The Marketplace MLS Mandate

This series was originally published in REALTOR Magazine

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 a five-part series on MLS planning for 2021, we look at questions that all MLSs should be discussing as the year unfolds.

 


The mechanics of the MLS are under intense scrutiny by both investors and investigators. Lawsuits, consumer transparency demands, and national policy edicts all scream for your attention. That this confluence of trends may be inconvenient is irrelevant. A marketplace mandate has been laid at the feet of the MLS: Earn and keep the consumer’s trust.

A philosophy of affirmative transparency can be your organization’s guide. The MLS’s value is best communicated when it’s accessible to its end users. Seeking out ways to shine sunlight on the MLS’s pro-competitive and pro-consumer processes and benefits has never been more important.

As you’re planning for 2021, there are critical topics and questions for your organization to consider. Some are best handled locally. Others will be debated at a national scale; in those cases, an objective framework for analyzing the impact of MLS policy will help guide transparent and systematic decision-making.

Earning the trust of professional customers (participants and subscribers) and consumers requires MLSs to focus on transparent access to services. Because most consumers receive MLS benefits through a broker participant, this series begins with two segments on participant access, followed by two segments on consumer access. The final segment discusses national MLS policy decisions. With new NAR mandates seeming to grow in frequency and impact, MLSs would benefit from a transparent framework for identifying the line between local flexibility and national consistency. I’ve discussed such a framework with industry colleagues, and I’ll share a proposal in Part 5.

There’s work to be done, so let’s get planning.


Part 1 of 5: Participant Access to Listings, Showings, and Data

Square one, the most basic tenet of the MLS broker cooperative, is sharing listings. When should MLS participants gain access to other participants’ listings, and what information should they be allowed to access?

The choices seemed clearer just a few years ago. On a number of fronts, MLSs need to identify ways to improve transparency and efficiency around broker participants’ access to listings, showings, and MLS data.

First and foremost, there’s the popular topic of Coming Soon status:

  • Does your MLS have a policy around Coming Soon listings? Should it?
  • If it does, do Coming Soon listings go out to broker participants but not consumers? If so, for how long?
  • Has your MLS defined how long a listing can be Coming Soon, or in a delayed showing status? Clarity will guide many downstream decisions.

And while there might be general consensus on these questions, there most certainly is not on the fringes. In Part 5 of this series, I’ll share an example that illustrates how inconsistent policies on Coming Soon status can create confusion and make life difficult for agents and brokers.

Participant Access to Listing Addresses

Is an MLS broker participant required to share a listing address with other participants? Common sense would say yes, but even this most basic requirement of listing cooperation has been challenged in the past year.

Some agents are asking that MLSs allow them to hide the address of their listings and deliver it to participants on an agent-to-agent basis. A change of this magnitude requires a big-picture analysis of what the brokerage cooperative is. Are there other data sets that agents and brokers might want to restrict in the future? If the MLS opens this door, where does it draw the line?

Fair housing compliance and equitable access practices come into conflict with these kinds of efforts. MLSs would be wise to tread lightly in areas that limit participant access to critical listing information for their clients, and his theme will continue throughout this series.

Participant Access to Showings

2020 brought many new challenges to in-person showings. Pandemic regulations banned open houses and required pre-scheduled, small-group showings in many regions. The pandemic forcibly sped up agents’ adoption of digital showing scheduling services and remote showing options.

The distinction between pre-recorded listing videos (virtual tours) and livestream video showings or open houses was codified by the industry and mandated for technology at a speed not seen during normal times. Remote showings will likely remain popular going forward, even after pandemic measures subside.

Many MLSs are providing organized education about how to efficiently set up, designate in the MLS, and perform distanced showings and open houses. Sellers will demand these services at least for the near term future. Agents should be equipped to employ them.

And health concerns aren’t the only consideration when it comes to participant access to showings; MLSs also need to be keeping an eye on legal trends. Specifically, brokers’ ability to show listings to their clients is a critical link in fair housing compliance.

MLS participants in some areas are asking that sellers’ addresses be obscured from the MLS in some cases. Such a policy decision would affect showing access, creating a subjective human screening bottleneck that could take transparency backward. Any time a process appears to allow the “right kind of agents” to show certain properties to “the right kind of buyers,” great caution should be taken. Is the benefit to the MLS so broad that another tiptoe on a regulatory cliff is advisable?

