A database of the properties for sale in a particular market. This database is maintained by an organization of the local Designated Brokers. The relationship between the organization and the local brokers differs from state to state and even within states, from a cooperative ownership of all, to ownership by the local chapter of the National Association of Realtors.
In addition to the database, an MLS organization provides the resources necessary for Real Estate Brokers to assist in the purchase and sale of real property. This ranges from electronic keyboxes, to contract forms, to extensive training and education.
The hallmark and defining characteristic of an MLS, however, is not the support it provides to brokers. Rather, by rule, it is cooperative. For a very long time, every listing – without exception! – had to offer two commissions: one to the listing agent, and one to the buyer’s agent (called the selling agent by brokers). And for reasons unknown (although collusion is a likely answer) the commission to the buyer’s agent is almost always 3%.
Until, maybe, today. Well, really tomorrow, but brokers may have taken the first step.
Buyer Agent Commissions in Seattle
The acronym “MLS” is used as shorthand. In Seattle (and most of Washington State) the official name is the Northwest Multiple Listing Service (or NWMLS). Unlike most other MLS organizations, the NWMLS is a cooperative and owned by its member designated real estate brokers. Perhaps as a result, it is a vibrant and engaged organization with the flexibility to adapt as times change. And eventually, everything changes.
Effective October 1, 2019, all NWMLS buyer agent commissions will be available to the public. Will this lead to fundamental change, perhaps even a world where buyers hire their own agents and don’t rely on the seller for that service?
Such a change is long overdue. Originally, all brokers worked for the seller, even those “working with” the buyer. So having the seller pay both agents made a lot of sense.
But it didn’t mesh with modern consumer expectations. So in the 1990’s, many states passed “buyer’s agency” laws. Since then, all agents working with a buyer do, in fact, work for that buyer.
But if they are still paid by the seller, that creates a classic conflict of interest. It’s the old rule: When in doubt about loyalties, follow the money. So a world where buyer’s hire their own agents? Sign me up.