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7 Reasons To Be Wary of MLS

Richard Montgomery on

Dear Monty: Our home is for sale. Our agent called to set a co-broker appointment. At the appointed time, the doorbell rings, and the buyer is at the door with no agent. I invited them in to wait. We quickly determined they would not buy our house. They needed a large lot, and we had a small backyard. About 20 minutes after they left, the agent showed up. I asked the agent why they were unaware of the lot size. The answer was, "It wasn't clear on the datasheet, so I thought I'd ask when we were here together." I was shocked. She left before I could vent. She apologized for being late but missed the inconvenience she had caused both of us. Should I complain to my agent?

Monty's Answer: The National Association of Realtors has done an excellent job convincing real estate agents and consumers that agents are professionals necessary to avoid financial risk when selling or buying a home. My experience in real estate has evolved from an enthusiastic evangelist into a solid contrarian. I believe it is financially risky to use multiple listing systems. Here are six more reasons:

No. 1: The dominant brokerage model and the multiple listing system are over 100 years old. Technology rendered these systems obsolete almost 20 years ago, but NAR and its membership fight to retain high commissions. Why? These old models are so inefficient that real estate companies must maintain them to stay solvent.

No. 2: NAR has about 600 MLS companies and a 900-member board of directors. The industry is a highly fragmented, chaotic and loosely managed network of independent contractors tied to the agent-driven, nonpublic multiple listing system. The industry's size, traditions, myths and failures have blinded the sector and the outside world to these fundamental flaws that expose consumers to invisible and significant financial risks. In a 2015 NAR report, 7,800 agents concluded their biggest fear for the future was that "The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry."

No. 3: MLS systems expose consumers to unqualified and duplicitous agents who use asymmetry to further their advantage. When you hire a real estate agent, you only know how well they will work afterward. Why? The unqualified agents mimic the good agents. They use the same scripts and buy the same cars, clothes and watches. I've also addressed agents' different motives for choosing real estate as a career -- which I have witnessed -- in a previous article.

No. 4: The customers have no direct access to the MLS data. The system "filters" the data to force the customer to trust another person with a significant conflict of interest.

 

No. 5: Agents manipulate the MLS. There are many ways this happens. A 2021 report by Market Business News describes several practices most consider unethical.

No. 6: When a new listing comes in a balanced market, about 30-35% of all listings expire unsold with the listing broker. While every local market differs, they would still be inefficient even if expired listing percentages were lower.

So, should you complain to your agent? It takes time and energy to explain. Chalk it up to experience and move on.

Richard Montgomery is the Founder of PropBox, the first advertising platform to bring home sellers and buyers directly together to negotiate and close the sale online. He offers readers solution choices for their real estate questions. Follow him on Twitter (X) @rmpropbox or DearMonty.com.

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