The recent efforts to limit address access claim to seek privacy for sellers, but there are privacy options already available to sellers:

  • Sell privately
  • List FSBO
  • List with a broker who is not an MLS participant
  • List with an MLS participant as an office exclusive
  • List with an MLS participant and opt out of IDX display
  • List with an MLS participant and require pre-scheduled appointments with financially pre-screened clients and listing agent-attended showings

Obscuring addresses from listings appears to be a solution seeking an escape from what a small slice of the industry perceives as a problem (Clear Cooperation?) rather than a true privacy utility for the MLS. It might be feasible, but is it in line with the MLS’s strategic vision?

Participant Access to Data Services: Efficiency

There’s momentum within the industry’s trade organizations and brokerages to overhaul data access policies. The Real Estate Standards Organization (RESO)–inspired Networked Office and Web (NOW) policy would maintain all safeguards necessary for protecting the integrity of MLS data and combine them into one single set of rules and one holistic access process for all of a broker participant’s data needs. The concepts behind the NOW policy are being vetted with Council of Multiple Listing Services (CMLS), and an implementation-ready proposal is expected to move to the National Association of REALTORS® in March for consideration by the MLS Technology and Emerging Issues Advisory Board and possibly the Multiple Listing Issues and Policy Committee and NAR Board of Directors.

Why is consideration of the NOW policy so critical at this time? Comfort in the status quo may exist within some MLSs, but it most certainly doesn’t with brokers. IDX is unnecessarily limited with its focus solely on display of listing data. The virtual-office website (VOW) policy clunkily hides behind a registration wall and is frozen in time by the shadow of the Department of Justice. Policy on back-office use of data by broker participants is almost nonexistent.

There’s no better time to make everything easier for brokers who play by the rules with a holistic, efficient new model for data access. It’s not just that we need common fields; we need a single set of instructions for different uses of MLS data, retaining the important security protections that MLSs currently have in place.

And though it’s unfortunate that this has to be said, it’s clear from the industry whisper network that it does: Any organization so haunted by the specter of new tech-savvy entrants that it rejects new, efficient models for MLS participants is cutting off its nose to spite its face. The MLS exists to facilitate cooperative competition. Why not set strong rules for compliance, open the floodgates, and let it flow?

Participant Access to Data Services: Consistency

Those who tuned into Inman Connect NYC this month heard Joe Rand, managing partner of Better Homes and Gardens Rand Realty, fume about the data black hole that exists for brokers working in New York City. In 2019, Rand said, New York brokers couldn’t tell if the market was up or down, if prices were soaring or stagnant. A focus on technology, broker cooperation, and data accuracy is improving that situation. And while New York stands alone in some respects, data fragmentation is a theme that resonates throughout organized real estate. In the MLS world, we often point at rural areas to describe overlapping market disorder, but brokers in large cities endure it as well, San Diego and Atlanta being just two examples. MLS overlap in a single market doesn’t necessarily create market data fragmentation, but it’s a common cause.

Observing from the outside, fragmentation is widespread, and it’s not a good look for brokers. Of course, the inconsistency in broker access to data isn’t just fueled by the lack of MLS uniformity. There are brokerage companies that choose not to be involved in standards development with the goal of reinforcing their perceived technical moats. MLSs should ask successful broker participants in their market: If you’re not already pushing the industry toward better data by participating as members of RESO, why aren’t you?

Consumers don’t really care what their motives are. They just see a shared mess.

The circumstances of these scenarios are far too broad to paint a single solution for them. But the goals remain the same. Give brokers a unified set of services and data that present a true picture of the market, and leave consumers with a high level of satisfaction with their professional service provider.

Avoiding data shares, standards, efficient distribution of data and consolidation for the sake of organizational self-preservation leaves us all with egg on our faces.

Participant Access to Data Services: Expansion

Providing MLS participants with more data isn’t just about technical capabilities. It’s also about thinking in a more holistic way.

The MLS’s customers do more than list residential resales. They get called to help buyer clients with a FSBO seller. They represent consumers in iBuyer and other turbo-transaction scenarios.

They lease rentals, do property management, sell multifamily and commercial real estate. This information is critical to your customers’ growing knowledge base about market conditions.

