Why MLSs should charge more, play nice with brokers and merge already

A report released today by a new MLS think tank starts off bluntly: “Almost everyone interviewed for this study feels that the MLS industry has meandered aimlessly for over a decade.”

How to stop that wandering? Seven MLSs representing about 300,000 agents, brokers, and appraisers have gotten together to form a strategic thinking forum, MLS RoundTable, which discusses “the challenges associated with implementing meaningful change in an industry that generally dodges it,” David Charron told Inman.

Charron is the group’s spokesperson and chief strategy officer of Bright MLS. The other MLSs in the think tank are CarolinaMLS, Northwest MLS, RealTracs, Midwest Regional Data (MRED), MLS PIN and California Regional MLS.

As its first project, MLS RoundTable commissioned a study from real estate management consulting firm T3 Sixty to identify the most significant and important issues the MLS industry should focus on in the next 24 to 36 months.

The firm interviewed 28 industry leaders, including representatives from the MLS industry, brokerages, MLS technology vendors, the Real Estate Standards Organization (RESO), Upstream, The Realty Alliance, Zillow Group, the National Association of Realtors and Realtors Property Resource (RPR).

“The MLS 2020 Agenda is presented to the entire industry in the hope it advances constructive dialogue amongst and between brokers, agents, MLS and associations and technology partners,” Charron said.

The report doesn’t endorse specific solutions, but it does ask MLSs to take a long look in the mirror. “It’s time to start ringing some uncomfortable bells,” Charron said in the report’s foreword.

The leaders interviewed were all asked the same question: “What do you think are the top two issues facing the MLS industry over the next two-to-three years and what is your proposed solution?”

Their answers varied, but some common themes emerged.

• It’s time to bury the hatchet between brokers and MLSs and work together.
• MLSs should ditch the slow, association-based governance structure and operate like businesses.
• The MLS business model needs to change to foster innovation. This may mean charging more and offering tiered services.
• Brokers and agents need comprehensive, accurate property data of all kinds.
• MLSs should merge and use that as an opportunity to create a better MLS.
• MLSs need to realize that the consumer ultimately decides who wins in the real estate industry.

Here is a sampling of some of opinions expressed in the report:

Tom Phillips, Bright MLS

Issue: “[T]oo many MLSs with too many rules, too many processes and too much disjointed decision-making” means the MLS industry has not kept up with the needed pace of change.

Proposed solution: Redesign the MLS organization when merging. “[U]se consolidation to put stronger organizations in place that will bring back the efficiency and spark the innovation that the brokerage industry needs.”

Boyd Campbell, Century 21 New Millennium

Issue: “The need to demonstrate the value proposition of the MLS to the real estate professional, over and above preserving cooperation with compensation.”

Proposed solution: Focus on making the day-to-day work of MLS subscribers “more functional, more productive and less stressful.”

Denee Evans, Council of Multiple Listing Services (CMLS)

Issue: “What the consumer wants — and how the MLS of tomorrow will meet that need — must become an integral part of the conversation with the real estate industry. If the consumer is not getting the information they want from their agent, they will go somewhere else to find it even if that leads them to an unproven data set that someone else created.”

Proposed solution: MLSs should bring industry stakeholders together “to create an industry-wide vision for what consumer demands might look like in the future.” As experts in how real estate data flows and functions, MLSs can provide “pre-emptive direction on how to meet future consumer demands.”

Gurtej Sodhi, Crye-Leike

Issue: MLSs need to focus on the key factors that will ensure their viability in the future.

Proposed solution: MLSs should “assess what their core competencies are and then either divest themselves of areas that don’t align with the core competencies, or build upon the areas where they do have those abilities.”

Michael Wurzer, FBS

Issue: Brokers operating across multiple markets while MLSs remain local or regional.

Proposed solution: Requiring software vendors that contract with agents and brokers to use standard APIs to eliminate “duplicate entry and complicated processes.”

“For example, when an agent gets a lead through a website or other product, it should flow through a standard API in order to ensure that every other application has access to that information.”

Dana Strandmo and Alon Chaver, HomeServices of America

Issue: MLSs providing “sensitive and valuable homeowner data” to non-secure third parties undermines agents’ and brokers’ ability to secure customer data.

Proposed solution: MLSs transitioning from “Opt-out” feeds to “Opt-in” feeds.

Kymber Lovett-Menkiti, The Menkiti Group

Issue 1: Ensuring access to all property data. “Today the public often has equal or better access to a broad selection of property data than what the broker actually has.”

Proposed solution: “So much data is available from third parties, for example: mortgage balances, city and county records, foreclosures, pre-foreclosures and short sales, etc. MLSs simply have to aggressively move forward and become a data leader again.”

