San Diego, California
A collection of notes and observations by Saul Klein, CEO of InternetCrusade.
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Jun. 18, 2007
Categorized in: MLS Issues
In my June 10 post entitled “The Future of MLS – A Series of Posts,” I reacquainted you with the “Six Guiding Principles” for MLS created by the California Association of REALTORS (CAR) MLS Working Group and adopted by the CAR Board of Directors (BOD) in September of 2005. These Guiding Principles are an important piece to your understanding the direction that CAR is moving.
In January of 2007, the Working Group, as requested by the CAR BOD, developed a general document outlining two possible directions that would incorporate much of the “Six Guiding Principles” and define the future of MLS in California (and possibly beyond).
1. Statewide Data Aggregation or a
2. Statewide MLS
Over the last few years, three areas of California have been working on aggregation and/or consolidation of MLS data, moving toward greater MLS access for more licensees over greater geographic areas. These areas are known as:
1. CDU (Los Angeles and vicinity)
2. NCREX (San Jose, Silicon Valley, East Bay and surrounding areas), and
3. Quattro (San Francisco, North Bay, and Sacramento).
Each of the above is taking a different approach to the job of preparing their MLS for the future.
At the CAR Board of Directors meetings in Sacramento in early June, the BOD passed the following significant motions. There should be no doubt that the future of MLS is being transformed. Where it leads is another question. Why it is seen as necessary is another story.
Here are the motions:
1. That prior to the issuance of an RFP for Information Engineering, C.A.R. will meet with the current groups (NCREX, Quattro, and CDU) to review in depth their technical work and to maximize use of their work product in the Statewide Information Engineering effort.
2. That C.A.R. authorize up to $500,000 for the Information Engineering effort necessary to facilitate the development of either a Statewide Data Aggregation and/or a Statewide MLS, accelerating the implementation of either plan.
3. That C.A.R. develop more detailed implementation plans for both a Statewide Data Aggregation Service and a Statewide MLS which will be presented for consideration in October. It is understood that participation in either plan will be voluntary.
4. A motion from the floor of the Board of Directors was referred to the Strategic Planning and Finance Committee, that the MLS Working Group accomplish two additional goals:
a. Hire a consultant or consultants to advise C.A.R. on how to be more Web 2.0 enabled, how to build a website that will drive, capture and serve consumers on a statewide aggregated data site or statewide MLS site, and build this into a strategic portion of the business plan.
b. Evaluate the feasibility of creating a C.A.R. statewide website that is consumer driven utilizing current IDX data feeds which can be up and running very quickly and not years out.
In future posts we will discuss the above Motions and also further define the 3 areas in California already moving forward and what exactly they are doing, knowing that a possible step forward would be these 3 entities to combine the access to their respective data.
Saul
Saul Klein
President/CEO, InternetCrusade
Jun. 10, 2007
Categorized in: MLS Issues
At the CAR Board of Directors Meeting in January, the CAR BOD tasked the MLS Working Group to create plans which would, if the BOD so decided, be the basis for modification and simplification of MLS in California, and move towards the 6 Guiding Principles previously stated.
The plans created with the help of a consulting team and presented to the CAR Directors on June 8, 2007 in Sacramento contemplate:
1. Aggregating MLS Data from all the 70 or so MLSs which would give all MLS Participants and Subscribers access to all the MLS data of all the participating MLSs for a single fee, uniform rules, etc or...
2. Creating a statewide MLS to replace the 70 or so existing MLSs which would result in fulfilling the 6 Guiding principles.
3. Reducing the cost of MLS to Participants and Subscribers
What the Working Group concluded was that the next step for CAR would be to fund, with up to $500,000, the creation of an “Information Engineering Plan.” A motion to that effect was sent forward to the BOD and will be reported in a future post. The task is to create the structure or schema to allow all the data from all the MLSs to be properly categorized. What is considered a full bath in San Diego may not be what is considered a full bath in San Francisco. What in San Diego is considered a “neighborhood” may not be considered a “neighborhood in Berkeley. The fields used in San Diego might omit certain fields used in Contra Costa. In the early days of the REALTORS Information Network (RIN) the same issue existed and the solution proposed was something called DXM (Data Exchange Method). This is a real issue to be solved in order to move ahead with a Statewide MLS or an Aggregation of data on diverse vendor platforms, or even the same vendors multiple platforms.
