Local MLSs are doomed. The case for data consolidation in real estate



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The thing holding many local MLSs in place is a desire for power and control rather than seeking the best for real estate agents and brokers, writes Mainframe Real Estate founder Sean Frank.

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Real estate has always been a local industry. In its early days, information was exchanged almost exclusively by word of mouth. As the internet evolved, it became evident to the world that controlling data is akin to holding modern gold. This is why brokers, associations and MLSs fiercely guard their data.

This battle for control, driven by ego and financial interests, is detrimental to the industry. The history of real estate information sharing points to the pressing need for consolidation among local Realtor associations and MLSs.

A history of information power

In the late 1800s, American real estate professionals began gathering in person to share information about their listings and sales. This practice, which wasn’t yet formalized as the MLS, involved verbal communication and personal notes. These groups relied heavily on each other’s knowledge. The founding of the National Association of Realtors (NAR) in 1908 provided a framework for these groups, although not yet for the MLS.

When information was still in written, analog form, standardizing it across distances was impossible. Even as the MLS evolved into book form in the 1900s, the cost and constant updates made it impractical for agents to have personal copies. It was becoming more clear during this time that information sharing among real estate professionals was a source of power. However, with the advent of the internet in the 2000s, the attempt to maintain control over information on a local level turned into an archaic power grab that continues to hinder industry progress.

The role of local associations

Before NAR, local Realtor associations were informal groups sharing information. In the 1900s under the umbrella of NAR, they played a crucial role by providing a place to gather, share information, access MLS books and receive training. Without the internet, agents needed to join in person, and associations had to be within a reasonable driving distance. Today, the role of local associations is diminishing or becoming obsolete, although they would argue against any statement that poses a threat to their existence. 

State associations, however, provide essential services, such as standardized forms, policy advocacy and education, which local associations can no longer match. Many Realtors argue that local associations are driven by egos, with leaders vying for power in what can resemble a school popularity contest. Members pay millions for local buildings and staff, expenses that could be streamlined and unified under a single state association.

The fragmentation of MLS systems

While Realtors might tolerate the existence of inconsequential local associations, many are frustrated by fragmented MLS systems. Some agents must join multiple MLSs, leading to multiple memberships, fees, platforms and redundant activities to maintain listings and searches in multiple systems. It’s no wonder that consumers often turn to websites like Zillow, which provide unified data more effectively than the fragmented MLSs that agents are using.

In 2002, NAR initiated a workgroup that evolved into the Real Estate Standards Organization (RESO). RESO developed the Real Estate Transaction Standard (RETS) and later introduced the Data Dictionary and the RESO Web API to standardize data. Despite these efforts, full unification remains elusive. 

There is currently a nauseating total of 535 MLS systems in the country.  This includes 43 in Texas, 39 in California, 31 in Florida and 27 in Georgia, for example. Of these 535 systems, 59 percent are certified for the current RESO standards, 2 percent are certified under older standards, 31 percent have completed technical testing but are not certified and 8 percent are uncertified. Each of these MLS systems allows different methods for approved data access by technology vendors and brokers.

Although many MLS systems have adopted modern APIs, many have not. Bridge Interactive created a platform to convert MLS data into a simple API for others to connect from, and this company was purchased by Zillow in 2016. Trestle, owned by CoreLogic, is another popular option that converts MLS data into a usable API.

Many MLS systems do not cooperate with these leading companies, making data access for technology vendors and brokers increasingly difficult. Even more concerning is that MLS is dependent on other companies to distribute their data.

Additionally, these inconsistent APIs require technology vendors to unify multiple systems in ways that are incredibly cumbersome, given that these 535 MLS systems all independently make changes at different times.

The case for consolidation 

  1. Unified messaging and actions: A huge loss for the industry, especially given the recent NAR settlement, is that local Realtor Associations and MLSs do not have unified messages, actions or training on the settlement. They cannot share any information beyond the facts of the settlement, so their news is hardly news and they are repeating the same information as other associations and MLSs across the country. Some MLSs have taken strong stances, such as ignoring the requirements of the settlement, creating seller concessions fields to overcome the lack of buyer commissions fields and more. Many in the industry would say that the right hand doesn’t know what the left hand is doing, or that they aren’t cooperating at best, and that the fragmentation of messaging and actions is causing more confusion and solutions. 
  2. Efficiency and reduced costs: Consolidating local Realtor Associations and MLS systems into single-state entities would streamline administrative processes, reduce redundant efforts and lead to significant cost savings. These savings would benefit agents and consumers through lower fees and more efficient service delivery. Brokers and agents would not only save money because they would not need to maintain multiple memberships, but the cost of operating a single entity will be extremely less expensive and that reduced cost could be passed back to the members as savings. Across the nation, hundreds or possibly thousands of jobs could be lost through this consolidation, which is part of the reason that the fight against it will be strong. 
  3. Data consistency and standardization: A unified state-level MLS would ensure that all listings follow the same rules and standards, unify field names and values, and reduce confusion and discrepancies. Importantly for data vendors, one MLS system would be updated per state, rather than dealing with many MLSs making updates to their data at different times. This standardization would also make it easier to train real estate professionals and provide consistent support across the state through one MLS system. 
  4. Improved education: Rather than each local association and MLS creating their own training and education, a more comprehensive and consistent approach could be made through consolidation. Training that now is held by local professionals in small groups could be replaced by much larger on-tour training in large rented venues instructed by more notable trainers and educators. This is in addition to enormous virtual education seminars for agents across the state, which would likely be the primary form of education. The content of the education could also be expanded upon greatly, with attorneys and experts approving every part of the curriculum.
  5. Increased influence and bargaining power: A larger, unified organization would have greater influence when negotiating with technology providers and other vendors that provide resources to associations and their members. This could result in better pricing and access to advanced technological solutions and resources, benefiting all members.

Accountability?

While local real estate organizations were once essential, modern technology has rendered many of their original functions obsolete. The only thing holding these organizations in place is the sheer determination of those who want to maintain power.

They want to maintain their influence, their data, their control and what they probably consider to be their money. The truth is that it all belongs to the industry, an industry whose future lies in unity. It’s time for the real estate industry to consolidate and become a powerful, unified leader.

Sean Frank is the founder and CEO of Mainframe Real Estate in Florida. Connect with him on Instagram and LinkedIn.





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