Download the report (PDF 554 KB)
There is one thing that courts, regulators, online advertisers, and the real estate industry can agree on – that is, local multiple listing services (MLSs) promote competition between real estate brokers which ultimately benefits consumers. MLSs organize listing information in a common database resulting in lower search costs, greater exposure of inventory to potential buyers, and easy market entry for new brokers to compete. MLSs also provide a means for communicating unilateral offers of compensation to other participants and they provide rules and dispute resolutions processes to ensure the orderly functioning of the real estate brokerage market. That is what MLSs do. How they do it has garnered much less discussion – until now.
The National Association of REALTORS® asked independent, expert economist Frederik Flyer to explain how MLSs work in his new report, "Procompetitive Benefits of Policies Limiting Access to Local Multiple Listing Service Data." The report explains that the MLS depends upon participating brokers voluntarily agreeing to share their property listing information with and compensate other participating brokers for the sale of those listings. Quite simply, in order for the MLS to work to make listings available to consumers, brokers must be incentivized to participate; they must receive benefit from their participation. According to Flyer, "the MLS is not costless to build and constantly needs updating and new distribution to maintain relevancy, and so incentivizing those who 'build' the MLS and contribute the listings that it contains is important to the promotion of consumer welfare."