I have been following the discussion around the competitiveness, costs and consumer benefits of U.S. Multiple Listing Services (MLS) by those trying to disparage the system. As an Irish immigrant to the United States in 1996 who became a real estate broker in 2000, I can tell you this: The U.S. system has long been — and is still — viewed as the best by consumers around the world.
You don’t have to look very far for examples that illustrate why.
This past December, my mother and father closed on their home of 35 years in Limerick, Ireland, after 10 months “in escrow.” They also recently closed on their purchase of a new home. In the process, they had to rent a home for four months between their sale and their purchase given “simultaneous closings” are not a practice there. That kind of drawn-out timetable is typical for the majority of western nations that use the auctioneer system where a seller works with one, perhaps two, auctioneers.
The costs and other headaches also add up.
The auctioneer typically charges a 1.5% fee to the seller. My parents then paid a 1% fee to the solicitor required to handle the transaction. They paid a 1% transfer tax, called the Stamp Duty, (which can be 2% or 3% depending on sale price) also assessed on the final sales price. And they paid a 1% fee to their solicitor for their purchase. (Solicitors are legally required when purchasing a home in Ireland.)
All in all, my parents paid 4.5% in fees. They also had to pay for the brokerage sign outside their home, newspaper advertising, online ads and the brochures for potential buyers. And that home rental between closings? An additional $6,400.
Home buyers like my mother and father outside the U.S. also don’t get the benefit of any professional representation. They must go from one auctioneer to the next given there is no shared database to find homes. If a showing is to happen, buyers must make appointments with each seller auctioneer to view those homes. No one helps them with the negotiation process.
And on top of all that, any buyer in “contract” can get “gazumped” (contracted price goes up) at any time until the final weeks of that sale agreement. Compare all that to the U.S. experience.
The cooperative MLS system exposes home listings to the largest number of potential buyers with an offer of compensation to any successful buyers’ agent. The U.S. MLS has spawned deeper collaboration among competitors where reliable, in-depth information is shared among participants, all to the benefit of the end consumers who get a fuller, more accurate look at the current housing market.
That market, which is fiercely competitive, allows consumers the best chance to see all inventory and make informed decisions. And because the market is so competitive, sellers and buyers alike can negotiate commission levels with potential brokers whom they are considering.
In the process, American consumers can count on a real estate agent to look out for their needs and provide critical, expert advice. There is no replacement for things like data interpreted by a professional who understands the nuances between one property and another adjusting for, say, the view, the quality of construction or its location next to a waste water treatment plant.
Not to mention all the other financial, legal and community details real estate agents help consumers understand.
It’s a trusted, predictable process. And expedient. Closings within 30 to 45 days is remarkable and typical in most markets here. This places fewer barriers on consumers ready for a home purchase or change, especially when life-changing needs are hanging in the balance. And according to RealTrends, average total commission to all of the brokers in a residential real estate transaction in the U.S. fell to new a new low of 4.94% in 2020.
It’s easy to understand what a market without an MLS would look like and why it doesn’t work. It already exists most places in the world, and yet WE are the example others look to. I have no doubt in my mind that if the real estate brokerage profession in this country had not formed in the way it has through innovations like the MLS and a spirit of collaboration that best serves both buyers and sellers I, for one, would not be able participate in it as I have as a homeowner and a professional.
I have successfully raised three daughters, bought my own home, paid my taxes and contributed to society in a way I believe represents the ideal of the American Dream. The real estate industry and the U.S. MLS system underpins that American Dream, and I have hundreds of clients who would agree.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Collin Mullane at [email protected]
To contact the editor responsible for this story:
Sarah Wheeler at [email protected]