Issue 2: Inaccurate MLS data as the result of agent and broker data entry mistakes.

Proposed solution: Developing “a better way to confirm and lock data into the system in a more standardized format,” and eliminating the “extra work that brokers and agents are now being required to perform in hunting down and verifying the data that is presented to the customer.”

Jim Harrison, MLSListings Inc.

Issue: “The MLS has a business model problem. The industry has forgotten who their customers are. The industry’s longstanding ‘product in a box’ solution is no longer valid and the platform it is delivered on is antiquated. In essence, the MLS is still trying to operate as a gatekeeper and continues to block real estate professionals from having access to the best-in-class products they need to help them do their job.”

Proposed solution: “These current practices must stop:
• Running a technology business by committee. MLSs have been trying to do this for the past two decades. It just doesn’t work.
• Trying to serve the customer without talking with them or knowing them. The MLS needs to get out of the box (and the office) and talk with the customer. Find out what it is they really want.
• Ignoring new platforms such as apps and mobile platforms.”

Bob Goldberg, National Association of Realtors (NAR)

Issue: Industry infighting. “If we are stumbling around fighting amongst ourselves no one is going to want to participate in our sandbox. Someone else will come in and create a better tool and the consumer will select them. Then we all lose; brokers, agents and organized real estate.”

Proposed solution: MLS consolidation — which will lead to increased efficiencies in the market — with facilitation from NAR.

Craig Cheatham, The Realty Alliance

Issue: MLS loyalty is dwindling as agents seek the best service provider.

Proposed solution: “For the first time, the industry has entered a world where there are realistic and legitimate attempts to create alternatives to the MLS that exists today. This means that MLSs must:
• Become more ‘nimble’ as brokers and agents are looking for better and faster functionality today.
• Become more and more ‘cooperative’ and better manage the dynamics of their relationships with others in the marketplace.
• Actively interface with the portals and the technology companies, as more services and support with respect to their data are being offered and managed by others.
• Yield some of the ancillary services and products they have accumulated over the last 10 years or face fierce competition.”

Jeremy Crawford, Real Estate Standards Organization (RESO)

Issue 1: In the face of retiring leaders, the MLS industry has no succession plan. MLS boards of directors are not providing MLSs with the necessary vision and direction to remain at the forefront.

Proposed solution: “More leaders need to be groomed and mentored to be full-time executive officers as well as elected leaders. There should be operational and skill requirements for serving on the board as well as term limits to ensure renewal and modernization and requirements that directors run active brokerages with a minimum number of transactions per year.”

Issue 2: “There are too many legacy rules, regulations and policies in the MLS industry” — some of which may be so outdated that they may be illegal.

Proposed solution: MLS organizations should do an audit of their own potentially dated regulations, rules and policies.

Dale Ross, Realtors Property Resource (RPR)

Issue: “Many times the goals and expectations of both millennial agents and consumers coming into the industry are not being met by [current MLS] systems. One primary obstacle is the fact that most MLSs operate closed systems at extremely low price-points. In addition, they … are not taking advantage of evolving API technology and are not open to multiple third-party apps that give professionals the tools they need and that consumers expect.”

Proposed solution: “MLSs need to charge a fee for their services that allows the companies building the technologies to reinvest in R&D. Price suppression has been prohibitive to innovation by the vendors.”

Alex Lange, UpstreamRE

Issue: “Association ownership and involvement continues to create an obstacle for MLSs. Core MLS services are under $5, but pricing to members is typically in the $40 range. The industry is paying, but MLS software companies aren’t seeing large enough margins to justify reinvesting into R&D and improving the MLS software. This often leaves an MLS to seek alternative revenue models that may compete with their brokerage clients, such as offering vendor products as an alternative to brokerage offerings.”

Proposed solution: More holistic revenue models for associations and their respective MLSs. “It’s not uncommon for one entity to subsidize the R&D or the operational expenses of a partner to serve their own interest in other industries.”

Greg Robertson, W&R Studios

Issue: Real estate professionals still wish they were data gatekeepers, but that era is over. “Welcome to the ‘war of listing input modules.’ It’s all about control, and everybody wants it.”

Proposed solution: “Brokers and MLS organizations need to find new ways to redefine their value proposition.”

Errol Samuelson and Curt Beardsley, Zillow Group

Issue: MLSs failing to keep up with “the changing scope of the content they manage and technical demands of their users.”

“Example: in many areas, the listing input form has not changed over the last 15 to 20 years. It is still capturing and managing a similar set of data as it did two decades ago, and the number and quality of photos that can be uploaded has lagged.”

Proposed solution: MLSs moving away from single-platform systems and investing in systems that allow for better integration and scale.

The full report can be found here.

Email Andrea V. Brambila.

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