Launch Pad

You already know how important MLS data is to your business. In addition to being a central source of information on properties for sale (pending, closed, withdrawn, and so on) and as a marketing tool, MLS data helps you do tasks such as completing comparative market analyses and broker price opinions and identifying properties for buyer clients. It is a vital resource for real estate appraisers to obtain market data and comparable sales for their assignments, and MLS data also finds its way into public records.

Who Gets Hurt When MLS Data Is Inaccurate?

Everyone who uses MLS data counts on it being complete and accurate. It’s imperative that brokers, agents and assistants touch every field when entering listing data in the MLS. For each field, consider:

• Is the field applicable to this property?
• Has the information been input accurately?

When data is input incorrectly or missing relevant details, it skews statistical and search results, which impacts CMAs, BPOs and appraisals. Agents and appraisers can end up missing important sales or listings due to errors or details omitted from listings. This can be detrimental to the sellers, the buyers or the transaction—and it can carry over into other transactions, impacting prices, contracts and values.

Listing agents typically have a legal or fiduciary duty to ensure clients’ properties are properly marketed. As members of the National Association of REALTORS® (which many appraisers are), even when it’s not our listing, we commit, through our Code of Ethics, to not present a misleading picture to the public.

Imagine you have buyer clients looking for hot-water heat and an attached garage. If those features are listed in error for a home with forced-air heat or a detached garage, it could result in a showing that wastes the time of the sellers, both agents, and the buyers—and makes both agents appear less than competent.

6 MLS Inputting Errors to Avoid

It’s helpful to know where errors most often occur. Here are six potential errors you should be careful to avoid:

1. Omitting or incorrectly reporting concessions. 

Appraisers are required by the lender, per Fannie Mae and Freddie Mac guidance as well as appraisal standards to address concessions in every appraisal. One reason you may be hearing from more appraisers is that, since the NAR Settlement, MLSs in different regions are treating the reporting of concessions differently. In some areas, concessions have been removed from the MLS altogether.

Whatever the norm in your region, if an appraiser calls, emails or texts you to ask about concessions on a current or past listing, please respond. Yes, you may share information regarding listed property with appraisers, including sales prices and concessions, consistent with your obligations under the Code of Ethics and state law. 

Concessions have been a potential source of confusion since residential practice changes resulting from the settlement went into effect in August 2024. Concessions are not the same thing as compensation, though the settlement terms spelled out that buyers can continue to choose to offer concessions, as long as they are not limited to or conditioned on payment to a buyer broker. NAR says buyers have always had this option, and Fannie Mae and Freddie Mac exclude fees that are “traditionally” paid by the seller from the Interested Party Contribution calculation.

That said, appraisers must have a clear understanding of where concessions are going and will treat concessions differently for appraisal purposes, depending on whether the concession is an IPC. Was the concession used for home repair or improvement items like new flooring, new paint, or a new water heater? Or did the buyers use concessions to cover transaction costs, such as closing costs or buyer agent compensation? We need details.

Appraisers operate by a set of congressionally authorized standards known as the Uniform Standards of Professional Appraisal Practice. USPAP states that sales or financing concessions may have an effect on the price paid for a property. As a result, it is imperative and required for appraisers to analyze their impact. In addition, according to Fannie Mae’s Selling Guide—which spells out rules for loans to be sold in the secondary market—“comparable sales that include sales or financing concessions must be adjusted to reflect the impact, if any, on the sales price of the comparables based on the market at the time of sale.”

In other words, appraisers must account for factors that impacted sales price and make adjustments. That's why, when we're unsure about something in an MLS listing, we reach out to you. Let's work together!

2. Specifying the wrong property type.

In my area, this is especially an issue when it comes to townhomes. “Townhome” is a style of property, akin to Georgian or Colonial. It’s not a form of ownership. Knowing what type of property you are listing (such as fee simple, common interest, condominium) enables you to gather the correct documentation, including condominium declarations, bylaws, and covenants, and conditions and restrictions (commonly known as CC&Rs). Incorrectly listing a property type can cause confusion for those viewing the listing and, in some MLSs, can lead to fines.

3. Mistaking Terms

Listing agents sometimes use real estate terms inaccurately. For example, I’ve seen “walk-out basement” and “walk-up basement” used interchangeably or incorrectly. A walk-out basement is below grade on one or more sides, but residents can walk directly out to an area at grade because the property is built on a hill or sloping site. A walk-up basement has stairs that lead up to grade level (see photos below).

4. Making square footage errors.

This can happen when an agent or broker includes below-grade space in the home’s square footage. Whether the home has a walk-out or a walk-up basement, for example, the space typically doesn’t count as above-grade living area and therefore can’t be included in the home’s square footage. Yes, a basement can be measured, and its presence can add value, but it’s accounted for as separate space for appraisal purposes. Generally speaking, that’s true even if the quality of workmanship is similar to that of the above-grade living area; that’s because buyers typically prefers to live above grade, and so the price per square foot for above-grade living area is typically higher than the price per square foot for below-grade living area.

A property may have a collection of above-grade and below-grade spaces including a garage, patio, deck, outdoor pool, or accessory dwelling unit, guest house or casita. Again, while these features may add value, they generally are not counted as part of the home’s livable space. Each is identified separately in an appraisal report and should be found separately in the listing data. That’s true even for ADUs located in the attic of a primary property; if the main residence has 2,000 square feet of livable space, and the ADU is 700 SF, the total square footage of the residence is 2,000, not 2,700.

Be aware of regional variations. Know what fields are available in your MLS and how to appropriately account for various spaces.

5. Depending on public records.

Don’t assume the square footage reported in county or municipal records is correct. Instead, verify the information. Agents and brokers have been sued—and lost—over advertising incorrect square footage. One way to prevent inaccurate reporting of living area is to hire a licensed appraiser to measure the property when you list it. Many appraisers offer measuring services to ensure accuracy, and they use the American National Standards Institute (ANSI) measuring standards now required by Fannie Mae and Freddie Mac. (See “Why Do Square Footage Disputes Arise?”)

6. Omitting or incorrectly reporting information on solar systems.

Systems that collect and use solar energy add value in some areas but not in others. There are also restrictions on when solar can be included in the value of the property. The system must be owned, not leased, by the property owner. If there is a solar loan and the loan has a Uniform Commercial Code filing, then it is considered personal property and should not be included in market value. Agents and brokers should be aware of the placement and orientation of solar panels, the panel specifications and the details on energy-storing batteries. Accurately reporting the type and details of the solar system, including if the house is a passive solar home, is imperative. (Download Fannie Mae’s one-page “Appraising properties with solar panels.”)

Good MLS Data Requires Care, Teamwork

They say, “Garbage in, garbage out.” Well, the opposite is true as well. By carefully inputting your listings into the MLS, and working cooperatively with appraisers who call with questions, you help ensure the information on your listing is complete and accurate. That, in turn, enables all of us to assist our clients—and it protects the integrity and value of MLS data.

Find the NAR Article Here