This article was originally published on Inman News:
The power balance in the real estate world is shifting faster than ever. Travel titans, search engines, investment oracles and government entities all want to change the way we do business. Most just want to control a larger piece of the pie.
Real estate brokerages are often too focused on their day-to-day business of attracting and retaining agents to give an appropriate share of their attention to the greater direction of real estate. The reasons are fairly simple. Brokerages are deemed successful by their ranking vs. local competitors as opposed to the greater health of all brokers in their region. The ability of a broker or agent to increase sales production and income often comes at the expense of competing agents and brokers, especially in a down market. This is not necessarily a negative, but the reality of competitive business and our natural motivations in these roles.
Then, there is the MLS. The multiple listing service could be called the referee for our regional activities. Some practitioners love the MLS for its standardization of practices. Some hate it for its plethora of rules impeding their business. Some brokers appreciate the MLS’s creation of a level playing field vs. other companies. Many brokers feel disdain for any organization that seeks to override its regulatory authority.
The nature of these differing opinions exemplifies the strength and value of the MLS to our industry. Whether it’s a parent, teacher, CEO or government regulator, any authoritative entity should wield enough clout to create useful standards. If it lacks the strength to create regulations that benefit its constituents as a whole, it is useless. At the same time, if its decisions lack the support necessary to regulate member policies, it is impotent.
An uncommon position of power
MLS organizations are in a uniquely powerful position in our industry today. The MLS is supported in some way by Realtor organizations, diverse brokerages, volunteer agents, and MLS staff. Their overwhelming strength is the nearly ubiquitous control of our most precious asset in the new media age: the real estate listing.
Think about the biggest names in real estate news today. You’d be hard pressed to name a single one that could drive significant revenue without some attachment to real estate listings. The listing itself is the tangible piece of media that changes an online real estate experience from a puff piece into a consummation.
The primary driving profit factor in real estate-related ventures is the idea of the sale. Interest in real estate media is driven by the current or long-term desire to buy, sell, remodel and live in a home. All other real estate-related media and data is merely window dressing to the sale. Charts, graphs, social interaction and idea boards are just small talk until the real estate listing and the potential of a sale is introduced.
The value of a listing
It’s clear that real estate listings can be used to create great wealth, even for those with no part in the creation of the listing or the sale of the associated property. Publicly traded portals have scraped, copied, subscribed to and been fed listings of every variety to keep their content valuable. Pioneering brokerages have added every piece of extraneous media possible to their listings to make them stand out. The battle for search engine rankings on individual property addresses highlights the very specific nature of the individual listing’s monetary value.
While investors and technologists have scrambled to gain more and more control over the marketplace for, and dissemination of, real estate listings online, most brokerages have had a less visionary approach. Some have expressed a bit of creativity, but the vast majority have taken a back-seat approach and reacted to the changes as they came. Fearing their competitors more than the changing market, the very nature of brokerage competition seems to have stagnated much of the potential innovative power of the real estate brokerage and its agents.
In the meantime, the technology entrepreneurs within the agent community seem to be leaning more toward unified solutions from MLS organizations. As the power and duties of the MLS have begun to slowly grow, many brokers are balking at the changes out of short-term self-interest. If we are truly being strategic about the long-term agent-centric real estate model, though, all brokerages must take a long look at the need to focus on the strength and value of our listings. We also need to empower the only organization that allows us to provide those listings in a professional and powerful way.
Give the MLS teeth
The MLS needs wider latitude and governance of the creation, display, dissemination and retention of real estate listings. While those responsibilities are technically available to an MLS today, the reality is that large brokerages seek to retain more autonomy by cutting their MLS off at the knees and handicapping its ability to make big decisions.
Brokerages need to allow the MLS the ability to negotiate on our behalf from a position of power. Whether that means negotiating a revenue model for listing syndication, restricting that dissemination, or creating new and creative ways to improve our processes, the MLS needs the flexibility to work as our voice in the industry. Mistakes will be made, but as MLS organizations across the country collaborate over the most effective processes, the efforts will become streamlined and our ability to direct industry momentum will continue to strengthen.
The MLS should be our power broker at the negotiating table with any search engine or portal that wants to profit from our labor but doesn’t feel the need to follow our rules. With all brokerages’ influence behind the same face, we put ourselves in a far better position to negotiate listing standards that benefit the consumer and create reasonable financial concessions where appropriate.
Current listing display agreements with third-party vendors include onerous terms giving full licensing and usage rights in perpetuity to any and all associated companies. Agents and brokers are signing agreements every day that give them no recourse with these marketing “partners” because they believe they have no other other choice. Frankly, because our industry response has been so disorganized, they currently don’t.
The broker must cede more power to the MLS
Brokers will argue that they’re already doing a good job of dealing with listing media on their own. They are wrong.
Multiple brokers forging different agreements with the same portals is like multiple buyers competing for a home. Everyone undercuts everyone else. There is no uniformity of goal. It’s every man for himself.
Brokers provide invaluable services to agents, but those are services of business support, competitive differentiation and regulatory oversight. Whether it’s through marketing, administrative foundation or training, brokers are mercenary business support structures that agents will happily pay to do business with. They are a necessary and hugely beneficial part of our profession. What they are not are unified voices for the betterment of all agents.
Brokers have proven this themselves. They continue to make private deals with portals to secure advertising positioning over and above competitors. They’re more interested in usurping their counterparts than creating a clear market picture for the consumer. That’s a logical business strategy, considering their responsibility is to their agents and their clients. It also illuminates their inability to be a strong negotiator for the agent community as a whole.
New industry, new rules, new strategy
MLS organizations across the country are beginning to forge new ideas that are good for consumers and profitable for real estate professionals. While brokers grimace, new rules, standards and services offered by MLS organizations are widely appreciated by agents. These organizations have set many regions on the pathway to standardized forms, better consumer advocacy, and liability protections for practitioners.
While thousands of brokerages dangle wide-ranging listing publicity policies around for the nearest takers, our MLS boards are the only organizations that can truly provide a common, consistent voice for the people who actually create those valuable listings — the agent and the client. Whether or not the MLS’s decisions include revenue generation, wide distribution or strategically limited exposure, the MLS needs the support and strength to make these decisions in the name of its members and subscribers.
For our industry’s agents and brokers, we have two clear choices: Concede a bit of our autonomy to strengthen our long-term voice, or continue to claw at each other for that next sale, while our disorganization allows others to determine our direction for us.