Moving From Distorted Advertising to Useful Information in the MLS

Nov 17, 2007  |  Michael Wurzer

This post continues the discussion regarding listings as advertising or information and brings in days on market, data accuracy, long-tail search, hot sheets, and improving listing promotion inside and outside the MLS.

There’s a belief in the MLS world that the MLS data is the most accurate data regarding home sales. This is a nice statement of faith but often is frustrated by the members of the MLS themselves who are intent on trying to “promote” their listing and are willing to distort the data to do so. This point was driven home by David Harris, the Director of IT for FMLS in Atlanta, in his post The Listing: Advertising or Information, where he says:

Each day our compliance department has to address issues where the property may not be described accurately or the listing may contain information that does not pertain to that property (ie. a picture of the list agent as the 4th property photo 🙂

David then also alludes to the mess that is days on market when he says:

I would love to set up a ‘history’ link on a listing so you can click to see any past times it has been on market to allow for an event better idea of the property, but that could be a concern with some agents as well.

(Emphasis added.) Of course, this is the perennial issue of days on market and the desire of agents to have a low number for marketing purposes. But, as Jonathan Miller of Matrix pointed out some time ago, days on market requires one to determine “what market”, which fundamentally is dependent on price. The “market” for $1,000,000 homes is different than the market for $250,000 homes. Accordingly, Miller prefers to measure DOM:

DOM From Last List Date – Measured from the last time the list price was changed, if ever. The calculation is: Last List Date Change – Contract Date. This is the more useful of the two methods because it shows the market’s ability to absorb a property once it actually enters the market. Essentially, its the list price of the property just before it goes to contract. In other words, its the list price that brought the property into the correct market segment and attracted buyers.

Of course, Mr. Miller is coming at this from his perspective as an appraiser, which is more focused on the information. Yet DOM has become a tool for advertising, despite the idiosyncracies involved in determining “the market” and calculating an accurate DOM. So, now we have MLSs everywhere trying to figure out a better formula for DOM to tie various listings together but the real problem is that members want a low number and will often manipulate the data in order to get it, whether that’s canceling an existing contract and re-listing the property or shifting the listing to another agent in their office or a myriad of other approaches. Regardless of the rules developed by the MLS, the clever agent will find a way around it, because they are more focused on an “advertising” mentality than an “information” mentality.

Jim Duncan posts about this as well:

If Realtors could develop a product that had all of the information – All of it – They could use that as a tool to gain what everybody wants – consumers’ trust. (just having the information is not sufficient to earn trust) Everyone else is doing that (Zillow, Trulia, etc.) but for now, Realtors have the best data – for how long?

But what’s to trust about days on market or other data that is manipulated for advertising purposes?

This same issue came up following our recent release and some changes we made to the hot sheet. One user wrote to me and said that the new format frustrated her efforts to promote her listings, because users were now less likely to click on the text change section of the hot sheet, which she often used just to promote her listings. In other words, she was making changes to the text just to get it on the hot sheet, even though those changes had no substantive value. Of course, these manipulations make the hot sheet less, not more, useful.

One of the comments to Jim Duncan’s post tied these issues back to the revolution being wrought by the web for consumers:

I think the internet has changed the entire concept of selling things, but some less visionary people still don’t get it. I think the old methodology of selling things was just to cast a wide net, hoping that someone would see your ad and be convinced to buy. The power of the internet is that it allows people to be far more specific about what they purchase.

My question is whether it’s possible for MLS operators and vendors to leverage the desire to promote the property into creating more, instead of less, data accuracy. For example, could listings with more property details or photos be promoted on the hot sheet more or longer than other listings? Can listing addresses that are validated by a geo-coding proces or GPS be promoted more or longer? Or will these approaches simply result in more manipulation? Are fines the only approach to help members “get it” when it comes to data accuracy?

All of this has a lot to do with data standards, of course, and one of the better conversations I had this last week at the NAR convention involved the idea that the RETS standards and the new RESO governing body may want to consider extending the discussion to MLS rules in addition to data, as the two are inextricably intertwined. Data standards require rules about data validation. I believe that its possible to establish a “base” set of rules and data standards that allow for “blind” entry of a listing into any MLS system and move us toward true enter once, distribute everywhere. Without such a “base” standard, single data entry isn’t possible unless there is only one MLS, which, of course, is just another, more complicated and expensive, way of creating a “base” standard.

The “base” standard could involve tiers of validation that would promote listings more or less within an MLS system, as described above, such that those with more accurate and broader and deeper data would get more prominent and longer promotion in the MLS. There could be search fields for rule compliance or validation levels, for example, so that users could search only on more or less validated listings. Of course, the trick is in defining what is validated or not and that’s why broadening the discussion among the MLS community over standards is so important. There is no question in my mind that the future for MLSs requires exploring new ideas for encouraging data accuracy over manipulation and moving from advertising, which inevitably seems to involve manipulation, to becoming the trusted source for accurate and detailed listing information.

Postscript:  It just struck me: Wouldn’t making the information more public be one of the best incentives for creating accurate data?   After all, while agents may be willing to deceive their fellow MLS members, are they also willing to risk deceiving the public if it’s easy for them to be found out?  Listing history is a great example.  Why not make the detailed listing history public as David suggests?  Facts are facts, to be judged objectively.  Disclose them and the need for accuracy increases dramatically.

8 Responses to “Moving From Distorted Advertising to Useful Information in the MLS”

  1. David Harris says:

    Great thoughts, Michael. Unfortunately, this is probably a long and painful journey.

