Will NAR crackdown force MLSs to play by the rules?

The National Association of Realtors (NAR) is using its considerable muscle to crack down on multiple listing services (MLSs) that aren’t toeing the line.

On Jan. 31 and Feb. 1, the 1.3 million-member trade group put some 90 MLSs on notice: comply with the data standards required by NAR policy within the next 60 days or lose NAR liability insurance coverage. Nearly four weeks in, whether the majority of those MLSs take heed remains to be seen.

Realtor-affiliated MLSs were required to implement the Real Estate Standards Organization (RESO) Data Dictionary and Web API standards on January 1, 2016, and June 30, 2016, respectively. That means about 12 percent of the nation’s 700 or so MLSs — the vast majority of which are Realtor association owned and operated — have been out of compliance for years.

RESO estimates that a maximum of 75,000 MLS subscribers are on MLS platforms that have never adopted the RESO Data Dictionary and a maximum of 275,000 MLS subscribers are on MLS platforms that have never successfully adopted the RESO Web API.

These standards allow the exchange of real estate data between systems in a standardized format. When both MLSs and real estate tech firms use them, the latter don’t have to spend as much time and money coding their products to meet the data peculiarities of each individual MLS — potentially resulting in more and better tools available to more agents and brokers, faster.

“The benefits to adopting the RESO standards include unprecedented industry-wide access to consistent, structured real property data by MLS Participants, technology vendors and the MLS itself, eliminating various costs and creating new efficiencies,” wrote Rodney Gansho, NAR’s managing director of association and MLS governance, in the letter sent to Realtor-affiliated MLSs on RESO’s three-year-old “not certified” list, updated weekly.

This is not the first time NAR has admonished MLSs to comply with RESO standards, but this time the trade group put some teeth and collective pressure behind its effort.

“We request the association/MLS respond immediately to confirm the MLS is scheduled to use the RESO compliance certification program or, alternatively, provide confirmation the MLS otherwise complies with the RESO standards. Failure to respond within 60 days from the date of this notice will result in the loss of NAR insurance coverage,” Gansho wrote.

Why send these letters now? Why wait until MLSs are years out of compliance? NAR wouldn’t specify or say whether its insurance provider required MLSs be given a hard deadline.

“This is a continuation of ongoing efforts to ensure MLSs have adopted the RESO standards. Compliance with mandatory policies adopted by the NAR board of directors is a condition of coverage under NAR’s insurance program,” Kevin Milligan, NAR’s vice president of board policy and programs, told Inman via email.

“The recent notices reiterate that policy and draw specific attention to loss of insurance as a consequence for failure to adopt the RESO standards,” he added.

The 60-day window NAR gave MLSs to comply will be up in early April, Milligan said.

Are MLSs paying attention?

So far, six MLSs that received notices from NAR have successfully been certified as compliant, according to RESO Executive Director Jeremy Crawford:

• North Alabama MLS
• Triangle MLS
• West Penn MLS
• Martin County Realtors of the Treasure Coast
• Pikes Peak Realtor Services Corp.
• Bryan-College Station MLS

Another 15 MLSs that received notices have applied for certification, he said. More than 45 of the MLSs that received letters had already applied for certification “quite a while ago” but never completed adopting the standards, Crawford added, noting that many of those MLSs had been in touch since the letters went out regarding putting “more attention” on completing adoption.

A handful of MLSs have said they are not interested in moving forward in adopting the standards or have said they are in compliance even though their MLS software providers have said they are not, according to Crawford. RESO also plans to provide NAR with the names of six more MLSs that the nonprofit believes should receive notices, he said.

“We are still receiving inquiries on the letters as well this week and have some organizations that we haven’t heard from at all,” likely due to a lack of full-time staff at some smaller organizations, Crawford said.

Why some MLSs aren’t complying

Crawford cited the four top reasons MLSs are not complying with RESO standards as:

• Leadership directives and underlying political reasons and motivations not to adopt RESO data standards (he said specific reasons were not provided)
• The MLS or its association had no idea there was a NAR MLS policy mandate requiring the adoption of RESO standards
• The MLS’s software provider hasn’t provided the MLS with a compliant solution
• Cost of adopting RESO standards (which Crawford said was the least reported of the four reasons). Standards certifications are free with RESO membership, which starts at $250 per year. A single certification for non-member MLSs starts at $500.

NAR declined to say what its response would be if an MLS gave one of these reasons for not adopting the standards.

