Meg White is the former managing editor of REALTOR® Magazine.
Brokers and agents who manage data across a number of multiple listing services are often irritated by the time and money involved in maintaining various memberships. Over the years and across the country, practitioners’ calls for consolidation have gotten louder and louder.
The resistance from some MLSs is less about the concept of merging and more about the confounding logistical, technological, and political hurdles inherent in such a massive undertaking. But the tide seems to be turning. This year’s launch of Bright MLS—now the largest such system in the country—offers an object lesson in how to achieve what many have long perceived as unachievable. The new operation brings together 85,000 subscribers from nine MLSs representing 43 REALTOR® associations over parts of six mid-Atlantic states and Washington, D.C. Bright MLS Chief Strategy Officer David Charron predicts an uptick in consolidation across the country over the next couple of years. “It’s going to happen. I’m getting calls from people who are anywhere from curious to committed,” he says. “There’s a sea change of challenges and opportunity out there and that’s what this group decided to meet head on.”
Bright’s debut was a long time coming and demonstrates the necessity of patience and perseverance in transforming arch competitors into trusted allies. Back in 1999, the Reading-Berks Association of REALTORS® recognized that its MLS, representing about 600 practitioners in central Pennsylvania, needed a technology upgrade to the tune of $750,000. While the organization had ample cash in reserves, the question was whether they should spend it on a new platform.
“Our technology was becoming antiquated. But we asked ourselves, ‘How much do we want to spend recreating our own MLS?’” remembers Jack Fry, broker-owner of RE/MAX of Reading in Wyomissing, Pa. “In another three years, we’d probably have to spend that much all over again.”
Fry says it was a struggle to get everyone on board with the idea, but eventually the board approved a merger with TREND, a large MLS based in King of Prussia, Pa. “We made the right decision,” Fry says, adding that in the long term, managing the MLS “would have bankrupted us.”
Sure, the association lost some revenue, but new income streams through preferred vendor partnerships, media ventures, and increased education options made up the difference. The association used its cash reserves to buy its own building so there’d be no future concerns about rent or mortgage payments. But even more important than the association’s balance book was the fiscal health of its members. If the association had kept the MLS, “it would have been on the backs of agents,” Fry says. “The agents are why we’re in business. If the association’s only value is to provide an MLS, it’s already extinct.”
That’s why Fry was elated in 2014 when he heard that Tom Phillips, then CEO of TREND, and Charron, then CEO of Maryland-based MRIS, were talking about creating a regional MLS.
The similarities between the two MLSs helped bring them together. Both encompassed multiple states with urban and rural areas, had similar numbers of active listings, and were run by brokers and owned by REALTOR® associations. From an initial idea sketched out on a cocktail napkin three years ago, Phillips and Charron hoped to develop a framework that others in the region could buy into conceptually. They’d each failed to convince smaller MLSs to join their individual companies in the past. “We’d share stories about our lack of success at being able to invite others into a consolidated marketplace,” remembers Charron, identifying governance issues and a loss of autonomy as chief objections.
So the two set out to chart a new course. Instead of an acquisition, their vision was to dissolve TREND (which had just under 30,000 subscribers at the time) and MRIS (around 45,000 subscribers) and create a new, larger MLS in their place. They resolved to put thoughtful give-and-take discussions at the center of their effort, building a diverse task force where stakeholders of various sizes could sort through the roadblocks that had stood in the way of past consolidation efforts. Charron and Phillips reached out to smaller MLSs in their area and asked them to join the talks. “Rather than the two of us just merging, [we could] invite our contiguous markets to participate with us in the conversation about what might be next,” Charron says. “They face most of the same challenges. Why wouldn’t they want to be part of this discussion?”
It turns out they did. In the end, seven other MLSs joined the task force—alongside representatives of different-sized brokerages and association leaders—to map out their future. Since the participants first gathered in fall 2014, they have hammered out organizational structures, bylaws, staffing requirements (Phillips says they’re going to “need every one of the fantastic people we have” and then some to handle the transition and ensure adequate support), and other details. They released a combined listing data feed last year and officially incorporated the for-profit Bright MLS on New Year’s Day. By late summer, agents and brokers in the region are expected to begin using Bright MLS as their back-end software. The company predicts it will process some $85 billion in residential sales over 40,000 square miles of territory in its first full year in 2018.
Phillips, now Bright’s CEO, says that including all stakeholders at the earliest discussion phase slowed the process, but it was ultimately the best choice. “You must approach something like this with a spirit of collaboration,” he says. “Otherwise the discussion will go nowhere.”
Of course, it takes time for participants to shift their mindset toward a common goal. Cindy Ariosa, a senior vice president for Long & Foster Real Estate who served on the task force and is now on Bright’s board, says the conversations weren’t always easy. “Everybody was selfish in the beginning. We all thought we had the best system,” she says with a laugh. But when the conversation focused how to best serve the needs of everyone—consumers, agents, brokers, shareholders, association employees, and MLSs—Ariosa says they could see the path ahead more clearly.
Ariosa acknowledges her large firm’s competitive advantage could suffer due to the technological boost smaller brokerages gain from a more robust MLS. Nevertheless, she says the increased capacity for tech integration and research and development benefits all. “It’s very exciting. We think it’s going to help with the other industry changes,” she says, noting that up-and-coming technologies such as Upstream will work more smoothly with larger, regional MLSs. “If other people take our lead, it’s going to allow for these other industry advancements to happen.” Charron agrees, noting that their larger footprint will not only allow for greater internal R&D efforts but also give them more buying power with outside vendors.
As a trade organization for MLSs, the Council of Multiple Listing Services isn’t pushing groups to consolidate, but it has been working to get the Bright MLS story out to members. “There are so many different ways [consolidation] can happen, so what we’re really advocating for is having the conversation,” CMLS CEO Denee Evans says. “Seeing the process that was used, the time that it takes, and the details, it adds perspective.” And perhaps Bright’s progress provides inspiration to MLSs envisioning their own bright start.