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The Future of MLS

Written by Posted On Monday, 23 March 2020 13:08

The following is an excerpt from Swanepoel Trends Report 2020.

Trend 07: MLS in Jeopardy: Can the Industry Pull Together?” -- available at www.t3trends.com

Although companies are not necessarily building these platforms to compete with MLSs, they will soon exceed, or circumvent, the listing service MLSs offer. This leaves the relevance of many MLSs in question, as uncomfortable as that conclusion is. Given this trajectory, MLSs and brokers must act immediately.

T3 Sixty interviewed a handful of influential brokerage leaders to pinpoint some of the ways the brokerage industry feels the MLS should evolve. T3 Sixty interviewed an executive at a large national real estate franchisor, a leader of a large brokerage net¬work and leaders of three different regional brokerages.

Below is a summary of the impressions and suggestions provided during the interview process:

Broker Roles in Improving MLS -- Brokers say they prefer to partner with MLSs as they are the process experts and the best and most logical partners. But if they do not prove responsive, they will seek solutions elsewhere. They feel that some MLSs operate as if they no longer depend on brokerages and act independently.

Easy Access to Data -- Above all, brokerages expressed that they wanted frictionless ac¬cess to their markets’ real estate data without having to cut through red tape at too much extra expense.

Reduce Fragmentation  -- Related to the above, brokers want more consistent rules and access to data across MLSs in their footprint and do not care if it means differ¬ent MLS organizations or vendors. Establishing additional data feeds, ensuring compliance with local rules and differing data definitions across multiple MLSs require brokers expend constant energy, ex¬pense and maintenance resources to properly manage.

Improve Responsiveness  -- Brokers expressed the desire for better response to broker requests.

Share Profits or Compensate Brokers for participation -- The brokers T3 spoke with suggest that MLSs should incentivize them by making them full partners in the MLS business. They feel that MLSs should either share revenue with them or compensate them based on the number of listings they share in the MLS. Getting brokerages to “buy-in” to more involvement should include brokerages receiving more (or some) revenue from MLS profits, or a change in the corporate structure allowing brokerages to directly receive dividends as a percentage of participation.

Incorporate Listings and Data from Transactions Outside the MLS

To ensure their databases remain comprehensive and accurate sources of local real estate data, brokers would like MLSs to agree to incorporate data from transactions completed outside the MLS. This will help brokers prepare more accurate property comparisons, better market stats and a truer picture of the real estate market.

Incorporate brokers more directly in governance -- Brokers feel that they should be brought more intimately in the MLS de¬cision-making process. By doing so, brokers will have a better opportu¬nity to guide MLSs in the ways that will best suit them.

Do not compete with brokers -- As MLSs are agent dues-driven organizations, there is a base level of tension between brokers and MLSs, who both rely on agents for reve¬nue. Sometimes MLSs provide services to agents that member brokers feel should be left to individual brokers to provide — and compete with their cohorts on.

Establish more data display comingling rules -- Brokers feel hampered by MLS rules that require only certain data to be included with IDX-provided listings. With third-parties such as Zillow providing listings along with richer data, brokers feel they are put at a disadvantage, and feel that MLSs could greatly help them compete, or at least keep up with, online portals by coming up with a policy that allows them to co-mingle data from a variety of sources for public display.

Conclusion -- Many MLSs are just not providing the services brokers need or mov¬ing fast or smart enough to help them compete with rapidly moving newcomers. While brokers would prefer to partner with MLSs, they, or another entity, will build the MLS of the future if current MLSs do not. The needs and trajectory are clear. The only question is if MLSs will adapt or be replaced.

Loss of the MLS would require the development of an entirely new sharing, cooperation and compensation structure for the industry. This would be a much different reality, one that may not serve consumers as well as MLSs do today.

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Saul Klein

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