Editor’s note: This is Part 1 of a two-part series looking at efforts to make MLS property information more widely available across market boundaries. Part 1 focuses on efforts within California, and Part 2 focuses on efforts in other states and regions. Read Part 2, “Connecticut real estate brokers push for statewide MLS.”
Change is coming throughout the vast and varied landscape of real estate databases in California. And the race is on to find a better way to share property information while meeting the demands of Realtor politics, multiple listing service fiefdoms and industry power brokers.
The outcome will be watched and weighed carefully by Realtor trade groups, MLSs and brokerages across the nation. California is home to about 180,000 Realtors, or 14 percent of all Realtors in the United States, and the state has a reputation for spawning Internet innovations that revolutionized many industries. In this case, technology is not the problem.
Real estate brokers and agents in California often have to join several MLSs and pay multiple subscription fees to get access to property information in all of the areas where they work, and there are more than 60 MLSs in California.Creating a seamless data-sharing system with uniform rules across all market boundaries would eliminate a lot of headaches.
“What looks like a simple issue becomes very complicated,” said Ed Krafchow, president of Prudential California Realty. “We have separate MLSs with separate rules, so no one can make heads or tails of them. Some (rules) are actually contradictory to one another.”
“What we need is one set of rules, one set of behaviors, one set of technologies. In truth, the technology is available to have a national MLS. There is no reason not to have a database of that size,” he added. Such a plan has been casually discussed within the ranks of the National Association of Realtors, though there is no formal proposal on the drawing board.
Krafchow said it will take baby steps to get to that stage. And in California, several steps have already been taken to establish regional and statewide systems for sharing property information. “There are multiple efforts. There are a number of processes at work. Everybody understands the issue. Many people are trying diligently to move the effort forward,” he said.
“Any time you are approaching a very traditional business, the tendency is to work for no change whatsoever, and at this time ‘no change’ is not going to work for us,” Krafchow said, adding that a more widespread sharing of property information among agents is “a very critical issue in the business.”
In September, the California Association of Realtors adopted a set of principles to lay the groundwork for the statewide MLS data sharing and for a standardization of MLS rules and information.
Among the principles: “California Realtors should have universal access to all MLS data, MLS rules should be uniform and enforced consistently, and MLS data needs to be fully standardized with local options for data field variation.” The principles were recommended by an MLS Working Group that the association formed in January 2005. The group, led by Southern California real estate broker Gary Thomas, received input from agents, brokers, Realtor association executives, MLS vendors, regional MLSs and an MLS consultant. Walt McDonald, past president of the National Association of Realtors, is also a member of the task force.
The working group was formed, in part, in response to low Realtor satisfaction with MLSs. According to a C.A.R. 2005 Membership Survey, 44 percent of survey participants rated the value they received from their MLS subscription at four or below on a scale of one to 10.
Vince Malta, C.A.R. president and a San Francisco real estate broker, said, “C.A.R. is not going to be in the MLS business, but we will do everything to help and facilitate the process to remove barriers to allow our agents and brokers to have information statewide.”
He added, “We’re not going to force change on our MLS providers. We’re going to encourage them every step of the way to embody the principles and give strong consideration to the principles in the interest of our members.”
The planned statewide system will be “the mother of all databases … a place where data will reside,” Malta said. Under this plan, MLSs will feed data into this database, and agents and brokers will retrieve this information through their subscription to a local MLS. “I hope our users will be able to see all MLS data from across the state, so it will look seamless to them. I think that’s where it’s heading. I don’t believe we are headed toward one MLS in the state,” Malta added.
Such a system could take shape within three years, he said, and the structure “will definitely involve large brokers, as well as independents and agents,” he said. The C.A.R.-adopted principles clearly state the role that brokers should play in controlling MLS data and governing MLS boards. One principle provides that “use of MLS data and its distribution to third parties should be controlled by the brokers who provide the data,” and another provides that “MLS boards and directors should include broker-owners with appropriate regional representation.”
Malta said the current and future leadership of the state Realtor association is committed to the plan. “This can be achieved and it can be achieved in the short run. The biggest hurdle is a political one.” The California effort, he said, may eventually be dwarfed by a national system to share MLS information.
“The National Association of Realtors is now also talking about perhaps a national database that MLSs could obtain information from. The holding place for this information may be best at the national level. Whatever it is, I hope that the information will be provided by a standard that will be useful for our members. If it’s done on a state or national level, so be it,” he said.
Mark Lesswing, director for the National Association of Realtors Center for Realtor Technology, said, “Actions by California and C.A.R. are always noteworthy and carry a lot of weight.” The effort to establish a statewide property information database in California will likely be based on Real Estate Transaction Standard, known as RETS, a standard for exchanging real estate transaction information that was created by the national association in collaboration with real estate technology companies.
Standardizing MLS information among MLSs is essential to forming a large database, Lesswing said, as some local MLSs assign different names to different fields of data. For example, one MLS may use “listing price” while another may use “home price” to define the same set of data. According to the MLS Working Group in California, “A lack of uniformity has created artificial boundaries that impede the efficient operation of the market and the ability of Realtors to service their clients. We support universal data fields that are standard across all MLSs.”
Regionally, groups of MLSs in Northern California and Southern California have already formed alliances to share property information across MLS boundaries, which spare subscribers from joining multiple MLSs in those areas.
James Harrison, president and CEO for REInfoLink, a Realtor association-owned regional MLS that serves five counties in the Silicon Valley area, said, “The sands are shifting quite a bit right now in the MLS industry,” and he believes that the regional system of sharing property information in the Bay Area is ahead of the statewide effort.
MLSs, by working together, he said, are more likely to accomplish meaningful change in sharing property information than outside entities. “I think that we need to understand more about what the state (association’s) initiative is. There are a lot of ways to partner, to create a tool that benefits everybody. I don’t have any problems with … a data sharing utility. The first thing that comes to my mind — I just want to avoid another layer of government bureaucracy,” he said.
While MLS officials have an interest in the principles that were adopted by CAR leadership, Harrison said, “I think a lot of us left the room holding our wallets.”
Efforts to share MLS data among different MLSs “are already well under way” in the San Francisco Bay Area region and in Southern California, he said. “We already have created a common database of some sort. Regionalization was needed in Northern California and Southern California.”
The MLSAlliance in Northern California, for example, is a single source of MLS listing information from five MLSs in a region stretching from Sonoma County south to Monterey County. A similar alliance among MLSs was earlier created in New England.
Malta said that the statewide effort will reach out to MLSs “that want to embrace the principles and get this thing going,” and those that don’t join may “find that the information highway will just go around them, and they’ll be left with a little island.” The Internet is driving change at a rapid rate, he said.
Consumers, too, are driving the effort to consolidate MLS information, Krafchow said, and it’s in the interest of agents and consumers to make it happen. “The consumer is not interested in how the business works,” he said — that’s up to the industry to figure out.
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