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 In addition to being a central source of information on properties for sale (pending, closed, withdrawn, and so on) and as a marketing tool, MLS data helps you do tasks such as completing comparative market analyses and broker price opinions and identifying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!