The old mantra of the MLS was, “That’s not our transaction so we can’t include it.” But all information, if accurate, is good information. Talk to neighboring MLSs: Do they track comps-only sold listings, defined as sales procured before a listing is entered into the MLS? Such data is a critical component of competitive market analyses; it’s also much more valuable to subscribers when they get this directly as a core service of the MLS instead of from an outside tax data service.

Has your MLS incorporated tags that tell a broker or an appraiser whether a sale was an MLS resale, new construction, distressed, REO, or an iBuyer sale? Bringing more of this data into the tent of the MLS adds value, giving brokers the ability to meet their customers’ expanding needs.

NAR: Working Toward Core MLS Standards

The National Association of REALTORS® is actively engaged in efforts to bring consistency and transparency to the operation of MLS services throughout the country.

NAR’s MLS Mission Statement

NAR cultivates an efficient, cooperative, and transparent real estate marketplace by leveraging our national perspective and brand to deliver thoughtful guidance and develop policies, in collaboration with subject matter experts and stakeholders, resulting in organized and consistent expectations and accountability for the benefit of MLSs, members, and the consumers they serve.

The association’s MLS Standards Work Group, which is working to establish minimum standards for MLSs, has received a tremendous amount of feedback from the industry, and a significant portion is focused on improving data access for broker participants. Last November, the Work Group brought forth eight recommendations that were approved by NAR’s board of directors, and the group is expected to bring a full set of standards forward in the spring.

Here are a few questions the work group is asking, and MLS organizations should be discussing as well:

  • Is there a transparent process for consumers and data partners (such as consumer-facing portals) to report inaccurate listing data to the MLS? Is there a straightforward mechanism for fixing inaccurate data?
  • Is getting access to data from your MLS a clear, well-publicized, and easily navigated process? Does the MLS have an objective framework for approval decisions?
  • Is an independently RESO-compliant MLS database interface in your MLS’s future?
  • Does your MLS have a set date to sunset traditional RETS (real estate transaction standards) data access? If they don’t sunset, will brokers ever upgrade to Web API?

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.

Part 3 of 5: Consumer Access to Listings

Previous segments in this series covered participant access to a range of MLS services, from listings to lockboxes and even the physical space an MLS uses.

Part 3 shifts to consumers’ access to listings. This includes a discussion of the fragmentation of listing access, the move by MLSs to retire traditional MLS listing areas, and the growth of rich media.

Consumer Access to Listings: Fragmentation

Consumers today have access to the vast majority of real estate listings online. Most listings are aggregated on broker IDX or VOW websites. They’re also shown on national consumer website portals.

There’s a significant portion of the market, however, that’s trending toward fracturing and separating pools of available listings for display. Private listing networks have created these silos as their stated purpose.

Brokers, in some cases, are also using traditional listing mechanisms to add complexity to consumers’ listing searches. The office exclusive listing feature, intended to provide limited exposure for clients with privacy concerns, has become a vehicle for fragmentation.

There has never been a consumer who wished to search 12 sources of listing inventory when the same inventory could be found in one. But some brokers’ inventory differentiation strategy forces consumers to do just that.

By employing an office exclusive listing strategy as a default business practice instead of using it as an exception for special cases, these brokers hope to create a greater sense of inventory scarcity.

  • Does the MLS have a role in ensuring office exclusives, created at the expense of free exposure for the broker’s clients, are being appropriately administered?
  • Is it transparent, or ethical, for an MLS participant to intentionally degrade the marketplace’s consumer search experience?
  • If a property is listed as an office exclusive for the client’s privacy needs, should the participant be penalized for misuse if it subsequently becomes publicly listed as an active listing?

Consumer Access to Listings: MLS Areas

MLS listing areas are the traditional codes that agents used to classify listings geographically. They are functionally obsolete. Yet listing a property in area 520 vs. 530 is so ingrained that even mentioning the eventual demise of the practice leaves some agents feeling bereft.

Whether MLS areas should be used by an MLS to define property location is no longer just a question of personal preference. These white elephants cause damage to the credibility of the MLS, the broker, and the agent. Consider the facts:

These static areas don’t keep up with changing neighborhood or school boundaries–they’re dated, arbitrary, and often split subdivisions and neighborhoods.

They’re often based on older government maps that defined redlining areas, possibly the greatest concern that the MLS should consider.

Agents consistently game areas with listings that should be elsewhere or request to double-list in different areas. This puts an undue burden on the MLS to support an outdated practice.

Agents give clients much more refined searches and, therefore, higher quality results and experiences with map-based searches.

