A Chicago NRT COO has pulled 10 offices out of the largest MLS in the country, MLSNI. Is this just a local dispute or are there national implications?

According to the Chicago Tribune, 10 offices associated with Cendant company-owned NRT offices known as Coldwell Banker Residential Brokerage, were pulled by president and COO Doug Ayers from the local MLS, MLSNI, and the listings were transferred to a smaller broker-owned MLS called MAP.

Why were those ten offices in particular pulled, when there are 56 offices in total in the Chicago area under Ayers' control, and why the move to a smaller MLS? These questions weren't covered in the Tribune article, published March 19th, 2004, although the answers may be revealed in a follow-up.

The article's author, Mary Umberger, wondered whether the move could mean less exposure for clients' listings due to fewer members in MAP. As a news reporter, she's right to home-in on the effects on consumers, but the issue is too complex to distill it down to a consumer perspective.

It appears to be an industry issue, because the MLS isn't an advertising medium, although many consumers would like it to be.

It's a voluntary cooperative among brokers to share listing information among other brokers and agents, but MLS inclusion doesn't preclude brokers from advertising the listings in a number of places and marketing the listings in other ways besides advertising including open houses or tours.

MLSNI was created over 20 years ago as a regional MLS serving 10 real estate boards, which allowed more real estate agents "to improve the chances of selling properties quickly," writes Umburger. MLSNI serves, says Umberger, 6,200 Chicago-area real estate offices and 37,000 members, while MAP services 270 offices with 10,500 members.

But selling properties isn't the only reason to join. Members also join a regional MLS so they don't have to join as many association-run MLSs, which can be costly, particularly for agents. In most large MLSs, most members seldom sell outside their area of expertise. And that's the case with North Shore, says Ayers.

"The immediate obvious reason we went with MAP is the penetration of MAP in that area," explains Ayers. "It has all the North Shore brokers in the system so the exposure wouldn't be compromised. In general, we don't have a lot of people who look for property in the North Shore from other areas."

Ayers also says that technology was a factor. The MLSNI system is a large legacy system, in which members have to get in and out of programs. MAP's system is browser-based and more nimble.

But the real issue could also be one of control, as Umberger wisely ferrets out, over the listing data. Who gets it and what do they do with it?

She notes that MLSNI became an investor several years ago in a company called Real Estate Business Information Group (REBIG,) which repackages selected MLS data to non-realty groups such as market analysts and credit-rating bureaus. Coldwell Banker has not wanted to participate in this idea from the beginning, because it puts information protected by a not-for-profit organization, the MLS, into the hands of for-profit entities, whomever they are.

REBIG founder Jay Huffman told Realty Times two years ago that the information would be carefully controlled, but the company was also looking at statistical models and automated valuation models which arguably could reduce the value of person-to-person information and interpretation provided to consumers by a Realtor. Realtors don't want to disintermediate themselves, and there are also other considerations.

Huffman is also CEO of MLSNI, and has put his wife, Brenda Krueger, a business development specialist, in charge of business development, and some may feel that these relationships pose a conflict of interest. If MLSNI wants to repackage listing data, is that good or bad for the listing brokers? And with the Huffmans in charge of both, is the concept more of a benefit for the Huffmans than MLS members?

Some brokers and franchise leaders philosophically don't like the idea of the aggregated database of MLS listings being used for anyone's profit other than the brokers who supply the listings - particularly the largest brokers who would have the most to lose should data be put into the wrong hands.

Listing data is, after all, an ad for the listing company. And it's as simple as "to the victor goes the spoils." Listing brokers incur expense, time and liability to acquire listings, and listings are a commodity that can either bring a consumer to that listing or to the brokerage to buy other listings. In addition, consumers make judgments about the listings they see and may choose a broker based on his or her listings.

Recent scandals including the misappropriation of listings from The Real Estate Book by a Primedia subsidiary/affiliate (depending on whom one chooses to believe) and the discovery by TREND MLS technicians that agent members as well as other third-party aggregators have misappropriated MLS copyrighted data have only underscored to many nervous brokers that they should retain tight control over their listings. These breaches are just the tip of the iceberg in which industry leaders believe that data misappropriation is rampant.

Says Ayers, "Do we have some issues with MLSNI's direction? There has always been an issue in respect to where the data goes and MAP has a different philosophy. They own it, and that's important to customers' data we collect, and to my knowledge, no customer has ever allowed their data to be repurposed to be given to moving companies and AVMs (automated valuation models.) A lot of brokers are concerned that there are entitites taking this data and repurposing for other uses without brokers' permission, and we are responsible for it. MLSNI has created REBIG and its sole purpose is to relicense and redistribute data."

The most overlooked fact of this whole story is one that is easily overlooked by any news reporter who isn't intimately familiar with how the real estate industry works - that brokers are independent contractors who hire independent agents to work for them. They incur a lot of time, money and liability to acquire a listing and the right to advertise it as they see fit.

There is no law that says brokers have to share their listings with anyone - much less in an association-sponsored MLS cooperative. Brokers choose to share their listings, unless for some reason, they don't feel it is in their best interest to do so.

That makes Ayers action a strong message to MLSNI and association-run MLSs in general.

"It's become a strong message judging from the calls I've received," says Ayers. "It certainly is a message locally that there are alternatives for MLSs. MAP has been here for 40 years, and they have coexisted with MLSNI that long, but in terms of ease of use, and the rules for data, MAP fits better with what our goals are."

MAP, says Ayers, a shareholder, is a not-for-profit MLS open to all brokers who can participate as shareholders or subscribers.

Published: March 22, 2004

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