Listing on an MLS has long been viewed as the best scenario for a home sale. The functioning of the real estate industry—as well as common sense—would indicate that advertising a property as widely as possible is the best way to get the most buyers and, therefore, the best price.
A new study commissioned by the second-largest MLS in the country, Bright MLS, would seem to confirm this—at least on the seller side. Using a tremendous cache of data and collaborating directly with academic sources, the analysis found that homes sold for almost 20% more when listed on the MLS, and moved more than three times as quickly compared to so-called “office exclusives.”
“This research shows that even when homes flew off the market with little prep, there was a clear benefit to listing a property on Bright MLS, which offers the widest exposure for your home, including ensuring that your property is visible to homebuyers nationally,” said Bright Chief Economist Dr. Lisa Sturtevant, who led the study.
Office exclusives—an evolution of the “pocket listing,” where properties are marketed within a brokerage or company but not to the broader public—usually end up on the MLS eventually, according to the Bright analysis.
Looking at housing data across the mid-Atlantic region from a time period stretching from 2019 to Q1 of this year, the analysis found that being on the MLS had a highly positive impact on two of the most important aspects of a home sale—sales price and time on market.
In Q1 2022, a home listed on Bright MLS sold for $71,622 more on average than a comparable home sold off MLS. On Bright, homes went under contract in an average of seven days, while 63% of office exclusives were moved to the MLS after 18 days (only 12.6% of homes listed as office exclusives sold that way during a study period in 2021).
The analysis also found a broad trend of a greater proportion of homes being sold through the MLS over the last three years—at least in that region—countering anecdotal reports of more homes trading hands off-market during the high-demand, low-inventory pandemic market.
Speaking to RISMedia, Sturtevant said the fact that the MLS listings maintained—and even increased—these advantages over other types of sales despite unique market conditions was somewhat counterintuitive, at least to some observers.
“During the pandemic housing market, weren’t sellers having a relatively easy time finding a buyer? Wouldn’t it be almost the other way around?” she asks. “But if you think about it, the MLS provides that sort of marketplace environment that allows the true value that the market is going to place on that home to actually be realized by having the greatest number of buyers and sellers on the MLS.”
The trend was not equal across regions. Baltimore and Philadelhpia, for instance, saw smaller premiums overall from MLS participation compared to nearby metros like Washington, D.C. Baltimore also saw a dramatic decrease in the proportion of homes sold on the MLS between 2020 to 2021 (falling 11.6%).
Sturtevant says that generally, people selling lower-priced homes often perceive MLS participation as cutting into their profits, even though the study found both those cities saw sales prices more than 10% higher on MLS in 2021 (the average for the whole region was 14.8%).
“We do know that the tendency is that there are sort of lower-priced properties that sellers are often trying to sell as a FSBO or off-MLS, thinking that the return on selling off-MLS is worth giving it a shot,” she says. “In some neighborhoods in Baltimore we were seeing this really fast activity, and that might have been another reason where there was a shift a little bit away from the on-MLS transactions, but they are sort of coming back up close to where we were prior to the pandemic.”
The findings around office exclusives were also notable. About 5,600 office exclusive listings were reported to Bright during the 2021 study period, an increase from the year before. But with the majority of those eventually selling on the MLS, the effectiveness of that avenue as a fundamental replacement for listing services is at best, still not evident.
“We did a pretty sophisticated, multivariate analysis for the whole sample of off-MLS, but we didn’t have enough data to do that very rigorous estimation for just the office exclusive, so I’m always hesitant to conclude with the same confidence,” she cautions.
Another thing that didn’t show up in the data—essentially everything from the buyer’s side. But Sturtevant argues that those advantages are generally obvious.
“The fact that eight out of 10 listings are available on MLS, it’s important to recognize that there are benefits to buyers. There’s also this idea that particularly in this low-inventory environment that we’re still in, having access to all the available listings is a benefit to the buyer who can make better choices,” she says. “And having a level playing field to access listings really supports fair housing and equal housing opportunity.”