While making MLS areas optional sounds like a reasonable compromise at first glance, it doesn’t solve the problem. If an MLS keeps MLS areas as a function, there will always be agents who list and search by area. They’ll miss listings. Their clients will miss listings. And when consumers miss their dream home, they’ll be left with the impression, rightly so, that the MLS didn’t serve them or their agents well.

Technology changes. The physical world around us changes. And societal demands change. Yet some agent practices don’t change unless it’s the only choice. The MLS should consider its reputation and liability when discussing the retirement of MLS listing areas.

Consumer Access to Listings: Rich Media

A builder recently said that his company wouldn’t use the MLS to advertise to consumers because it allowed 15 photos at a maximum of 800×600 pixels each. While that’s probably an outdated conclusion, it’s the impression we’ve created over the years with some consumers: an MLS platform made to limit and box in media rather than expanding and inviting new media innovation.

Home shopping, showing, and even buying remotely has been greatly accelerated by the pandemic. In many areas, mobile technology capabilities have outraced what we’re capable of displaying in MLS systems.

Yet there is innovation. Digital floor plans are squeezing their way into core MLS systems; FBS’ FlexMLS integration with FloPlan is one example. Multiple video uploads are table stakes. Interfaces for 360 videos and 3D walkthrough tours are becoming more commonplace.

Accepting the input and integration of rich media content into the MLS will be critical to keep brokers and their clients engaged. Any advances brought to the MLS can be considered a potential competitive advantage or, at a minimum, an opportunity to catch up.

Can an MLS provide a platform for participants where this rich media is experienced right in the MLS interface, as opposed to bouncing users out to different media websites? Can the MLS provide a simplified way for brokers to access this same rich media from the MLS and present it directly on their own consumer facing websites?

The participant’s experience in this process is important. It’s currently a clunky, manual process to get media from the producing vendor to the agent, to the MLS, and back to the broker’s website. RESO members are exploring standardized ways to automate rich media population into the MLS by any vendor working with an agent. Cutting edge MLSs and vendors are building the first generation of these tools as we speak.

Brokers will present this media to consumers. When the MLS’s capabilities to distribute rich media doesn’t live up to their needs, they’re going direct to platforms like WellcomeMat because consumer desires demand it. Will the MLS be involved in that process in the future?

Part 4 of 5: Consumer Access to Additional MLS Benefits

Previous segments in this series covered participant access to a range of MLS services, from listings to lockboxes and even the physical space an MLS uses, as well as consumer access to listing data.

Part 4 dives into a broader range of consumer services.

Consumer Access to Showings

In Part 1, we discussed MLS participant showing access: Lockboxes for all licensees, address information availability, and listing agent screening are all current concerns. Major discussions are also taking place today regarding agent compensation, including whether buyers should be paying their agent’s commissions directly. Are MLSs prepared for potential change, and what might be the functional effects of such a change? Ignore, for the moment, whether compensation paid directly by buyers is a good idea. MLSs should be doing a SWOT analysis to explore scenarios in which buyers want to go it alone for some portion of the buying process or want to access property directly on their own—and whether the MLS will be involved.

The recent agreement between the National Association of REALTORS® and the U.S. Department of Justice means that REALTOR® association-operated MLSs will need to be able to give lockbox access to non-subscriber licensees. It’s worth also thinking through how single-access capabilities could work in serving unrepresented buyers. Properly identified and vetted by a listing agent, might buyers be able to get one-time use codes to view homes on their own through your MLS? We know the technology is already in use with iBuyers. The broader MLS could be next.

Consumer Access to Rental Opportunities

Most MLSs have a section for rentals. It’s often a ghost town. There are myriad reasons for the sad state of rental data in our MLSs, and there are just as many opportunities to improve the situation.

If the MLS is to think like a proactive, business-building real estate agent, it must think about growing its funnel by offering new value and then fulfilling expectations with a quality consumer experience. Treating rentals like resales won’t do, and the perceived limitation on rental compensation shouldn’t take away from the value of bringing these consumers into the MLS.

The Real Estate Standards Organization recently talked with rental powerhouses Apartments.com and RentalBeast about the future of incorporating rentals in the MLS to enhance both participants’ and consumers’ experience. This is a huge marketplace that leads consumers to work with brokers early in their real estate life cycle. How can the MLS tailor the fields, forms, and processes that brokers use to enhance their opportunities to bring renters into the MLS space?

