MLS: Yes to Consolidation

A move toward statewide MLS systems would foster much-needed standardization for data and service.

March 1, 2011

There are 883 multiple listing services in the United States—in some cases, dozens of them in a single state—and they’re all doing essentially the same thing. How did it get like this? Well, it just kind of happened that way.

MLSs have grown dramatically from humble note cards being traded at the local VFW, but this growth has come without any coherent plan, vision, or industry standard to shape that growth.

If we were starting from scratch, no one would design an MLS to serve only segmented portions of a state. Imagine for a moment if our telephones worked on the same logic. Most calls are local, so there’s no need to worry about long distance calls, right? Want to call the next town over? Forget it. You’ll need to drive over there to get some help. It sounds crazy, yet this is exactly what brokers in overlapping MLS markets have to tell their clients unless they belong to multiple MLSs.

Some brokers maintain blatant protectionist claims, pretending that consolidation means non-local brokers will suddenly flood markets they have no business being in. (Translation: We don’t want them here.) If you believe this, I’ve got news for you: The only "barrier" to entry into your market is an MLS fee. Any broker wanting to "cash in" on your listings is already there and a member of your MLS.

The reality is that brokers in less affluent parts of the state have no more interest in traveling to unfamiliar high-end markets than high-end brokers have in traveling to lower-priced areas. On the contrary, practitioners in Connecticut and other states with statewide MLSs have experienced an increase in the number and quality of referrals. Every state has desirable real estate—your market isn’t as unique as you think.

Among other things, a statewide MLS can provide its members with more accurate and timely listing data, dramatically improve member benefits at no additional charge, offer standardized data feeds and MLS rules and regulations, provide greater responsiveness to member requests, and charge one MLS fee for statewide data and services. For example, the Connecticut MLS serves more than 11,000 members with just 10 employees and 12 REALTOR® Association Service Centers. By virtue of our greater size and efficiency, we can purchase products and services unattainable by smaller MLSs. Initiatives in larger states would presumably benefit those states to an even greater extent than in Connecticut.

In addition to the significant member benefits listed above, there are very real, substantive business reasons for consolidation. First among them is the ability to protect MLS data. As an industry we are under increasing pressure to give away or sell our data. The problem is that very few of us have large enough geographic coverage to monetize it on ­favorable terms. Currently, the only choice many of us have is a simple "yes" or "no" to offers. When an MLS represents an entire state’s worth of data, it can realistically increase its power to negotiate favorable terms.

Ultimately, by failing to adapt to the needs of our changing market, we risk rendering ourselves superfluous. We’ve all heard exaggerated predictions that the death of the MLS is inevitable; they’re mostly wrong but a little bit right. The disconnect lies in their assumption that all MLSs are alike. In fact, the MLS industry plays host to a variety of models—some successful, many not.

In the corporate world, a company’s lack of adaptation may spell bankruptcy or a hostile takeover. But in the MLS universe, captive members, protectionist boundaries, myopic vision, and revolving door (or recycled) leadership allow many weaker players to survive. Fortunately, well-managed MLS corporations are no more in danger of being rendered obsolete by technology today than they were when they were launched. But we must bring standardization, for both data and service, to the industry. Consolidation into a network of statewide MLSs is the most effective, efficient, and proven means to that end.

Cameron Paine is the CEO of the Connecticut Multiple Listing Service Inc.