Should consumers be charged to view the MLS aggregate of listings?

Using the MLS aggregate of listings in virtual office Websites as a means to generate new customers and referral fees has caused huge problems for the National Association of Realtors. To add insult to injury, (threats from brokers that they'll pull out of the MLS and from companies whose business models are based on using other brokers' listings to generate business) nobody is making any money from MLS listings aggregation except third-parties - why shouldn't the Realtors profit instead?

Caught in the middle between companies who insist that the NAR create rules to govern the publication of MLS listings on VOWs and others who need the MLS listings in order to gain marketing advantages they wouldn't otherwise have, the NAR has created a policy designed to allow VOWs to use MLS listings but restricted to consumer service rather than consumer acquisition.

While it's common knowledge that consumers want to see inside the MLS database of listings, it hasn't been proven by any company willing to share its statistics that giving consumers MLS access via VOWs without a preestablished relationship has resulted in better profits. In fact, the opposite can be concluded. Access to the MLS database has done nothing to stem the flood of lower commission demands by consumers. In fact, they've accelerated, thanks to third-party advertisers who attract consumers by advertising lower commissions or consumer rebates on transactions through their broker networks.

So why give away the valuable MLS database when it has proven to only bring economic harm to the industry? Why can't it be used to bolster the flagging real estate industry with revenues instead? If consumers want the aggregate why not make them pay for access? Brokers can still give away "free listings" on their personal Websites and through their Internet data exchange (IDX) solutions, which was created for the purpose of using broker-permission-gained listings on Websites and in advertising arrangements. But if they want to see all the listings - make them pay.

Realty Times suggests holding the MLS database in reserve to be used by brokers for their customers, but allowing the MLS to charge for limited consumer access, making the local MLS portal the one place where consumers can view the most listings without obligation to a broker, if that's what they want.

What convoluted the issue to begin with is the industry's notion that the aggregated MLS listings should be used by brokers to generate leads, when that was never the intent of the MLS. Now that the cat's out of the bag, what can be done?

Restrictions on VOWs and eventually on IDX will eliminate their use as lead generators for brokers, so how can the MLS database serve brokers and be used to please the demands of consumers at the same time?

Consumers will still be able to access listings through portals and brokers personal Websites, but charge consumers for access to the precious aggregate. This will give a new business model to MLSs and their association partners who have spent fortunes creating VOW and IDX solutions for nothing but grief in return, and it will turn an expensive free service into a revenue generator for broker members. And consumers won't be able to say the industry denied them access.

Some Realty Times readers have responded:

If a VOW site wanted to use the aggregated listings, then I certainly agree that there should be a charge to the companies that use VOWS to have this information. I just do not feel that consumers should be charged for this information. The MLS data should be a reason why a consumer would choose to work with a real estate professional.

I personally do not feel that VOWS assist real estate agents and brokers in generating and acquiring new business. It is only those companies that field Internet inquiries based on the need for agent selection that are referring quality business to real estate agents. Those companies whose strategy is to use listings to solicit referral fees from agents are not only performing an disservice to real estate brokers and agents, but also to consumers.

Sincerely,

Rebecca D. Levinson
Director of Business Development/Member Services
OnLine Relocation Inc.

'Priceless database'??? The industry would not have the money to build this database if 'consumers' were not paying 6% commissions on the sale/purchase of home. Let's at least remember who's paying the bills here!

Amazon.com offers a 'priceless database' of books for sale, but they are not charging consumers to search all of the available books for sale just because the authors, distributors and retailers have spent a lot of money printing, shipping, cataloguing and displaying the books??? I have said this for some time now... if the consumer ever gets wind of the kind of debates going on in this industry over 'their' homes, we are all in big trouble.

The discounters and referral/interlopers have only surfaced because the traditional brokerages have been in denial about the Internet and the consumers use of it. If the traditional, local brokerages decide to compete rather than just put their heads in the sand or resort to pointing fingers, they will find consumers will choose their VOW's to search for properties and as a result, buy or sell a home via one of their agents.

Glenn Davies
Mosthome.com

I am an NAR director, and a past president of SoCalMLS. I have been following the VOW debate with increasing agitation. You are by far the best writer on these subjects. It seems to me that NAR got off on the wrong foot by making the advertising/not advertising distinction. It is all advertising as far as I can see. Certainly from the consumers' point of view IDX and VOWs are both simply very similar ways to see what is on the market. Consumers don't care what we call it, and they don't want the uncertainty of trying to figure out what is missing from each compilation.

The primary evil brokers and agents are concerned about is the monkeyinthemiddle.com business model. Companies like Lending Tree, and FNIS simply take value out of transactions. I'm not sure consumers will ever want to pay for what they see as "public" information. After all information famously wants to be free. I do think we can craft an approach that avoids endless lawsuits, discourages the monkeys, and allows consumers free access to the most extensive data. We need to remember that the very purpose of the MLS is to allow brokers and agents who are primarily in the business of selling real estate to cooperate with one another. Everything else is peripheral. In my view, we don't need separate rules for MLS and IDX. We do need rules that reaffirm and clarify the central purpose of the MLS. Referrals from companies that have no interest in representing buyers and sellers should be prohibited. The difficulty with such rules, of course, is that they step on the toes of relocation companies, and the large brokerages affiliated with them. Considering the accelerating grief that relocation referrals have caused agents over the past decade or so, the time may be right for a compromise that preserves the legitimate functions of relocation companies (whatever they are) and the brokerages they enrich, while tightly limiting most other types of referral fees.

Best regards,

David Silver-Westrick
Orange County Association of Realtors

You suggest a reasonable solution. The challenges to making it work are, first, an industry that for decades has decided the best way to serve the public is give away the most important part of our industry, our knowledge, in a desperate hope they will then choose to use our services. This has lead to the second challenge, which is to satisfy the wants of a public we have trained to not respect us.

We offer free CMA's, we chauffeur buyers who really are just lookers, we accept overpriced listings, and spend our own money for marketing with prayers for a sale. Then to top it off we decide anyone who sends us a lead is worthy of 30-35% of our gross, which removes any hope for a return on our marketing costs, let alone a profit. On the brokerage side, most agents get a far more generous split than they really earn, in spite of their protestations to the contrary. Our time and money seems to have little value to us, so why should it have value to anyone else.

We as an industry have created this monster, and I am not convinced it is through attacking, no matter what happens with VOW's. I am not meaning to sound negative, but truly we have not been watching our back very well because we focused more on our own agenda than what was happening around us. Now, the battle is fierce. I wish us well.

Steve Fairbanks
Principal Broker
CENTURY 21 Coventry

We work in an industry that has tried harder than any other work longer hours to generate less revenue while embracing higher costs. Time for a new plan. Keep up the great work!

Art Momper, CRP,CRS,ABR
RE/MAX Professionals, Inc.