“Specific communications with associations/MLSs regarding the circumstances surrounding adoption of RESO standards are an internal NAR matter, and in any event, we would wait to receive and review actual communications before formulating a response,” Milligan said.

He speculated that one reason an MLS would not know about NAR’s requirement to comply with RESO standards was likely “turnover in MLS leadership and staff.”

Crawford agreed. “Some smaller MLSs don’t even have paid staff and the leadership is rotated every year, so we often deal with new [association] presidents that have not been educated in many areas and within a year they are gone and a new president is elected and they are the ones that run some of the smaller MLSs,” he said.

For some non-compliant larger MLSs, certification has not been a priority. Annie Ives, CEO of TheMLS.com (also known as Combined Los Angeles Westside MLS, or CLAW), told Inman via email it had not adopted the RESO Web API because “[w]e have been very busy rewriting our software and researching API from third parties.”

CLAW, which has more than 16,000 members, is working on the release of its new VESTAPLUS software, Ives said, and plans to become RESO Web API certified by the end of 2018.

Ives noted that CLAW did not receive a notice from NAR about its RESO certification at the beginning of the month. NAR said this was an “oversight” and sent CLAW a notice on Feb. 7. Asked how CLAW planned to respond to the letter and if the MLS was worried that NAR would revoke its insurance coverage before it complied at the end of the year, Ives did not reply.

Stuart White, president and CEO of Brentwood, Tennessee-based RealTracs, acknowledges that data standards would solve some broker pain points, but his MLS has not become certified for either the Data Dictionary or the Web API.

“I must expend resources where there is the most impact. [O]ur RETS server feed data is Data Dictionary compliant, just not certified,” White told Inman via email.

“With limited development resources, we must pick and choose our biggest challenges and do them well for long-term successful deployment.”

But RealTracs, which has 13,500 subscribers, is a member of the MLS Grid, an initiative that aims to combine different MLS data feeds into one standardized feed available to brokers, agents and tech vendors with one standard license agreement.

MLS Grid, which plans to launch this quarter, has applied to RESO for platinum certification of the Data Dictionary and Web API for the initiative’s nine participating MLSs, White said.

RealTracs did not receive a notice from NAR because it is not wholly-owned by Realtor associations. Other MLSs on RESO’s not-certified list are also unaffiliated with NAR, such the Buffalo Trace MLS, and therefore not required to comply with RESO standards.

But some MLSs decide to comply with the standards regardless of the requirement. Broker-owned West Penn MLS “makes a point to comply with nearly all of NAR’s policies even though we are not affiliated with them,” Bill Gutendorf, the MLS’s director of information technology, told Inman via email.

Because of that lack of affiliation, West Penn had not known it wasn’t in compliance with the latest RESO standards until reached by Inman, Gutendorf said.

“Had I been notified previously, we would have been compliant months before deadline, just as we were in 2014,” he said.

West Penn has now been certified and Crawford noted that the MLS’s situation “demonstrates we [RESO] need to do better from an educational perspective.”

Still other MLSs may not have become certified due to less-than-ideal communication with their vendors.

Tessa Hultz, CEO and president of 11,000-member Triangle MLS, told Inman via email that Triangle had contracted with MLS system vendor Black Knight and Zillow Group-owned Bridge Interactive back in 2016 to become compliant with both RESO standards, but that Triangle had not become certified due to “a miscommunication between the parties.” Triangle is now certified.

Complaints from brokers

Crawford said RESO was “hugely supportive” of NAR’s effort to ensure its policy mandates are met, noting that RESO regularly receives complaints from brokers when their local MLSs haven’t adopted the standards.

“The benefits of standardized MLS data access saves the brokers and their associated technology companies money, time to implement, provides a consistent experience and overall increases profitability and the opportunity to innovate,” he said.

He noted that many brokerages and tech companies, such as Redfin, NextHome, eXp Realty, W&R Studios, realtor.com, Zillow Group, Tribus, Homes.com and myTheo, have already or are actively in the process of converting their infrastructure over to RESO standards to reduce their costs and developmental resource needs.

RESO has released a case study on the benefits of adopting RESO standards by myTheo and it has a second case study in the works highlighting Homes.com’s efforts to move over to RESO standards. The latter found that adopting the standards cut down on development time to launch in a new MLS market to just two hours, down from 25, according to Crawford.

If just one individual organization can do that, adopting the standards across markets is “a huge win for the industry” in terms of time and cost savings, Crawford said.

Email Andrea V. Brambila.

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