Competitive Pressures and Your MLS
The business environment looks radically different than it did just a few years ago. How does that change the way your MLS operates?
January 22, 2021
It’s 2021. If you operate an MLS organization, or if you’re a REALTOR® who’s involved in oversight of your MLS, there’s never been a more complex time to make decisions about the MLS’s future.
In this five-part series on MLS planning for 2021, we look at questions that all MLSs should be discussing as the year unfolds. The theme is affirmative transparency: earning trust by shining sunlight on the MLS’s pro-competitive and pro-consumer practices.
Part 2 of 5: Participant Access to Additional MLS Services
Part 1 of the series covered a variety of issues related to participant access—from policies around Coming Soon listings to rules governing the use of MLS data by participants.
But access issues don’t stop there--especially with increasing pressure coming to bear from both the federal government and new business models. This segment looks at topics ranging from access to lockboxes to access to data—and even touch on how MLSs should be thinking about their physical office space.
Participant Access to Lockbox Services
In most markets, lockboxes are critical for efficient showing access. They remove much of the human friction and subjectivity of showing availability.
Recently, lockboxes have become a prominent part of the conversation as a result of NAR’s agreement with the U.S. Department of Justice to open up access. Once the rule is implemented, REALTOR® MLSs will allow non-participant and non-subscriber licensees to access lockboxes with the seller’s consent.
There’s a lot to unravel here.
First, NAR is still finalizing the details of the agreement, so MLSs shouldn’t act yet. Second, the industry’s most popular lockbox devices already give MLSs the ability to provide this service, so there should be no technical problem with implementing the rule. With each individual seller needing to opt in to a non-MLS real estate licensee accessing their keybox, this may be a very minor issue.
Yet it also invites questions of whether some agents, particularly those who only show or sell a few homes a year, will unsubscribe from MLS or lockbox services and instead seek one-time use codes for showings whenever they do have a client. Is that fair to the cooperative that’s footing the bill? MLSs will be required to make decisions that support their business models while still complying with the yet-to-be-finalized DOJ agreement. As always, and most importantly, MLSs will have to adjust their services in order to remain relevant for their users.
Participant Access to Equity for New Business Models: Zillow
Topic A1A in MLS circles may spawn thousands of conversations, but it’s really quite simple. MLSs, you have a new participant, and its name is Zillow.
Zillow is officially becoming a broker for its iBuyer business. That means the company will be joining REALTOR® associations as members and MLSs as participants. As a broker, Zillow will get the more accurate and timely data sets that other brokers enjoy.
What should MLSs’ reaction be?
“Welcome to the REALTOR® family. Welcome to MLS participation. Here’s how you get your data and services.”
That’s all. They and any other brokerage that qualifies as an MLS participant should have the same rights, responsibilities, obligations, and expectations of every other MLS participant and subscriber. Because, after all, that’s the essence of a true cooperative, isn’t it?
Education and Training for MLS Volunteers and Staff
Speaking of volunteer leaders, it’s a well-known challenge for MLSs: how to give new contributors a common body of knowledge about MLS mechanics, policies, and industry relationships. New entrants to the business, particularly those with a tech background, may overestimate their understanding of the complicated MLS environment.
Wouldn’t it be nice to have a consistent onboarding and education process for new volunteers and staff? MLSs should consider CMLS’s CMLXv course for all new volunteers and CMLX1 for staff involved in MLS operations. These certifications give volunteers and staff a foundation in the nuances of MLS organizations that can help guide their decision-making.
MLSs should also look into RESO’s new Working With Real Estate Data course as a way to educate volunteers and staff about technology, data policies, and industry organizations that govern data access and distribution. The business concepts module explains in a non-technical manner how the industry’s standards and technology foundation work.
As dedicated and experienced as volunteer leadership is, they often don’t know what they don’t know about MLS. Incorporating RESO and CMLS programs into the onboarding process will help MLSs bring a more consistent set of knowledge across members of their boards and staffs.
