As a real estate investor, you likely always keep an eye on the market to find your next property or know when to list your current assets. For many, this involves using the multiple listing service (MLS).
After all, it’s often the most effective way to access the largest inventory and reach the right buyer for your listings.
But how does the multiple listing service work?
And what is the best way to use it as a real estate investor?
We’ll answer both questions — and more multiple listing service questions — in this article.
What Is The MLS?
A multiple listing service is a private database, generally available online, where real estate actors (agents and brokers) share their properties for sale with each other.
A multiple listing service is often geographically based, but there can be competing MLSs for the same marketplace.
There are approximately 600 MLSs in the United States (this number can change as a multiple listing service can merge with another).
How a Multiple Listing Service Works
Each multiple listing service is unique. How does the multiple listing system work depends on the rules established by the broker cooperative or the MLS organization that owns it.
The information provided on the multiple listing service includes:
- the name of the listing agent and data (such as the listing price)
- number of days on the market
- a short description of the property
- neighborhood and school facts surrounding the specific property
- and more
Real estate brokers and agents can search the multiple listing service according to the criteria defined by their clients.
They can also update the information for their listings, such as:
- the listing price
- additional media, including photos and videos
- sale status
How to Get Access to the MLS
A multiple listing system is only accessible to its members — real estate agents and brokers — who pay dues for this privilege.
Some real estate investors work with a real estate agent who helps them find and list their properties on the MLS. They can be priceless allies for investors since they often have their professional network on top of access to the multiple listing system, and they can facilitate the transaction.
However, keep in mind that you will need to pay a commission.
Therefore, a growing number of investors are using this ability to get direct access to the multiple listing system — and other reasons — to get a real estate license.
Although it is a commitment in terms of time and money, it is also the best way to get easy access to fresh listings and non-public disclosures.
How to Use the MLS
How does the multiple listing system work for a real estate investor?
Because of the large inventory, finding the right property can be difficult.
In some markets, there may be a lot of competition for the best listings.
Here are a couple of strategies to find the perfect building on the multiple listing system.
Scoop brand new listings
If the sellers are motivated, they may accept a quick offer with advantageous terms, such as an all-cash offer. However, if your offer is too low, they may prefer to wait.
Target listings that have been sitting on the market or have expired.
In this case, the sellers may be willing to accept a lower offer. Distressed listings, such as foreclosures, short sales, or probate properties, are excellent candidates for investment properties.
Search for terms such as “cash only” or “as-is” since these properties do not qualify for most financing and competition is lower.
Alternatives to the MLS
Many real estate platforms source their listings directly from MLS and are available for free, including:
- Realtor.com, etc.
You can get access to most information online, but there may be a delay, and the data may not be as accurate as the multiple listing system.
Also, you can sometimes view the properties directly on the real estate agent website.
Some of the best investment properties are often not listed on the market.
Since the competition is low, you can usually purchase these buildings for bottom dollar.
For Sale by Owner (FSBO) properties require more legwork to gain exposure than listing with an agent.
You will need to use your network, put a sign on the property and use alternative advertising methods (Craigslist, Facebook groups, LinkedIn, etc.) to find a buyer.
However, you will save the commission fee.
Using the MLS As A Real Estate Investor
With the MLS, you can both find investment properties and sell them more quickly and efficiently than alternative methods.
However, you can save money by finding buyers and sellers for your properties alone.