Complicating the issue is the fact that 3 major population centers in California are already working on 3 different approaches to the above:
1. Quatro – San Francisco, Bay Area Regional MLS, Sacramento – Data Sharing with Single Sign on and Strong Authentication (Rapatonni the common vendor) and a fourth, “read only” data base
2. NCRex – San Jose, Silicon Valley, Bay East, et al – Creating one MLS (a “mini” statewide system)
3. CDU – Los Angeles Area MLS – Alliance of MLSs sharing MLS data where the MLSs have different vendors
Further complicating the issue is political sentiment that CAR should not get in the way by creating its own solution(s) but seed these ongoing efforts to help discover the best result for all REALTORS in California, and for consumers. Some local associations, MLSs, and their volunteers fear loss of control, loss of revenue, loss of jobs for key employees at the organizations absorbed in the process.
CAR’s MLS goals are a worthy destination. The path to arrive there is less clear.
It is easy to focus on the wrong information and miss the real issues. In my mind, appropriate questions are:
1. What would be the mission (purpose) and vision of a statewide MLS?
2. What are the consequences if we do not move in this direction?
3. What are the consequences if we move in this direction, but slowly?
4. Is there urgency?
5. In the technological structure, are we really willing to spend the money to compete in a Web 2.0 environment?
6. If yes to question 5…why the talk about 6 pictures? Will this be scalable? Will we be able to ad Virtual Tours and video? Not important you reply? That is what the “Outsiders” are doing
7. What about Web 2.0 Challenge?
8. What paradigm of MLS are we using as the assumptions to move forward? Are we merely looking at changing the form of MLS and not the substance?
9. Are we addressing content syndication?
10. What action was taken by the CAR Board of Directors this week in Sacramento? That will be the subject of the next post.
Saul
Saul Klein
President/CEO, InternetCrusade
Jun. 10, 2007
Categorized in: MLS Issues
The Internet, access to data, technology, consumer expectations, generational differences and forces from outside of the industry have the power to shape the future of the real estate business. If REALTORS want some say in that future, they need to pay attention and do their homework. What and where are the threats and the opportunities? Where is MLS and the industry headed?
Let’s begin this conversation with the MLS Statement of Principles of the California Association of REALTORS.
The following Principles and explanations are the product of the California Association of REALTORS MLS Working Group and were adopted by the CAR Board of Directors on September 24, 2005.
Anyone with an interest in MLS should read and understand the following.
I am presenting the information here as background for future posts and conversations.
MLS Working Group Statement of Principles
(Adopted by the C.A.R. Board of Directors 9/24/2005)
1. MLS data needs to be fully standardized with local options for data field variation.
We believe that local customization of MLS data fields has made the comparison of data between MLS’s unnecessarily complex. A lack of uniformity has created artificial boundaries that impede the efficient operation of the market and the ability of REALTORS® to service their clients. We support universal data fields that are standard across all MLS’s while also recognizing the need for adding local descriptors.
2. California REALTORS® should have universal access to all MLS data.
C.A.R. members are licensed by the state Department of Real Estate and as such are able to sell property throughout California. Consumers have access to statewide and even nationwide listings through a variety of data aggregation sites on the Internet. In order for REALTORS® to provide their clients with the information they want, California REALTORS® should have access to all listing data in the state. Shared databases and reciprocal agreements should be strongly encouraged.
3. Use of MLS data and its distribution to third parties should be controlled by the brokers who provide the data.
We believe that a listing represents intellectual capital and that the process of creating a listing is a value-enhancing activity. Brokers entering into an exclusive agreement with sellers accept the responsibility for marketing the property and should have control over distribution of the listing data. The rampant and uncontrolled dissemination of valuable listing information on the Internet has increased the cost of doing business and devalued the role of the agent and broker in this process.
4. MLS entities should exist for the benefit of the participants and subscribers.
We believe that MLS fees should be set at a rate that gives the MLS and/or the Local Association a fair return for delivery of MLS services. We believe that local Associations of REALTORS® provide valuable services to their members. These include services and activities that advocate for homeownership, ethics and professionalism in the industry. We believe that local AOR’s should be adequately and fairly compensated for these services, including those that may be directly associated with an MLS. 1 2
5.. MLS rules should be uniform and enforced consistently.
Over the years the relevant market area for many brokers and agents has expanded beyond the artificial boundaries of now out-dated MLS regions. As a result brokers are increasingly operating in multiple MLS environments and facing complex issues related to the disparities in rules, regulations and enforcement governing different MLS’s. We believe rules should be established that simplify and enhance the experience of MLS users across systems. To that end we believe that the C.A.R. Model MLS Rules should form the basis to develop statewide rules and standards of enforcement.