Which companies can the MLS partner with to grow its rental listing inventory? The ability to collect listing information from property managers or listing aggregators will be critical to broker adoption of rental activities in the MLS.

Consumer Access to Compensation Information

The public display of offers of compensation to buyers’ agents is a hot-button topic in some circles but a yawner in others. It’s already a reality in some marketplaces and the consumer-professional marketplace continues to work just as efficiently as it always has.

In Seattle, the local MLS, Northwest MLS, has been publicly displaying buyer-side commissions for more than a year. Little has changed. Consumers have transparency, and a wide range of options exist with regard to service and compensation.

It’s understandable that real estate professionals object to mandates making their compensation public when it’s difficult to find another private profession that’s subjected to similar rules. But the outcome doesn’t seem to support the anxiety. And if more transparency helps consumers trust the MLS process, the potential positives should be weighed against the status quo.

Consumer Access to Aggregated Marketplaces

The MLS is the original aggregator. It brings a marketplace together for business efficiency and consumer transparency.

But consumer real estate preferences are shifting. Remote work and pandemic trends have home buyers searching broader geographies with greater flexibility on where they decide to live.

What is the MLS’s role in enhancing consumers’ ability to seamlessly search for real estate across marketplaces? Do MLSs have an inherent responsibility to cooperate with one another and facilitate the consumer’s digital travel across shifting MLS service areas?

From the view of REALTORS®, who’ve committed to cooperation by virtue of their membership in NAR, it seems they do. Professional standards exist to allow organizations and individuals to compete while ensuring a baseline of cooperation that benefits customers. If a broker is licensed to sell real estate across a state and a REALTOR® has a duty to cooperate with all other members, is there any reason a consumer shouldn’t be able to get statewide MLS-driven data without artificial barriers or borders?

The Code of Ethics requires brokers to only practice real estate in geographies where their knowledge and skill set are appropriate. But it doesn’t say that consumers’ access to information should be limited by those borders.

Consumer Access: Fair Housing Compliance

When discussing consumer access to housing, there’s no brighter light to stand in than the scrutiny of fair housing regulation. Every access decision that hinges on which kind of people deserve what kind of information should be analyzed with this in mind.

  • Listing availability: only if you know the right kind of broker?
  • Showing availability: only if you work with the right kind of agent?
  • Address, history, offer timelines, and terms: only if you’re part of the right crowd?

These kinds of questions will only increase. Organized real estate’s role as gatekeeper to basic property information was relinquished many years ago. Those seeking to reclaim it are the voices that drag organizations down.

Though the MLS serves participants directly, it has also taken on the role of providing equal housing access opportunities for our communities as a whole. Embracing that responsibility will help the MLS organization enhance its net positive effects on its marketplace and avoid unnecessary regulatory scrutiny.

Consumer Access to Logical Terminology

Speaking of information gatekeepers, the way professionals describe real estate to each other can appear like a foreign language to a consumer. The SOC on an ADU in Active-C status might make sense to local agents, but when it ends up on a public website it’s gibberish.

We owe it to ourselves and our consumers to coalesce around more descriptive and transparent terminology. While there will always be some inside baseball behind the curtains, there’s no need for the industry to confuse consumers with acronyms and cryptic terms that don’t clearly express what they mean.

Standard statuses, definitions, and increased commonality across markets would go a long way to better informing consumers about how real estate works. What we do across markets is much more similar than most think. In the link, you’ll see an analysis of just a few MLSs’ local listing statuses. You can see how the idiosyncrasies are more about wording than different professional practices. A summit of industry leadership to propose moving further toward an industrywide standard could provide the consistency needed to help consumers understanding a listing’s life cycle.

What is your MLS’s approach when local needs create a request for change? Does the MLS start with resources from the Council of MLSsRESO, and NAR, or does it look for a quick local fix first and only fall back on national practices when local ideas fail?

Before you add that next custom field, status, or rule, look outward. Maybe someone else has already done it in a way that makes sense to consumers, not just agents. If we’re going to use nonsense terms like Active-C to identify properties, it falls on every agent with every consumer in every market to explain why. This is not ideal.

Part 5 of 5: Regulating MLSs

The first four segments of this series analyzed current trends and our role in supporting participant and consumer access to MLS benefits.