    We at FMLS truly feel that our members are our “customers”. And our core mission is to address their needs and help them be successful. Of course, the daily balance we have is between the short term benefit of “tweaking” the listing, versus the long term benefit of an accurate database. Try to tell stock brokers that your publicly traded company is going to take some large “accounting charges” to make the company stronger in the long run, and see where your stock price goes.

    And even further than that, you as an MLS vendor are also beholden to the MLS and its members’ wishes to be successful. So not giving them what they want will have a direct financial impact on you.

    Things will change, slowly. Remember all the plumbers, electricians, etc that were named “AAA service”? All to be the first name in the phone book. Maybe we will see “Bob the electrician, check out my blog for more info” soon…

    David

  2. our members are our “customers”

    Of course they are, but, as is true of any organization, the members can act at cross-purposes to each other and, as you’ve mentioned, the challenge to the organization is to balance those activities. Fining the “bad” actors is one method, but I’m wondering if a virtuous cycle can be obtained by using the system to encourage more accurate and deep information.

    And even further than that, you as an MLS vendor are also beholden to the MLS and its members’ wishes to be successful. So not giving them what they want will have a direct financial impact on you.

    Similar to the above, we have to ask ourselves who are the “members” when they act at cross-purposes to each other. Also, the longer I work in the MLS and RETS community, the more I realize that leadership is necessary at the MLS level to foster best practices. As an MLS vendor, we have an obligation to try to create the best system for today and tomorrow, to benefit our customers. The best example of this is staring us all in the face now as we confront disparate data standards and business rules created years ago by vendors (including FBS) catering to MLS desires but that are now threatening the very existence of the MLS and certainly creating very real inefficiencies for the “members.” So, what’s in the best interest of the members? That’s the very question I’m asking nearly every day of myself and others at FBS and on this blog.

  3. Sorin Udrea says:

    Michael:

    The idea of letting the public be the judge regarding the quality of the listing information is very powerful. However, it might raise some serious problems…

    How would we be able to make the information more public? If private listing information would become public, what would be left of the MLS as an organization disseminating listing information among brokers and agents? What valuable information would remain private and also exclusive to the MLS participants?

    Isn’t historical market data the most valuable asset of the MLS Organization? I am afraid that if we give away the agents exclusivity with regard to listing history, statistical data, CMAs etc. we might get into real trouble….

  4. This is an interesting question, probably the central question in most MLS controversies and issues. At the core of it is the fact that the MLS was constructed as a cooperative with the sole purpose of helping its members sell real estate. To accomplish this, MLSs organized a group of people who were professional sales persons, but NOT necessarily good photographers, data collectors, analysts, or ethicists–and we said, “Go out there and do these other jobs, too!” We built a lot of rules, governance models, and software support systems to turn the salesperson into things he/she was not, and the goal we had in doing this was to provide him with results he really didn’t see the value of.
    The pure fact of the matter is that many of the MLS members (salespersons and brokers alike) are very annoyed by all of this–the rules to ensure data accuracy, for instance, often get in the way of successful selling (in the salesperson’s point of view). The situation escalates with the introduction of internet technology and the blurring of the line between sales information (which, by the way, is not even good professional marketing information) and comprehensive data accuracy, as Michael suggests.
    Is there a resolution? Frankly, I don’t know, but my pessimistic side says no, not in the current construct we have inherited. That’s why I suggested in an earlier post that having the same discussion with the same voices is not going to get us too far–there’s no silver bullet. I like the idea of calling the MLS a Broker Listing Cooperative as Indianapolis does. The name change doesn’t solve the problem, but it does better identify the purpose of what the organization is supposed to accomplish.
    But how one convinces the MLS members that data accuracy, for instance, is the central mission of the system, and not the immediate prospect of a sale….well, I haven’t got a clue about how to do that successfully. Do I think that a real estate salesman who hasn’t had a sale this month is going to foresake the opportunity to market his new listing as a fresh, hot property in a desireable cdommunity in order to provide data accuracy (it’s been listed 5 times in the last two years and the neighborhood is going downhill fast)? Do I think that? No.

  5. Brian Larson says:

    It is a tough issue – there’s a long-running thread on Active Rain about the same thing…

    I think the emphasis in MLS needs to be on accurate information, not on enhancing marketing opportunities. If a salesperson is “expiring” or “canceling” a listing and then relisting it immediately so that it will show up as “new” or have a smaller DOM total, that is an effort to be deceptive.

    There are some technological solutions: One is the button that David Harris talked about. Every listing display should have a “history” button that would show all previous listings tied to the same address and/or tax ID number. Of course then you have to make sure salespeople aren’t intentionally altering the address or PID to mislead the system – technology can help there as well.

    Of course, technology solutions are subject to two problems: 1) the arms race syndrome – every change you make will send “creative marketers” back to the drawing board to find new ways to cheat… er… be creative. 2) If influential brokers object, they may not get implemented.

    I’ve heard brokers make the argument “You have to let me relist, otherwise you are not allowing me to represent the best interests of my seller.” Thing is, MLSs serve both brokers repping buyers AND those repping sellers… (Most of those brokers do both.) I have an MLS client dealing with a broker whose seller wants a single-family home marketed as a commercial property, even though it is not zoned as commercial (one of the MLS’s pre-requisites for entry as a commercial property). He says MLSs rule is interfering with his relationship with his seller. That’s just bullsh17, but it does not prevent him making the argument and wasting everyone’s time…

    -Brian

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