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MLS is a term every homebuyer should understand. Bankrate explains what it is.

What is an MLS?

MLS stands for multiple listing service, which is a database that real estate agents use to share their listings with other agents and to search for homes for sale. Each MLS database serves specific regions in the United States and is available only to agents who pay for membership.

Deeper definition

The concept of a multiple listing service dates back to the time when real estate agents periodically met to share information about the properties they had for sale. Today, agents share this information via computer. They pay membership dues to access the MLS database, which covers the region where they work, and these dues support the program.

The MLS is a useful tool for real estate agents. When they list a property for sale and add it to the MLS, all of the agents in that region who have access to the system have the ability to review the listing and show it to potential buyers. This gives sellers more exposure in the local real estate market. Buyers’ agents who use the MLS have more options to show their clients.

In addition to increasing options for sellers and buyers, the MLS encourages cooperation among real estate agents, and makes it possible for small real estate offices to compete with large, franchised firms. Instead of selling only the listings they have in the office, they have access to the inventories of other agents in the area. As a result, all of the buyers and sellers have the same access to properties and buyers, regardless of the size of the real estate office.

MLS example

Sam is a real estate agent who is looking for houses for several prospective buyers. Sam pays a monthly fee to use the MLS, which he accesses often to search for properties for sale.  He enters search parameters into the database — such as number of bedrooms, price and neighborhoods — based on what his clients are looking for. He then prints a report for each property to share with the buyers. The buyers use this information to narrow their lists of properties and decide which ones to look at.

Use Bankrate’s calculator to figure out how much house you can afford to buy.

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