The Minnesota Association of REALTORS is preparing to release standardized forms to allow REALTORS in all of Minnesota to more easily represent both landlords and prospective tenants in leasing situations and simplify transactions across different brokerages.
Further, for those REALTORS serving the St. Cloud, Twin Cities and Western Wisconsin areas, NorthstarMLS is putting the final touches on the computer systems that will permit its members to easily enter for-rent properties into the MLS for searching by other REALTORS and for inclusion in the Broker Reciprocity feeds of brokers that choose to include it – which is what consumers are looking at when they search a broker’s site online.
Many regions of the country have had for-rent properties in their local MLS for many years and while there are companies and real estate agents that have worked the Twin Cities rental market for years, this will be the first time that the Twin Cities has seen a comprehensive and standardized system in place for both consumers and REALTORS to use.
The topic of adding a rental section to the MLS has been brought up in past years – when a few of us again brought up the topic of adding rentals to the MLS late in 2009 it was clear that the time was right. With the recent decline in home ownership rates the need for rental housing has increased. Further, many homeowners that needed to move but couldn’t afford to move have become accidental landlords. In recent years we have also seen sites like Craigslist bring much of the renting activity online, though with stories of both success and failure. Oh yeah, and property rental is one of the specific duties real estate licensees in Minnesota are permitted to perform. We may be late to the game but I bet you won’t know the difference in 12 months!
What sites like Craigslist lack are some of the strengths of the REALTOR MLS system:
- Controlled Data Entry – Only members of local Boards of REALTORS are allowed to enter property listings into the MLS and each of them is bound by the MLS rules as well as the local, state and national Boards of REALTORS rules, including the Code of Ethics. You don’t hear about Scams with the MLS because access is well controlled and the MLS is the Big Brother of the system and knows exactly who is entering listings.
- Reliable & Complete Data – REALTORS are required to provide information that is reliable and there is a specified minimum of information required on all listings.
- Standardized Information – Each listing describes the features of the rental in the same way (formatted fields) which makes searching, narrowing and comparing listings much easier.
- Reported Transaction Information – When a transaction successfully closes, the REALTOR reports the terms of the transaction to the MLS and that information can be used by REALTORS in the future to build market analysis reports for their clients to help price properties/rents. The MLS is also used by Appraisers when they are hired to perform appraisals of properties – the rental lease transaction information will be very helpful for Appraisers in valuing investment properties.
- Wide Distribution – The MLS system is likely one of the most syndicated database types on the planet. In the Twin Cities there are around 5400 broker/agent web sites where the broker reciprocity data from NorthstarMLS is syndicated. It will be up to each broker/agent to determine whether they will display rentals, however. Brokers display this data because they know and trust the source of the information and because of the following:
- Guaranteed Offer of Compensation - In my opinion the most valuable part of the MLS is the fact that brokers participating in the MLS must provide a specified and upfront guarantee of compensation to a cooperating broker that brings forth a buyer/tenant. If each property’s commission had to be negotiated in addition to the client’s purchase/lease contract, the process would be far more difficult. No matter what Google or others do for property listings, without guaranteed commissions they can’t reasonably supplant the MLS system. REALTORS do a job and want to get paid for their work!
I am excited about the new capabilities and there is so much to talk about related to this new component of the Twin Cities housing market so I will be writing additional posts on the topic in the near future.