Participant Access to Offers of Compensation
“Cooperation and compensation” have long been touted as the C&C pillars of MLS. But what if cooperation, consistency, and compliance were all that were required to create the end goal: an efficient and transparent marketplace for participants and consumers?
If a mandate to offer compensation were not present in the MLS, how would the marketplace react? Consumers still, and increasingly, ask for professionals to guide their transactions. Market forces have already created a vast range of compensation options in our MLSs today. This issue may not be the bogeyman it's made out to be.
Participants’ Expansion of Ancillary Businesses
Traditional brokerages’ business models are changing, too. We hear it so frequently now that it’s almost a non-story when a brokerage organization adds a mortgage or title arm. Ancillary services continue to become more commonplace for brokerages as their profit margins from commissions shrink.
What is the MLS’s role in helping to support its participants in their extracurricular activities? Providing quality data with efficient access is at the top of the list, but are there other new data sets or capabilities that might be integrated into the MLS platform?
There’s always the danger of mission creep when MLSs step outside of their core role as the broker cooperative. But the MLS could provide the conduit for efficient data relationships between the brokerage business and its mortgage and title partners. Establishing trust in partnerships with other industry verticals might become another block in the MLS’s foundation.
Participant Access to Physical MLS Services
MLSs have been thinking for years about how much physical space their organizations need, but the past year has compelled MLS executives to wonder aloud.
Are classroom and event spaces needed? Sure, MLS subscribers and participants enjoy coming into classes and social events: They’re real estate agents. But is that your MLS’s core competency? It may be if the MLS is the premier delivery vehicle of education in your market. A lot of brokers cringe at that idea, though many small brokers love it.
Does the MLS need a physical store with flyer boxes, shoe coverings, and cute door-handle hangers? Maybe that’s what gets you the physical engagement that creates customer loyalty. Maybe it just feels good while Amazon would be better at it.
What about office space? If Zillow, Google, and Facebook employees can work from home, could MLS employees, too? The answer may be that productivity truly increases in the office. But the question should be asked.
The services of an MLS, like those of almost every organization in the world, seem to be improving more and more with software and remote human customer service. There will be MLSs that go 100% virtual in 2021, or at least start the transition. MRED in Chicago, one of the largest and most dynamic MLSs in the country, has already begun investigating whether a distributed, remote MLS management structure can support and improve MLS services.
Participant Access to MLS Advertising
Doesn’t it feel like a long time ago when the MLS’s role in public-facing websites was a primary issue of the day? Today, MLSs have been given latitude to do significant marketing on behalf of their customers if their participants are in favor. Some MLSs have built very powerful consumer-facing websites.
Things have changed in the recent years and even months. Homesnap partnered with the Broker Public Portal, forged agreements with more than 200 MLSs, and was subsequently acquired by real estate data giant CoStar. Zillow became a broker and joined the IDX space. Major brokerages are touting their own websites with exclusive inventory as the first stop for consumers.
IDX rules, which allow participants to segment the MLS listing data set based on objective criteria and only display certain kinds of listings, by property type for example, on their websites are now being used in ways not previously imagined. There are real business cases where this capability is important for participants who specialize in a segment of the business such as land or waterfront.
Does a “yes, and” policy of requiring a segmented participant display to also provide a link or access to the full MLS data set improve transparency? This seems a simple solution to providing flexibility for specialization and enhancing cooperation.
What is the MLS’s role in this vastly changed space? While listing properties on advertising portals has been “free” for as long as we can remember, what if it isn’t in the future?
This could be a very different conversation with participant brokers and MLS boards of directors than in the past. Is the MLS listing portal a hedge against pay-to-play marketplace monopolies? Are brokers and agents more accepting of MLS public-facing websites in this new environment than they were five to ten years ago?
The only way we can know is to ask.
The next segment covers consumers’ access to MLS benefits. In particular, we’ll focus on consumer access to listing information and trends toward fragmentation, rich media, and the retirement of MLS listing areas.
Updated: June 22, 2021