Can MLSs and Consumers Agree to Make the Market Work?

Aug 29, 2022 Michael Wurzer

One of the most popular features of any MLS system is the listing alerts agents set up for their customers or prospective customers (or the consumers set up for themselves on a customer portal) to keep them up to date on what new listings or price or status changes have occurred in the MLS. The listing alerts often are set up before there’s a formal agreement or contract between the customer and agent or broker, but often the consumer is agreeing to some “terms of use” to access the listing alerts.

What if an MLS included something like the following as part of their terms of use for the consumer to access listing alerts or other data or benefits from the MLS system? Could this be a way for an MLS to educate consumers on how the MLS makes the market work with offers of compensation and perhaps even agree to those terms with consumers?

Consumer Terms of Use for MLSs

Thank you for being interested in accessing information from our MLS, which provides the most up-to-date and accurate information about the real estate market in the area we serve. 

MLS is able to aggregate the best data because we make the market work by bringing together agents for buyers and sellers and provide rules and options for how they can cooperate on your behalf by sharing data and commissions from sales. MLSs refer to this as “cooperation and compensation”, and it’s important for you, as a consumer (buyer or seller),  to understand how this works before you agree to use the MLS information we provide.

A key aspect of MLS cooperation and compensation – how MLS makes the market work – is that the agent for sellers of property often offers to share their commission on the sale with an agent who represents  a buyer for the property. This promise of commission sharing is important for buyer’s agents, who only get paid if the transaction closes. Agents for buyers are not working for free but they, like the seller’s agent, are only compensated if a transaction closes, and this is why the offer of compensation is important to making the market work.

Importantly, each seller may negotiate the commission they are paying their agent and offer to buyer’s agents and each buyer may negotiate what commission is paid to their agent as well by having a separate Buyer Agency Agreement. These agreements are between you and your agent as either a buyer and seller, and are completely separate from these Consumer Terms of Use for MLSs. 

By accessing the data in the MLS, you are not establishing any agency agreement or agreeing to pay any commission, but you are acknowledging that you understand how MLS makes the market work and agree that offers of compensation made through the MLS are an efficient and effective way to make the market work for you. 

There’s long been debate about whether MLSs should have direct relationships or connections with consumers, but this might be a way for MLSs to provide education and value to consumers before they contract with brokers so that when they are ready for such a contract, how the process of the MLS works is clearer to everyone involved and more options are available like those Northwest MLS recently implemented. What are your thoughts?