This segment will focus on when and how we as an industry make decisions to implement mandatory policies for MLSs through the National Association of REALTORS®.

Policy: National Versus Local

Many MLS issues can be solved locally. At other times, variation creates consumer confusion and organizational chaos.

The push and pull between local differentiation and competition versus national consistency and certainty are perpetual. Mandatory national policies are sometimes shunned by local association leadership as infringing upon autonomy and unique local situations. But consistent policies are sometimes needed to keep the industry as a whole moving toward a more transparent, trustworthy partnership with agents and consumers. A hypothetical consumer experience illustrates how inconsistency damages the MLS’s reputation.

A Consumer’s Experience With MLS Inconsistency

Meet Sally Seller. She’s listing her home with Amy Agent.

Amy lists Sally’s home in Sunny MLS and Breezy MLS because they cover the same geography. She wants broker participants in both MLSs to see the listing.

Sally Seller wants to delay showings and internet advertising for a few weeks so she can prepare the home.

Amy Agent lists the home in both MLSs, but the Coming Soon status in the two systems varies:

  • The property can’t be shown to buyers in Sunny but can in Breezy.
  • Days on market do not accrue in Sunny but do in Breezy.
  • The property is not published to brokers’ IDX websites in Sunny but is in Breezy.

Bobby Buyer sees the listing on a Breezy MLS IDX site and requests a showing. Bobby’s agent is confused as the listing is open to showings in Breezy MLS, even though Sally didn’t want it advertised yet, and Amy couldn’t show it anyway with Sunny MLS’s rules.

The listing moves to active status after painting is finished, at which point Bonnie Buyer finds it on Sunny MLS’s website. The site shows that the listing has been on the market for one day. Bonnie prepares for a bidding war. But Bonnie’s agent is a subscriber to Breezy MLS and says the listing is actually 23 days on market.

  • Bobby is frustrated that a property advertised as available for showings on one MLS is actually unavailable for viewing.
  • Bonnie is confused by the inconsistency and feels lied to.
  • Sally is disappointed because her agent couldn’t follow her requests for consistent advertising and showing communications due to disjointed rules.
  • Amy is perplexed because both potential buyers and her client have been let down, and it looks like her fault.

“Can’t we all just do this the same way?” agents ask. Local real estate leaders look directly at one another and say, “It’s different here.”

Yet for both consumers and professional customers (agents and brokers), MLSs need to continually improve the experience. National policy is sometimes the answer.

National Mandatory Policy Growth

It’s important to establish that the current growth of national mandatory policies is a direct response to business issues that are harming the professional and consumer experience in the marketplace. The appropriate breadth of national mandates may be up for debate, but the need for some level of consistency is largely unchallenged.

National policies have provided the mechanisms necessary for many advancements in the industry. They have created the motivation for progress where the local will has not:

  • Sold listing information availability
  • Virtual office website access
  • Mandatory cooperation rules
  • Consistency in participants’ sharing of listings
  • Standardization of information across markets

Yet there’s still clearly a need for some discretion when local situations are truly unique and call for market-by-market idiosyncrasies. All real estate is local, even if 90 percent of it is the same. By acknowledging and accepting these competing ideas, we can agree on a systematic framework that will allow industry leaders to initiate potential industrywide policy mandates with a shared understanding of their likely impacts.

Constructing a Framework to Analyze Policy Impact

NAR’s MLS Technology and Emerging Issues Advisory Board regularly considers policy changes that have broad industry impact. Its members include brokers and MLS leaders. This group is tasked with deciding where local uniqueness ends and the overwhelming need for global consistency begins.

This group has put forward significant policies that have been adopted by NAR’s board of directors in recent years, including:

  • Clear Cooperation
  • Participant Data Access
  • MLS of Choice

At a recent advisory board meeting, NAR General Counsel Katie Johnson suggested that the group consider defining criteria that would help establish when mandatory national policy is necessary and when local flexibility suffices.

Here’s an approach to that suggestion, a simple framework through which issues should be vetted before national policy proposals are considered:

Are any of these core components of MLS critically damaged or is their progress significantly limited, without a new national mandatory policy?

  1. Cooperation
  2. Accuracy of data
  3. Transparency

The need for at least one “yes” answer could provide a staging gate for ideas before they’re debated as mandatory policy proposals. They may not be the only criteria for analysis, but they provide significant clarity.

