The Future of the Multiple Listing Service (MLS) by Saul Klein

What’s the MLS of the future look like after the elimination of the MLS offer of compensation?

Prior to leaving for next week’s 2d Annual International MLS Forum in Milan, Italy, where Saul will Moderate a panel of key MLS thought leaders, Saul shared his thoughts on the following video about an innovative “Flipping the MLS Model.”

Here’s the 14 minute video recorded by our friends at CRE Collaborative.

For those who cannot access the 14 minute video, here’s a collection of excerpts from Saul’s presentation:

• I’m headed to Milan on Saturday to participate in the second annual International MLS forum. The MLS in the United States is the envy of the world. We are going through some  period of hardship right now with MLS in this country, but the rest of the world is still very interested in all of the great things that multiple listing services can provide —  from the data platform, to the broker cooperative, to the data and all the information that makes it much easier to buy and sell real estate.
•  So I was actually at CMLS last week. CMLS is the Council of Multiple Listing Services – some people compare it to the NAR of Multiple Listing Services. People sometimes don’t realize that multiple listing really is an industry all in and unto itself. The big question discussed was whether the Department of Justice (DOJ) will get involved and take a position on this proposed NAR settlement. The overwhelming sentiment agreed with all the attorneys on the legal panels who indicated that they believe that the DOJ will step in. I know John Reilly is working on a Data Advocate article projecting that the DOJ by the end of October will file an amicus brief arguing its position that the settlement doesn’t go far enough, and perhaps the parties should go back to the negotiating table.
• And so we haven’t seen the end of this removal of compensation from the MLS, but in the meantime, I’m heading to Milan to talk about data, the value of data. I’ve got a great panel,  Victor Lund from WAV Group, Kevin Green, senior vice president and general manager of CoreLogic, Giselle Abadi  CTO – CoFounder from Realtyna,  as well as Jeff Borsch, who is the CEO of the IRES MLS, one of the big MLSs in Colorado, which, by the way, Colorado’s got some very interesting things going on around MLS and ownership of MLS and ownership of data.
• So my panel will discuss the value of the MLS, and the value of data. How that data can be monetized, how the platform itself is an advantage to the community. The fact that the MLS, even if it had to eliminate the offer of compensation, is still THE  place everybody goes to find out much of what’s available. It’s a marketplace that everybody goes to find out what can be monetized, so they can do comparative market analysis and more. So there’s huge value in MLS. And the one thing that people in the industry haven’t really been able to do, despite frustrating attempts over the years, is really finding ways to monetize data in a big way. And, in particular, to look at ways to get a national footprint, to bring some of this really valuable data that can be captured within a multiple listing services to the capital markets and how we can monetize around that, and how maybe we can even “flip the model” of MLS.
• Because if you think about it, content providers who provide data, information and content to the internet these days are rewarded for that. They get paid. Unless you happen to sell real estate, then you pay to have your content on the internet. And there’s something wrong with that model where entities can take data from an MLS and can turn it into billion dollar companies. There’s something unfair about the fact that  both the small mom and pop broker and the big giant broker pay the same monthly fee — and that’s because in the past we’ve never been able to actually charge for data based on data consumption, but it looks like we’re getting very close to being able to measure usage and can begin to charge people who receive our data based on that data consumption.
• Of course we know, for example, that CoStar is a big commercial player and they would love to be in the residential space. As a matter of fact, they spend a lot of money promoting their asset brokerage — homes. com.  So there’s Homes. com spending just a ton of money around this idea of the home and the community and what’s going on in the community. So, they’re doing their very best. And at the same time, where do you think Homes. com gets the data for their website?
• They get it from the multiple listing services. So the brokers have to go out and  collect that listing data. The brokers have to spend money to operate a business. And then they have to pay to join the MLS. And then the MLS distributes that data. And then the big companies  make billions of dollars on the backs of the real estate brokers and agents who work hard under a contingency model – who, I always say, work for free, work for free, work for free, work for free, and then close a deal before getting paid. And so,  is that even right?
• Is it even fair that we as an MLS will distribute our data to a broker or a giant entity that just happens to have a broker’s license, because that’s the way they get that data for the same cost. And in my mind, it’s not fair. And so what we really need to do, as an MLS, is charge users for the data based on their consumption.
• We now can actually meter the amount of usage, and then charge for the amount of use. And if you’re a mom and pop brokerage firm and you’re only attracting a few eyeballs, you’ll pay an appropriate monthly fee, but if you’re a giant brokerage firm and you’re attracting 50 million eyeballs, a month, then you ought to pay more for that.
• We’re actually looking at technology that would allow us to meter and bill based on consumption. The technology was the hard part up to this point, but now that we’ve developed the technology, the hard part is going to be to go out and socialize this idea.
•  We have to be able to create the model and we created the technology to do it, then to be able to say to people we, and like 90 percent of the brokers don’t consume a whole lot of the data. So the charge to them would not increase at all or very much. It’s the big entities that utilize higher amounts of that data. And if, in fact, we can charge based on consumption. And if we can package that data up and sell it to other people who might be interested in it in the secondary market, like the capital markets, then we generate enough revenue to where we could compensate the true content providers – the brokers and agents.
• We must generate the revenue from the data before we can then turn around and start to compensate people for the data that they contribute. They contribute to the broker cooperative  because an MLS is a broker cooperative. The issue is about having these other companies that come in and get a data feed. They get a license to sell real estate. They don’t sell real estate. They don’t actively endeavor. They get a license just so they can receive the data. And then they take it and put the data on a website, get a lot of eyeballs, sell the leads back. And that’s not really a fair model to people that list and sell real estate who are members of the broker cooperative.
• So wouldn’t it be great to kind of change that model? We call that “Flipping The Model.”
• The rule you just mentioned is called mandatory submission. Mandatory submission is what makes MLS work. It said, I’m going to enter my good listings and my bad listings in the broker cooperative. And you’re going to put in your good listings and your bad listings, and we’ll all do it within some period of time so that we don’t have the opportunity to just necessarily sell the properties ourselves.

While we’re talking about value and property and commercial property, I think you might have seen the link from Places Platform where they co-hosted an amazing study with Cushman Wakefield and  focused on analyzing 15 cities. They’re going to expand that to 35 cities and it’s all about the future of cities. And it’s all about how much revenue gets derived from a certain geographic area. What’s the proper mix of residential, office, industrial to maximize the benefit? How can the cities make more money? How can they turn around and use that in a socially responsible way?

RELATED LINKS

Access the full one hour Oct 3 panel at https://www.youtube.com/watch?v=8YF_NiEubsA with Subscribe Button to the Real Estate Roundtable that is scheduled for the first Thursday each month with Saul being a regular panelist.

Announcing Reimagining Cities, an in-depth research report that puts 15 U.S. cities under the microscope to identify the real estate portfolios cities currently have versus what they need to flourish into the future. Access and Download your 23MB copy >> https://cushwk.co/3B8llTc