MLS = Monopoly Listing Service?



Recently I’ve chatted with representatives from MRED in Chicago as well as those trying to solve the inevitable problem facing technology providers: a single source MLS. Unlike singularity in the technology world, which exists when machines are at par with humans, singularity with the real estate space may actually be coming in the relatively near future.

Through conversations with CoreLogic’s Trestle team, the (now defunct) RPR AMP Project, ListHub, and WolfNet, there’s no doubt that there’s a large push being made to consolidate data across MLSs, in compliance with RESO standards, to benefit participating MLS’s, participating members, technology providers, and ultimately home buyers and sellers.

Historically, the MLS provided an enormous barrier to entry for technology providers and new entrants as brokers rightfully guarded their listings in a means to retain ownership to their most important assets. The intent of the MLS is to provide a platform to enable participants to share listing data in order to collaborate and benefit clients by featuring their home amongst the network of agents. This issue is the lack of a real, user-defined, performance standard, each MLS has its own data structure, rules, performance incentives, operating models, and access levels, which has backfired as consumers and industries in general have moved in the opposite direction: decentralized, consumer-facing, open-access technology-powered tools. The need in real estate to have technology that works online and facilitates better offline experiences is critical in a relationship driven business, yet many
MLS front-ends (connectMLS in MRED, for example) can’t match what is offered by the Zillow’s of the world, creating an ugly cousin relationship between client and broker technology.

Is the power shifting BACK to the MLS?

Consumers hail Zillow as a tools crafted by the gods given its mobile friendly and generally solid user interface. Agents have a ‘love-hate’ relationship with the tool given it’s faulty data, premier agent competition, and expensive advertising. The reality is that clients love the portals, and agents have to allow their clients to operate in whatever way is most comfortable.

Market Watch wrote about legislation enacted in 2008 that outlawed many of the monopolizing tactics the MLS and NAR find valuable, especially those hindering new contributors in the space, opening the doors for portals to obtain market share. As written in the article, the fact that Redfin owns less than 1% market share points to the fact that the threat of decentralizing listing data has not interfered with traditional brokers as feared.

The law is set to expire in November 2018, and should be monitored closely by all participants. What will happen if the law lapses and power shifts back to MLSs and NAR? Will Zillow suffer? Will technology providers be at a loss
for listings? Will consumers be upset?

The Data Aggregators

I chatted with an RPR’s AMP project leader not too long ago. One of their goals was to unify MLS data for technology providers. The initiative was focused on smaller markets first.

WolfNet and Trestle are similar companies that aggregate MLS data into a single feed. The value-add is obvious: scrubbing, normalizing, and directing different breeds of data into a single source. Trestle is a newer player in the
game but has the ability to incorporate CoreLogic’s expansive real estate data into a feed as well. Their footprint is smaller for now compare to WolfNet who cover approximately 99% of existing US listings.

CoreLogic’s Trestle aggregates and normalizes listing data

CoreLogic’s Trestle aggregates and normalizes listing data

ListHub is a syndicated data provider (think Zillow or that works with technology providers to aggregate MLS listings into a single feed. All of these companies charge fees in the neighborhood of $1–200/month per MLS but the tricky part is the requirement for MLS approval for consumer facing apps.

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The Challenge for Technology Providers

What does this mean? If you’re building the next great home search engine that is consumer facing, in order to get listings into your app, you have to get approval from the listing aggregator and potentially each broker whose listings you want to feature! This is an enormous burden for startups that want to help consumers. While on the surface this can seem unfair, it is the brokers who own the listing and the data and are the ultimate arbiter of where that data is shown.

To be sure, the pending legal ramifications could be meaningful for technology providers if these data aggregation services are affected. Handing more power back to the MLS could disrupt the trend in “open-sourcing” this data and create a much more monopolized environment. Not unlike trade tariffs and embargoes, the domestic consumer (the home buyer) pays the price. Add to this the crises forming between MLSs due to the differences in management and data schema, it’s not surprising a memo was recently sent to MLSs about getting RESO compliant.

Three Keys to How MLSs can retain ownership of the vault and provide value to consumers

1. Improve the ability for technology providers who work in closed loops between agent and client to have full access to MLS data

Currently, using MRED as an example in Chicago, technology providers who build products for agents and their clients can acquire full listing data within an MLS. If the app decides to become a publicly facing tool, that changes. For those who stay consistent with the closed loop, making it easier to gain MLS approval and access to this feed would be extremely beneficial. Lots of time is wasted in calls with each MLS to acquire approval, sign agreements, review 
data dictionaries, etc.

2. Move from opt-in to opt-out

For consumer-facing sites, the burden of getting broker approval is serious. Listhub claimed approximately 50% of brokers in the MRED MLS are on ‘auto opt-in’ meaning technology providers get started with half the listings, but to build a valuable app, 100% is necessary. Moving from an opt-in model to an opt-out (where all brokers are automatically approving vendors) would be beneficial for tech developers, consumers who want to use that tech, and agents who want to populate the app with their listings. The MLSs should retain ownership to verify the business model and specifications of the app for legitimacy.

3. Encourage MLS-wide notifications and partnerships based on engagement and adoption

Homesnap is an excellent example of a partner product. Homesnap has partnered with the Broker Public Portal and MLSs around the country as a free offering through the MLS. MLS’s should encourage these partnerships and take ownership of vetting these tools to help promising startups grow and point agents to the best possible tools. However, the MLS should also monitor closely the adoption of these tools within their MLS’s (BPP claims Homesnap has a 40% adoption rate within MLS agents) and their clients.

More impactful, but challenging requests involve cross-MLS communication and collaboration (which is coming via the MLS Grid). With RESO standards this is becoming a more doable function, but has a long way to go. Technology providers can take solace in the fact that as more and more MLS’s converge to RESO standards, API integration across MLS’s and other technologies should become easier, meaning consumers can bank on more helpful and powerful technology.