The multiple listing service is the place or "roster" where all volunteering properties get listed through a brokerage that enlists the cooperation of other brokers in the representation of that property to potential buyers. This is in hopes of procuring ready, willing, and able buyers for their properties more quickly than they could on their own. Most multiple-listing services accept exclusive-right-to-sell or exclusive-agency listings from their member brokers. In the sense that the participating brokers help represent other brokerages properties you have what we call Broker Reciprocity. Under the MLS arrangement, if a cooperative agent helps a broker sell a house, the broker pays the agent a co-op fee out of the broker's commission. The amount of the fee is noted in the MLS listing, is usually 3% on homes and provides the incentive for cooperating agents to "bring" their buyers.
We live in a day where all the information related to property is readily made available through these means. One use of agency is employed to represent property accurately. Today representation is also used to help "make the sale" happen with terms that favor the person being represented. Well, you can see that if you have other brokerages and their agents helping to represent a principle sellers property, that if two different brokers are involved, they are not always solely bound to always reflect the interests of both the buyer and seller in the same transaction. They are however bound to certain ethical constraints under their respective fiduciary duties.
Thus, you have agency laws that govern the procurement of terms that favor the person being represented. In order for this to happen, brokers that participate in the MLS, by itself, do not necessarily create a subagency relationship. Subagency is normally defined as one who is employed by a person already acting as an agent. So, in other words, one broker does not employ another broker by having them participate in the MLS on a particular listing. Conversely, the individual agents of one singly acting particular brokerage are subagents of the Broker.
An example of subagency would be thus:
If you give your colleague $5 and ask him to buy your lunch, your colleague is your agent. If your colleague is busy, he may hand your money to a friend, along with your instructions. The friend is a subagent--an agent of your agent. your colleague's friend is still responsible for buying your lunch in accordance with your instructions. The subagent, like the agent, is ultimately responsible to you, the principal.
To conclude the evolution of brokerage's helping to sell or [en]list properties for sale... because of widespread agency reforms, a cooperating broker cannot be presumed to be a subagent. Yet the listing broker is liable for the conduct of all of the subagents and their salespersons.
Remember that the MLS is designed, not to confuse representation, but for the use of brokers in procuring ready, willing, and able buyers for their properties more quickly than they could on their own. Usually, the seller stays fully represented because their broker or agent can seek for terms that favor them only. Conversely, buyers do not fully understand agency (enlisting an agent to help them) and how it not only works to their advantage to "have someone exclusively trying to get them the most favorable terms", or are naive about how commissions are already covered (this is a link), but often will engage the agent representing the seller to represent them- known as limited agency. A limited agent still can perform agency, it is just governed by fiduciary duties that are more limited in scope. Some would say that it is a conflict of interests. In some states limited agency is illegal and some it is not. Here in Utah it is legal.
Related Material- Which institutions are involved in transactions?
The Multiple Listing Service (MLS) takes place through the Washington County Board of Realtors, a division of the Utah Association of Realtors and they are a division of the National Association of Realtors. The Utah Division of Real Estate or government entity gets involved in the licensing of agents and making sure they conform to conventions and forms involving real estate transactions and having realtors abide by a code of ethics including the fiduciary duties involved in MLS transactions.
- Man, Land and Country - Brian's philosophy of doing business and regarding the property exchange process.