The Nail In The Coffin?

Dec 3, 2007  |  Michael Wurzer

For years, decades even, some in the real estate sales business have believed that a significant part of their value proposition lies in their access to the MLS and to open it up to others would be catastrophic to their business. I think I’ve finally found the nail to hammer into that coffin.

Yesterday, I posted about what I and others see as an inevitable decline in MLS membership numbers and was graced with several insightful comments. The one that really caught my attention though was from Matt Lavallee, Development Manager at MLSPIN in Boston, who posits, “I know many, many former Realtors and RE Brokers who have long since left the market but keep their membership & licenses active (often simply to sell their own or friends’ houses). A single $10,000 commission therefore carries the base cost for a full decade.”

Following this, Judith Lindenau commented that, “In my former association, over 1/3 of the members had not completed a transaction in the last 12 months–and that’s not unusual!” One-third may seem like a lot but I know this is basically right, because we ran these numbers a few years ago for our MLS client-base and I was astounded that so many users had sold nothing in the prior twelve months. The number is likely even higher now in this slow market. So, 1/3 of the members of the MLS really are not in the MLS market at all.

Huh? What happened to the need to keep the information private to participants in the MLS? What’s the difference between providing MLS access to a retiree or ex-agent who has no intent of listing or selling anything and a consumer? Two things: (1) agreement to abide by the MLS rules; and (2) payment of the fees. Oh, yes, and the fact that the consumer, if they want to access the MLS, likely want to do so because they are interested in buying or selling, whereas the 1/3 of existing MLS members have no such interest or at least ability.

So, is that really all that’s keeping the MLS private? Money and terms of use? These should be easy problems to solve. I’ve suggested before that MLSs, brokers and agents should consider the terms on which they’d grant various parties access to the MLS. Such terms have obviously been struck already with 1/3 of the members who really are just participants in form, not substance, and so the idea that the MLS should be maintained privately seems anachronistic.

6 Responses to “The Nail In The Coffin?”

  1. Well, as I’ve long believed, free (meaning uninhibited) access to the MLS by the consumer is a largely death knell for the role of the buyers’ agent and a likely marked increase in dual-agency deals.

    Personally, I feel that this is bad for the market, as anachronistic as the MLS “gatekeeper” system may be.

    Imagine if the MLS were suddenly open, unfettered, to the marketplace — the Realtor ranks would thin quickly, and those left would be in control of a lot of peoples’ money for a time. Then there would be the Great Rise of the Listing-only (no service) shop, coupled with a likely entirely new role of an impartial transaction coordinator, most likely coming from the legal trade versus the Real Estate professional ranks to handle the “flow” of the deal.

    In the end, then, neither party’s interest is protected, and the only thing we’ve done is shift the contemporary commission dollars to another party just as susceptible to “inflated prices” and dealings. Oh, and RESPA wouldn’t apply to them, so new laws would have to be created to protect the consumer from themselves.

    I don’t see a true Free Market happening in Real Estate in my lifetime — there’s just too much money on the table.


  2. Matt, I think you’re wrong — the buyer’s agent brings more to the table than access to the MLS. More importantly, I’m not talking about “uninhibited” access but rather access on terms acceptable to the MLS participants, with an emphasis on participants. My main point is that there has been this bogeyman in the room when it comes to discussing consumer access ot the MLS and the fact that 1/3 of the MLS members have access and are no different than consumers makes that bogeyman disapper, or at least it should. See you in Miami!

  3. Matt Cohen says:

    Michael, I think you’re making a big jump from real estate agents and others that only occasionally are involved in property sales to the consumer. I think (or at least hope) that we may be in agreement when we get down to the details – that there’s a role for the consumer in information systems that *tie into* the MLS. I think you’ve already started doing a wonderful job of enabling fulfillment of that consumer role in your system, and there will doubtless be other ways that consumers can have access to a system that is tied into the private one – in various controlled ways.

  4. that only occasionally are involved in property sales to the consumer

    Why is this a big jump? I don’t see it. As mentioned in the post, the differences I see are that the 1/3 non-participants have agreed to abide by MLS rules and have paid a fee. My question is why can’t others be considered on that same basis?

    I’m definitely not advocating some revolution here, I’m just calling out what seems pretty obvious — that the “privacy” of the MLS is in significant ways not true and yet the MLS continues to play a big role in real estate sales, buyer agents play a big role, and seller agents play a big role.

    I’m a HUGE supporter of real estate professionals. I think they bring a ton of value to the table. However, I don’t think that information access is one of them. I’m really talking to those who fear information access will ruin them — they are already providing access to people very much like consumers and it hasn’t ruined anything yet.

    Perhaps what you mean is that the numbers of non-participating MLS members are small versus the total consumer population. Yes, that’s true, but I also didn’t say that everyone should have access, I said the MLS and the participating brokers and agents should be thinking hard about the terms on which they will grant access to consumers who are interested in buying or selling properties. Maybe this means paying a fee (I wouldn’t recommend that, but it should be on the table for discussion), certainly should involve identification at any level beyond IDX access, and probably selection of a representative.

    The main point I’m making with this post, though, is that too often the conversation never even gets started because of the bogeyman over access and yet access is already being given.

  5. Troy Rech says:

    REIN rolled out a hybrid model of your concept a couple of years ago. In my opinion, it was successful but was killed due to backlash from a group of brokers/agents against the concept.

    MLS access to many agents represents a gym-type membership as outlined by Matt L. Agent maintains their membership for access to information, opportunity to receive a commission for a sale or referral, and – in some cases – an identity via career. Example, “We moved to Florida and I started my new career (or second career) as a real estate agent”.

  6. John Coley says:

    I agree that MLS data hoarding is silly. In a past post on my blog, I likened it to to stock quotes in the financial services industry. 15 years ago most people needed a stock broker to get an instant quote of stock XYZ. Not so now. Can you imagine picking a financial advisor based on the fact that he/she has access to real time stock quotes? Of course not. The value in a financial advisor lies in knowing WHY stock XYZ is selling at $10 / share or what it will do in the future. Any RE agent that thinks his worth lies in access to MLS info will soon find out the exact value of that – $0.