In a recent conversation with Rebecca Jensen, CEO of Midwest Real Estate Data and chair of the Real Estate Standards Organization, we agreed that this kind of analysis would be helpful for both MLSs and the advisory board as they deliberate on industry trends and potential policy changes.

Understanding where we start the conversation will create a stronger foundation for it. Do we start our default thinking with mandated consistency—or do we start with local flexibility until one of these core components of MLS appears to be at risk?

Potential Criteria for Initial Policy Impact Analysis Report

The “why” for an objective framework is clear. Mandatory national policy creates new workloads for local, state, and national associations; it requires retraining for agents; and it invites legal scrutiny. Yet it’s still critically important in the right instances.

The “how” we get to this more objective analysis framework is open for discussion. It may be that if any of the three core components we’ve described appear to be at risk, a policy proposal should be created. The MLS Standards Workgroup might tackle policy issues from a different angle, with an eye on minimum standard for service.

We could also create a more in-depth set of questions that the NAR advisory board should ask once it has established that a core component of MLS is threatened. These questions could help establish how a potential policy proposal is prioritized.

MLS Concern Established, Questions to Ask for Prioritization

Addressing these questions could help the advisory board, and the committees who subsequently review their work, see the analysis that was made before a policy proposal comes forward for committee and board of directors consideration.

Does this policy proposal improve consumer access to the following?

  • Listing information
    • Digital access
    • In-person access
  • Showings
    • Efficiency and timeliness
    • Consistent pro-competitive treatment of broker representatives
    • Guided by a real estate professional

Does this policy improve the consumer experience in working with professionals?

  • Efficiency of interactions
  • Consumer impression of the MLS marketplace
  • Consumer impression of real estate professional

Does this policy create a more consistent broker participant experience?

  • Listing information access
    • Participant-only, IDX, VOW, and potentially NOW (an early-stage proposal to streamline all of brokers’ MLS data needs into one cohesive policy).
    • Availability of addresses and other data currently in question
  • Showings
    • Coming soon
    • Lockboxes
  • Technology capabilities
    • RESO standards compliance
    • Efficient MLS procedures and practices

Does this policy preserve local MLS flexibility?

  • Encouraging MLS innovation and competition
  • Enhancing local efforts to grow participation
  • Supporting local consumer demands

Does this policy improve the competitive marketplace?

  • Avoiding regulatory scrutiny
  • “Yes and,” policy when possible
  • Business-model agnostic

Does this policy enhance REALTOR® organizations?

  • Strengthens professional standards
  • Encourages membership
  • Incentivizes MLS participation

Simply writing down the answers to these questions would help establish the priority and viability of new national policy proposals. It might help the postmortem analysis to also assign a simple scoring model for each question.

There seems to be momentum behind building this framework within the REALTOR® community. The involvement and input of MLS staff and association members who care about the future of MLS will be essential.

All Eyes on MLS

The government, consumers, industry insiders, and well-financed newcomers are focused on the MLS. So there’s no better time to look from the outside in and see the MLS how they see it.

There’s a very bright story for the MLS to tell, and affirmatively seeking transparency to tell that story to consumers can kickstart the process.

“I don’t think it can be overstated that the MLS is perhaps the greatest fair housing tool available in the real estate industry, and that’s for brokerages as well as consumers,” says NAR’s Johnson. “As long as it continues to provide accuracy, cooperation, and transparency in the real estate industry, it will provide the most access to real property for all people.”

It’s fitting that the Council of MLS’s timely consumer-focused communications campaign begins with this single tenet: Consumers don’t understand the MLS. Yet the professionals who are “In The Know” can seize that opportunity to transparently educate consumers on what we do and why it benefits them.

We have work to do, my friends, so let’s get started. Here’s to a brighter 2021.

Author

  • All opinions expressed herein are personal opinions and do not constitute the position or views of any organization. Sam DeBord is CEO of Real Estate Standards Organization (RESO). He has two decades of experience in the real estate industry, spanning real estate brokerages, mortgage lending, and technology consulting. He has served as President’s Liaison for MLS and Data Management with the National Association of REALTORS®, a REACH mentor, and on the board of directors for NAR, Second Century Ventures, and California Regional MLS. Sam began his career as a management consultant for PricewaterhouseCoopers. He is a recognized real estate industry writer for publications including REALTOR® Magazine, Inman News, and the Axiom Business Books Award-Winning Swanepoel Trends Report.

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