Why are there still so many MLSs? I’d argue it’s mainly because we don’t have the answer to other questions: How many MLSs should there be, and where are their borders? Should there be six MLSs? 30? 60? 100? One? Can anyone be held to account for not meeting a goal that has not been set? Before we consider how to achieve a goal that will enable consolidation, we need to know what that goal – the “win condition” – is.
Clareity Consulting is planning a study to figure out the MLS regionalization “win condition”. We believe that the industry first needs to understand what the consumer considers to be a natural market area. If someone gets a job in Manhattan, New York City, they may end up living in a house in that borough (2 MLSs), one of the outer boroughs or Long Island (several other MLSs), take the train up to Westchester or Connecticut, or out to New Jersey (even more MLSs). How can an agent serve his or her customer when he or she can’t set up a single prospect search in the MLS system, since the data is spread out over nearly a dozen MLSs? The situation is even worse when MLS geographies overlap or a property is on the border of more than one MLS. In this situation, agents can’t find all the CMA “comps” they need in one system. If an MLS doesn’t cover the natural market area – including overlapping and adjoining areas – it is doing its subscribers and their clients a tremendous disservice. How can that be justified in today’s world where real estate portals have no boundaries and consumers are free to search everywhere?
There are other criteria that can be looked at in order to evaluate the “win condition”. Can the very smallest MLSs – even if they are isolated geographically – meet reasonable standards of service? NAR hasn’t developed MLS core standards as they have for associations, and it is high time that it did so. CMLS did a great job summarizing MLS Best Practices. Perhaps they could establish the core standards. Clareity can easily imagine core standards covering compliance management, data standards, support, technology, data licensing and distribution, and participant data access, as well as security and privacy. Can those smallest MLSs provide that service at a reasonable cost? Another criterion for the win condition is whether an MLS can meet the needs of large brokerages that currently must belong to and aggregate data from multiple MLSs.
Clareity is hoping to complete a study to answer some of these questions but, for one thing, we don’t have consumer search criteria at our fingertips to determine those natural market areas. We have requested assistance from parties that do, but in the meantime, MLSs may need to do this evaluation regionally with whatever data they can muster.
Since this article has focused mostly on listing data, one might reasonably ask, “Can’t MLSs just share data? Do they really need to consolidate?” There certainly are cases where that might be sufficient, but MLSs need to evaluate their goals before they consider that answer. Do they want to reduce number of systems some members need to learn and pay for? How about providing consistent MLS rules and data accuracy compliance across the natural market? What about providing a single copyright / IDX notice for websites? Must a broker belong to many MLS boards to affect policy in their market, or can efficiency be provided in a single MLS? Are there economies of scale that are needed to provide the best service at the lowest cost to subscribers? Often data shares are not optimal because they add additional overhead, inject delays in getting the listings into the repository and into partner systems, and/or have problematic source data differences between the local systems. A data share may be a good solution, but careful evaluation is needed to determine if that’s the right approach for the MLS consolidation end-game, or if further consolidation is warranted. Data shares can also be an excuse to simply maintain the status quo when the right thing to do is consolidate.
We’re not going to see substantially faster progress in MLS consolidation until two things happen:
- Brokers get behind consolidation and/or demand it, especially in obviously overlapping markets, and
- MLS boards of directors openly discuss the future of MLS in terms of the types of business objectives discussed in this article, setting goals based on these business objectives, and planning for them.
A process for overcoming barriers to creating a regional MLS will be described in a second article.
This article was originally published on Inman News.
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