Syndication isn’t deadly but it also isn’t the MLS or IDX

Feb 1, 2012  |  Michael Wurzer

This post is about the “sindication” arguments erupting over the web over the last few months and more heatedly the last few weeks. For background, check out: Rob Hahn, AgentGenius, GeekEstate, Jay Thompson, Kris Berg, and the video from the managing broker at ARG in San Diego that set off the recent web storm. Read them all, especially the comments.

What to make of all this debate? First, there’s not much new here. Brokers are competitors and will make independent decisions about where to advertise their listings. This is called syndication and it’s been happening since the beginning of real estate brokerage. Historically, the syndication channels were newspapers, home magazines, flyers, signs, etc. Now we have the web and sites like Zillow and Trulia. So, this debate is nothing new.

Brokers will continue to decide how they can gain a competitive advantage for their listings. Some brokers only want their listings on their own web site or their franchise web site. Other brokers find value in Zillow or Trulia or Realtor.com. Others yet post to Craigslist and dozens of other sites, on the theory that more is better. In my view, here’s the rub:

On its own, syndication (the decisions of individual competing brokers) will never result in a critical mass of listings on any one site, because competitors will naturally choose different destinations to distinguish themselves.

This is what distinguishes syndication from the MLS. Almost five years ago, I wrote about how the MLS is more than technology. In that post, I wrote:

The representative decision-making process of the MLS is what allows for the broad cooperation necessary to create critical mass in terms of data sharing. Without this, I believe we’ll simply have a mishmash of data strewn here and there, with no possibility of a national repository or any other useful portal. The MLS embraces the duality of competition and cooperation, and strikes a limited balance that enables critical mass to be established. This feat should not be underestimated.

Five years later, that post proved prescient, because, indeed, what we have today is a mishmash of data strewn here and there. The only site that has anywhere near a complete data set is Realtor.com, because they were successful in working directly with the MLS organizations that have worked so hard to encourage cooperation among the brokers.

Importantly, however, the necessary cooperation will never be the strength of syndication channels (Zillow, Trulia, etc.), because they make most of their money by selling ads to brokers and agents on top of the listing data, which is inherently non-cooperative. In fact, this practice of selling ads on top of the listings to competing brokers really irks the listing brokers and results in claims of “coming to dinner with just a fork” and, ultimately, “we need to take back our data!”

But let’s stop and evaluate that last call to action, “we need to take back our data.” Where I think those who advocate against syndication go wrong is in using the terms “we” and “our.” In the competitive landscape of real estate brokerages, the only “we” and “our” is the MLS but the MLS is not a syndicator. By definition, syndication is the decision of an individual broker for their listings alone, and has nothing to do with the cooperative aggregation of listing data in the MLS. As suggested above, some brokers will decide to syndicate, others won’t, and the market ultimately will decide who has made the best decisions. This is as it should be.

The tougher issues arise, however, when brokers extend these same arguments to the MLS aggregation. In this regard, those arguing against “MLS” syndication are right. The MLS should not send the MLS aggregation to any advertising site, because the business models of those sites conflicts with the cooperative model of the MLS. As I wrote five years ago, the value of the MLS is in creating that fragile cooperation that allows for the aggregation. What we’re now seeing is that the fragile balance of cooperation will not stand for the MLS sending the aggregate data to any advertising site.

Instead, the MLS should continue to foster the IDX and VOW policies that have been successful so far and modernize them with stronger terms of use designed to make it clear to brokers that their data will only be used by home buyers and sellers for their personal home buying and selling decisions. Such a foundation will not only preserve but strengthen IDX and VOWs, and help brokers and agents extend the collective MLS data to their customers on the web, mobile devices and whatever new technology comes down the pipe next.

10 Responses to “Syndication isn’t deadly but it also isn’t the MLS or IDX”

  1. John Coley says:

    I’ve commented on this video elsewhere on the web, but I think it bears repeating here, especially since FlexMLS is “my” MLS. Basically, I find myself in the minority of other brokers that rely heavily on the web in that I am against thinking that all syndication is good for all agents at all times. I think it’s a personal choice. I get about 90% of my leads either purely from my web efforts or at least confirmed by them, so I am heavily invested in tracking my leads and knowing what works (for me) online. I am also odd from the average web based brokerage in that I sell in a rural, second home market in the southeast. Most web heavies are in major metro markets. The fact is, for me, right now, in my own market, realtor.com, trulia, and zillow aren’t worth squat to me, and I’m not afraid to say it. I have attended conferences and online classes (heavily sponsored by those companies) where the idea is put forth that if you don’t fully syndicate, and purchase their golden package, you’re automatically an idiot. I just don’t buy it. I allow my minimum number of photos to be posted for “free” on realtor.com but I don’t pay extra for anything. It baffles me how other web based agents can make a cogent argument against, say, newspaper advertising in a cost per closed lead basis, but not apply that same clear logic to paying additional cost to syndicators. Maybe someday conditions will change and I will pay the syndicators extra to advertise, and it will be worth it, but right now, they are a joke for me in my market right now. Why should I pay them, to post extra content that is free to post elsewhere? I am sure other markets and other agents are different than my situation, though.

