Four of the largest Texas MLSs and their board of Realtors' officers recently met in San Antonio, Texas to discuss ways to cooperate with vendors who would like to see easier ways to access large amounts of MLS data - namely through one repository. Meanwhile the lone star MLSs are also in discussions to be part of The Real Estate Business Information Group (REBIG,) a national cooperative of MLSs which will license data to companies seeking a one-stop-shop for national data.

Bob Hale, president of the Houston Association of Realtors, says, "We had a meeting - which we do often - of the four large associations in Texas, Houston, Dallas, San Antonio and Austin to see who is doing what with data licensing. We talk about safeguards of the data, who may be parties that license the data on the assumption that if someone is trying to license it is good to aggregate it within the state because you need a statewide bucket of data."

A possible Texas-based group need not be in competition with REBIG, points out Hale, which intends to aggregate data at the national level.

Says Hale, "We don't know what we are going to do yet. We are looking at everything. We might form an informal group to just work together, but if Houston wanted to license data and Austin didn't, they wouldn't have to."

While anticipating how a cooperative could help participating MLSs and their brokers make money from data licensing, HAR is mulling over a couple of hurdles.

Sam Scott, director of information for HAR, says, "We are wondering how to cooperate with REBIG and participate in those sorts of opportunities. We have licensed data for over three years, and we have generated over several hundred thousand in revenue." Scott is quick to point out that data licensing includes a rebate program to brokers in which nearly half the revenues were distributed back to member brokers.

The fact that MLSs are interested in forming data licensing cooperatives at both the regional and national levels illustrates a seismic shift in the way the industry views data licensing.

"The thing that really surprised me (at the San Antonio meeting) was the change in attitude within the industry as a whole," recalls Scott. "The groups and organizations that two years ago really weren't prepared to consider data licensing are now seeking avenues to do just that. Underlying it is a change in perception. Two years ago, people looked at it as losing control of the data when you sell it. Now you gain control over the data. My belief is the best way to manage and control data is to engage in a prolicensing program, find opportunities and shape them to benefit member brokers."

The first hurdle is pricing - getting the most money for the data.

Texas is a nondisclosure state, which means that certain information such as the price of homes sold, are not part of the public record. That means that companies which have certain tools to sell such as automated home valuations or transaction management platforms requiring AVMs or appraisals have to get their information from esoteric sources. Some vendors have made a business model out of accessing public records to sell to MLSs so that comparables, AVMs, and BPOs can be more accurately derived by brokers and agents. The MLS buys the tax roll data and then that data becomes part of the MLS comparables data, all of which makes MLS data valuable.

But whether the MLS buys or sells tax roll data, it is the current listing data combined with the most recent information in solds that makes it the go-to source. The immediacy of this data is what makes it compelling, as some government record keepers simply don't have the infrastructure to update data in as timely a fashion as an MLS can. This raises questions of supply and demand - what is this immediate for sale/sold data worth? And how can it be monetized to regional and national vendors?

The second hurdle is bureaucracy. Even if MLSs agreed to cooperate, the permission chain has yet to be shortened. Individual boards of Realtors require approval of each vendor before they allow MLS data to be licensed. So a cooperative of 20 MLSs, for example, would still require 20 approvals before the cooperative can act in the collective MLSs' behalf.

One MLS vendor manager, Jay Huffman of MLSNI, is also a coordinator for REBIG. He hopes to answer some questions about cooperatives by MLSs.

"The industry product partners have their own estimates of what data sets are worth," says Huffman. "National partners look at the ability of partners to provide data from a national scope. Any MLSs data set becomes more valuable when aggregated with a more national data set. Texas MLSs could form a regional operation that is valuable for people who are focused on regional product lines. Our focus is national product partnerships."

As far as MLS autonomy goes, Huffman says, "We aren't assuming the MLSs are going to cede decision-making or responsibility to anyone else. We aren't trying to take over - we are tying to help them move forward. REBIG is an MLS organization to help MLS's. While we will make it easy for vendors to develop and deliver product, we are here to help MLSs."

In addition, Huffman says the data will not be sold back to brokers, or to the public, nor will it be allowed to be sold by the vendors who use it. He also insists that revenues from REBIG will be shared by brokers.

While Huffman and others interview potential customers who wish to use the data for statistical applications, Texas MLSs say they would like to participate, but there are no deals on the table yet to agree to. Huffman says he will have vendor proposals analyzed by early October.

"We're still getting structural questions at this point," says Huffman. "We've been having continuing meetings with other MLSs, and we have doubled the number of organizations to over 25 that want to help design REBIG. Getting it off the ground is a matter of assembling what we have been able to do so far. We are working on an operating agreement that is nearing completion that will be the formation of REBIG in the next several weeks. The responses to the RFPs have been very positive, and we're analyzing what we've received, so we're on schedule."

Published: August 15, 2002

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