Why the MLS matters as much now (and perhaps more) than ever in a post-settlement era
May 30, 2024
By Jon Broadbooks, CEO
One of the big value propositions for the MLS has always been the offer of compensation.
Of course, compensation fields in the MLS go away as part of the NAR settlement taking effect Aug. 17, 2024, leading some practitioners to prematurely write the databases’ obituary. Citing an anonymous source, Inman News published a quote: “The MLS is going away, there’s no reason for it to exist now …”
Except that’s dead wrong.
Dangerously shortsighted, even.
MLSs matter as much, if not more, now than they ever have as they are a safeguard for agents, the brokerages they work for and the consumers they both serve. Here are three reasons why.
1. Providing order for disorderly industry
MLSs do more than serve as a conduit for offers of compensation, although this has been a key attribute for as long as the databases have existed.
Less prominent, but no less important, is the MLS industry’s ability to standardize and efficiently deliver an ever-growing volume of property data that practitioners rely on for their livelihoods.
There’s a saying that “data is the real estate industry’s oil.” If the data is high quality, then the friction between MLSs, brokerages and consumers is decreased, in much the same way as pouring 10W-40 into your car’s crankcase keeps it running smoothly.
Without this focus on making things work across association lines, brokerage service areas and even state borders, deals could falter, information becomes haphazard, and consumers would bear the ultimate brunt of this lack of coordination.
2. Governance by real estate agents for real estate agents
MLSs typically fall into three categories: Those which are broker owned, those which are REALTOR® association owned and a very few that are a hybrid of broker- and association-ownership.
There’s a common denominator for all of them, though. MLSs are run by REALTOR® members who are positioned to make decisions in the best interests of the industry and the clients the industry serves.
After all, the REALTOR® Code of Ethics forces attention to everything from fair play in business to safeguarding against discriminatory and predatory housing practices. MLS decisions aren’t just made for real estate agents, but also for the tangible benefit of consumers who are the end-users of the property information REALTORS® type into the databases.
Private businesses may be able to perform many of the same functions MLSs provide, but for one harsh reality: Corporations will always operate in the narrow best interest of their bottom lines.
Even if corporate ownership operates altruistically today, there’s no guarantee it will do so in a future which will inevitably face ownership changes, market fluctuations or internal cost-control mandates.
If corporate accounting drives decisions, REALTORS® stand a real chance of being marginalized. That’s not in the best interest of the industry or the millions of consumers who rely on its information to make decisions.
3. A level playing field in a rocky environment
By their very structure, MLSs exist to make sure that all brokerages — no matter their size — get a fair shake.
Service before size is their unspoken motto. What’s good for the largest firms is also good for a sole practitioner.
Data from the biggest brokerages are treated the same as the smallest, which despite what the DOJ might think, facilitates rather than detracts from competition.
The costs are the same for subscribers.
The opportunities are the same for all.
MLSs have governance structures that honor the biggest and smallest firms served.
This safeguards against favoritism. It makes sure no one gets squeezed just because they don’t have a higher agent count or bigger marketing budget.
Drive to survive = drive to thrive
MLSs admittedly are strange business creatures.
They are enmeshed in the traditional real estate association structure which admittedly can be change-averse.
They also operate in a high-tech space that demands constant innovation.
This high-tech mindset drives discussions about how to make data easily portable, creates opportunities to roll out new products and provides training for thousands of practitioners nationwide.
MLSs work closely to meet the needs of an industry that is always chasing after the next high-tech product which can revolutionize business. They vet products, work with brokerages to deliver products and ultimately jettison those that aren’t used and aren’t going to move the industry forward.
The tie to REALTOR® associations is critical, as well.
A close link with REALTORS® through associations such as WMLAR means that decision-making will always be in the interest of the practitioner and their clients rather than an entity with narrow self-interest.
This tech firm/association linkage both propels the industry and ensures that the basics that make it relevant and reliable are honored.
All of this is to state that writing obituaries for the MLS industry is unwise unless the industry is willing to embrace a world where favoritism is king, agendas are hidden and those providing essential data are marginalized.