  2. Dave Hanna says:

    An excellent post and very salient points. To me, John’s comments make clear how this decision is market by market. The effectiveness of 3rd party sites (Syndicators) is tied to thier willingness to invest dollars on SEO in a market. Where Zillow or Trulia want eyeballs (major metro areas) on their sites, they pay for SEO and the end result to those of us who participate with them are lead opportunities.
    The MLS/syndication conversation is a complicated one, and I don’t agree that the MLS should never send to these sites. Not all MLS have consumer portals, and not all MLS are owned by Realtor Associations.
    The data in the MLS is best available, and that is what everyone wants to see displayed. As others have said before me, the consumer is going to ultimately drive the decision, and determine where and how this information is accessed. We need to stop trying to get back something long ago lost and focus on accuracy and consumer choices.

    • Michael Wurzer says:

      Dave, syndication is advertising and the broker, not the MLS, should decide where to advertise. The MLS should not be make that decision for the broker. You are right that the market (though the market includes forces other than just the consumer) will decide what brokers make the best decisions about syndication.

  3. Dave Hanna says:

    I am in agreement on that point, and there is certainly a way to ensure this is a choice. My problem with much of this discussion has to do with the desire by some of the more vocal parties in the conversation to want to take this choice away from me.
    The reality of the marketplace, which is the demand for accurate and up to date information by consumers, unfiltered and unobstructed by brokers, is why so much of this is pure rhetoric.
    You will lose the arguments at the kitchen table, and the listing, to the competitor who can clearly explain how your wanting to control the data will restrict the opportunities for a consumer to see the listing online.
    No one with any real market share is willing to completely pull away from syndication, and will not successfully do so in the future.

  4. >>No one with any real market share is willing to completely pull away from syndication, and will not successfully do so in the future.<<

    Dave, Shorewest in Wisconsin has pulled away from syndication and I think they can easily be characterized as having real market share in that market. http://agbeat.com/editorials/open-letter-to-brokers-on-ending-listing-syndication/

  5. Dave Hanna says:

    Correction noted, but not exactly a trend yet.

  6. John Coley says:

    Dave and Michael – I also, not too long ago, heard the same logic (“no one with real market share… will not successfully..”) being applied to newspaper, home magazines and open houses. Just because the big brokerages do it, doesn’t automatically mean it’s smart for everyone. Again I beg the question, how many leads are you getting ~~ from the extra ~~ advertising you are paying on on Zillow, Trulia, and Realtor.com? If it doesn’t add up, why advertise there? After these comments I had a friend that sells in Atlanta call me. Obviously, Atlanta is a major metro market where those 3 have big impacts on SEO. My friend last year spent over $20k in extra advertising with them and it yielded well less than $10k in gross commission income. His experience last year was similar to several previous years. He has had enough and is dropping all 3 and sticking with the free 3 pictures or whatever. It would be interesting to me for agents who advertise heavily on these 3 to comment and give their ballpark expenditures and ~directly~ related gross commission income.

  7. Dave Hanna says:

    Hi John-
    I am not sure if this would be seen as relevant, but I do pay nominal (less than $2000/year) for some exposure on Trulia. I have not invested in Zillow.
    That investment in 2011 brought me 2 sales and over $15000 in income. Based on the fact I am now working with multiple parties as a result of this same exposure, I would expect to more than double that income.
    I carry on average about 10 listings at a time.
    I use the exposure on 3rd party sites in my listing presentation, as do the other agents in my office.
    We are a small presence in a big market (Chicago) and our local area, but average more than a dozen sales per agent in the office and have a good median sales price.
    We find a strong expectation by consumers to know their property information is getting to as many places on the web as possible where people look for real estate.
    i think all of this is specific to the area of the country you are in, as well as the market share (or lack of) brokerages have. Here in Chicago and the greater metropolitan market, there is no company with more than 15% of the sales,
    The greater question being debated here is more about the tension between consumer expectations and the perceived rights of ownership brokers have for their listing data, especially as it is aggregated and re-distributed, than how successful an agent is farming leads.

  8. Ron Thieme says:

    I have not read the entire thread of preceeding articles but are we not missing the big picture here? We need to remember that our job is to sell the listing for our client…the Seller. We should be thinking about what is best for him and not worrying so much about who gets the Buyer lead. A Seller would probably tell you the more exposure, the better.

  9. John Coley says:

    Ron, then wouldn’t that logic “more exposure is automatically better” mean that you should advertise on Chinese TV? (who knows if you can, but work with me.). With over a billion in audience, isn’t your seller poorly served if you don’t buy wall to wall advertising in the biggest TV market on earth? Of course not. This same argument should be made with any advertising, Zillow, Trulia, Realtor.com included. The problem is that very few agents I think are making this calculation, and are too scared to admit it.