6. MLS Boards of Directors should include broker owners with appropriate regional representation.
We believe that broker involvement in MLS governance is critical. The MLS is the single most important business tool in the real estate industry and as such the provision of MLS services should be accountable to all participants. We believe it is imperative that brokers from both large and small firms be given representation on MLS Boards.
Saul Klein
President/CEO, InternetCrusade
May. 11, 2007
Categorized in: MLS Issues
The Following was submitted by Matt Cohen of Clareity Consulting. This is a conversation in which we all need to participate, the future of listing distribution, and the future of MLS.
Saul Klein, CEO InternetCrusade
The following is a high-level overview of a session from Clareity Consulting's 2007 MLS Executive Workshop. Every year the Clareity's Workshop provides fresh, in-depth updates on the most pressing issues facing MLS executives and leaders and creates an intimate environment for participants to share their knowledge and experience with each other. You can check the dates and/or register for next year's event on the Clareity Consulting web site – www.callclareity.com
and other real estate content were at one time jealously guarded by brokers, and in turn by the MLS – especially when it came to putting that content on the Internet. Though MLS public web sites are still controversial in some corners, the recent trend has been toward wider distribution of such content and the question of day is no longer "Should my listings be available on multiple Internet sites?" and is more commonly, "Where should I send the listings?" There have been two trends contributing to the current environment: the first trend is the market slow down which has increased pressure on brokers and agents to facilitate greater marketing exposure for properties and the second trend is a part of wider culture, the "Web 2.0" trend of "syndication".
ListingsIn the "Web 1.0" world, companies wanted all consumers to visit their site and stay as long as possible. In the "Web 2.0" world, the trend is to make content available to other sites or have customized information delivered directly to individual site subscribers. The most common mechanism for this is called "RSS", which stands for Really Simple Syndication.
So, what we have traditionally referred to as listing distribution could also be referred to as content syndication. Such syndication may benefits all parties. Today, consumers must typically visit multiple sites to see all the listings for their area: Realtor.com/Move.com, Yahoo!, craigslist, Google, NewHome Source, FSBO.com, Trulia, remax.com, coldwellbanker.com and numerous other sites. When listings are fully syndicated, consumers may not need to visit multiple sites. For the broker or agent, syndication drives listing exposure across numerous online platforms - generating new traffic and content exposure — making syndication a free and easy form of advertisement.
Between the continued growth of listing content syndication and the evolution of data standards such as RETS (the Real Estate Transaction Standard), the MLS may have an evolving role to fill in the collection of data and its syndication. First, RETS 2.0 will make it more feasible for real estate professionals to manage their listings in a number of systems and have those changes syndicated. This may mean that an agent enters and manages a listing in the MLS and has it syndicated to the broker back-office system, other systems they use, and web sites – much as it is today – but it could also mean that the agent can manage listings directly into the broker system and have syndicated to the MLS and other systems. Managing that syndication may become a core function of the MLS and other real estate software. This scenario is illustrated below:
While it is clearly up to brokers to determine where their listings are advertised, as an industry it is in our best interest to encourage balancing the benefits of content distribution with the interests of those that have worked to create the content as well as providing appropriate levels of information security and consumer privacy.
While some MLSs have started dealing with their information security responsibilities, in terms of MLS system authentication and the hacking threat, less attention has been paid to listing distribution. Some say, "This is information already out there on the Internet – its 'public' information. We don't publish the consumer's name or phone number. So what's the big deal?" If a consumer provides information to an agent for the purpose of selling their home and, due to uncontrolled distribution or inadequate information security practices, the consumer is immediately overrun with telephone, mail or email marketing from real estate related services it could lead to backlash and damage the trust in the real estate professional. It's all too easy to scrape the content off of most MLS web sites, and combining that information in a "mash up" with even the most basic reverse telephone directory creates a consumer privacy issue. If industry critics like Dave Barry have their way and open up access to the MLS, we will surely have other attorneys attacking the industry for that breach of consumer privacy.
information security assessments to MLSs and brokers, Clareity has found that such policies are rarely thoroughly defined or implemented. Clareity has worked with a number of clients to adopt and implement more robust listing distribution policies, integrate these policies into appropriate contracts, educate staff and members and third parties on those policies, and implement pro-active controls as well as means for monitoring and enforcement. There are hundreds of details to attend to in such a policy, and it is rare that Clareity finds a policy that is better than 'fair' during an assessment. Ask yourself, "Does my policy cover secure coding practices to ensure listings can't be scraped off member or MLS/IDX vendor web sites? For the secure transfer of information using encrypted protocols? For the encrypted storage of information, in databases and on backups? For security compliance monitoring mechanisms?" Again, there are scores of detailed questions to be asked, and which need be addressed in a comprehensive policy.
