Major Changes In Real Estate

Behold, changes are taking place in real estate. We are seeing significant efforts like Project Upstream, RPR AMP, Broker Public Portal, Fair Display Guidelines, and RESO mandates that are shaping the future of our industry. It makes you wonder what is driving this explosive cocktail of industry wide initiatives.

At the heart of many of these developments are brokers. When they survey the world around them, they rue the existence of poor data management and profit taking by others.

Poor Data Management

I believe that it was MRIS CEO David Charron who coined the term "Overlapping Market Disorder." He was referring to situations where MLS areas overlap. It is a condition that causes brokers and agents to participate in more than one MLS and struggle to keep data clean and abide by different regulations. MLSs have long established unique data schema and rules to "differentiate" themselves from a neighboring MLS. MLS of choice caused this. And in many ways, association of choice amplified it. Today, nearly every MLS supplies brokerages with different IDX and VOW data feeds. For the broker and their vendor, maintaining these different types of feeds and rules is time consuming and painful.

The Real Estate Standards Organization seeks to make it better. They are doing an excellent job, and the Data Dictionary--the effort to normalize field names and attributes--will see the day of light by the end of this year and into 2016. It will be a slow transition, but brokers will finally be able to get a data feed that is normalized across multiple markets. At least we are optimistic. The lever to cause the data dictionary to be adopted is the NAR MLS Policy Committee. Technically, MLSs not adopting the standard would be subject to penalties from NAR for non-compliance. We will see how seriously NAR and MLSs take this requirement.

For its part, the MLS Policy Committee has done an excellent job of evolving the MLS model rules. For example, last year they standardized rules relating to the access and display of sold property data in the IDX model rules.

Profit Taking

Ask different brokers around the nation what they hate the most and they will tell you stories about how others are profiting from their data unfairly. Some will tell you that third party listing websites have been making extraordinary profits off the backs of agents and brokers. The hundreds of millions in revenue and the billions in valuation could not be created without broker participation by licensing their data. They hate it.

So, too, do they hate that MLS fees are subsidizing the associations of REALTORS®. Many associations depend on dividends from MLS fees to stay afloat – a condition that was never intended when brokers authorized the creation of MLSs. Moreover, MLSs have become something like a competitor to brokers by offering products and services to agents that level the playing field among broker competitors. Many brokers do not want their agents to use MLS tools in place of broker provided technologies.

Data licensing fees back to the broker or their vendor for IDX and VOW data are escalating at an impossible pace. Many MLSs set a price with little regard for anything other than profit. There is no rationale for the data feed pricing. In some markets, MLSs charge a base data license fee plus $10 to $50 per agent per month that are using the solution. The data license fees are greater than the application fees in these markets. Brokers are tired of being taxed to death with these impossible fees.

The Future

It is difficult to predict what will happen next. I do not see significant growth in third party portals. If anything, I would expect brokers to retreat from these services unless they change their strategy significantly. Not sure if agents and consumers will follow the broker. There's the rub.

I do hope that NAR takes adoption of RESO standards seriously. Moreover, I hope that brokers take a pro-active approach to demand standards. If MLSs fail to step up, I would not be surprised if brokers start pushing for RPR to become a national MLS. This will take years to play out, and will be mostly political. Many brokers fear that RPR's AMP program may serve to dissolve more regional MLSs than cause consolidation.

Brokers will find a way to get into first position on licensing their data. This data licensing will not only be structured through agreements to third party portals, but also to MLSs. Firms are going to stop "giving away their data" with little or no say in what happens to it.

I would expect the emergence of a "thin MLS." This system would be void of tools like CMA, client servicing portals, and other tools that are duplicated by brokers. I would guess that this will be a graduated pricing of full vs. limited MLS. Brokers who have all of these tools for their agents will ask the MLS to turn off access.

I am also confounded by the recognition that brokers have no access to communications between the agent and the client in the MLS. The broker is responsible for ALL of those communications but cannot access them. In many markets, they cannot even access the agent's usage of forms until the transaction is closed. I cannot understand how the industry failed to think this through. I do not even know of a single MLS market that provides the customer record to the broker in a data feed. For all extents and purposes, the MLS is blocking broker access to its own customer records.

In closing, I will quote John Mosey: "The only way to predict the future is to create it yourself."

To view the original article, visit the WAV Group blog.