The current trend toward increasing listing content syndication is going to create new roles for the MLS and new challenges for our industry. Finding a balance of giving the consumers access to the information they desire and protecting broker rights, industry interests and consumer privacy will be very important, and Clareity encourages its clients to take security of data distribution to the next level through policy, agreements, MLS rules, education, implementation, monitoring, and enforcement so they are prepared for the future of listing content syndication.
About the author:
Matt Cohen is Clareity Consulting's Chief Technologist. Matt has spoken at many conferences, workshops and leadership retreats around the country on a wide variety of MLS-related topics, and is a well-regarded real estate industry expert on software design, product management, project management, data center reliability, scalability, and information security. Clareity Consulting was founded in 1996 to provide information technology consulting to the real estate industry and its related businesses. For more information, visit www.callclareity.com
- establish common practices used to evaluate and establish third party relationships
- establish conditions on those relationships and responsibilities within them
- determine the data that may be accessed
- describe how that data may be securely transmitted and stored
- detail numerous other detailed steps needed to provide appropriate information security for the content to which third parties, are entrusted.
While providing information security assessments to MLSs and brokers, Clareity has found that such policies are rarely thoroughly defined or implemented. Clareity has worked with a number of clients to adopt and implement more robust listing distribution policies, integrate these policies into appropriate contracts, educate staff and members and third parties on those policies, and implement pro-active controls as well as means for monitoring and enforcement. There are hundreds of details to attend to in such a policy, and it is rare that Clareity finds a policy that is better than 'fair' during an assessment. Ask yourself, "Does my policy cover secure coding practices to ensure listings can't be scraped off member or MLS/IDX vendor web sites? For the secure transfer of information using encrypted protocols? For the encrypted storage of information, in databases and on backups? For security compliance monitoring mechanisms?" Again, there are scores of detailed questions to be asked, and which need be addressed in a comprehensive policy.
The current trend toward increasing listing content syndication is going to create new roles for the MLS and new challenges for our industry. Finding a balance of giving the consumers access to the information they desire and protecting broker rights, industry interests and consumer privacy will be very important, and Clareity encourages its clients to take security of data distribution to the next level through policy, agreements, MLS rules, education, implementation, monitoring, and enforcement so they are prepared for the future of listing content syndication.
About the author:
Matt Cohen is Clareity Consulting's Chief Technologist. Matt has spoken at many conferences, workshops and leadership retreats around the country on a wide variety of MLS-related topics, and is a well-regarded real estate industry expert on software design, product management, project management, data center reliability, scalability, and information security. Clareity Consulting was founded in 1996 to provide information technology consulting to the real estate industry and its related businesses. For more information, visit www.callclareity.com
Jan. 4, 2007
Categorized in: MLS Issues
Hot off the press is the announcement of Point2 Technologies launch of
the Point2 NLS.
You've heard us say that it is time for real estate professionals to
take back their future.
After taking an in depth look at Point2NLS, we believe it is the right
step at the right time.
Saul, John and Mike
******************************************************************
First National Listing Service for Real Estate Launched
Point2 NLS Gives Real Estate Professionals Complete Control of Listings
and Breaks Down Artificial Geographic Boundaries for National Listing
Exposure
Saskatoon, SK and Vancouver, BC - January 04, 2007 - Point2 Technologies
Inc. ("Point2") today launched Point2 NLS (www.Point2NLS.com), the first
national listing service for licensed real estate professionals. The new
service is launching with nearly 105,000 members in its roster.
Unlike a traditional Multiple Listing Service (MLS), which is primarily
an offer of compensation and where rules are enforced with fines, Point2
NLS is advertising and marketing focused, does not apply membership
fees, and is self policed by its user community.
Point2 NLS is designed to give real estate professionals complete
control of their marketing relationships and of their most valuable
marketing assets - their listings.
The new platform allows members to selectively advertise listings on
peer websites and on third party consumer search sites. Members always
retain control over who displays their listings and where.
Proprietary Point2 NLS data control capabilities are designed to help
real estate professionals take back their future, which has been in
question given the proliferation of technologies and business models
that have allowed virtually anyone to leverage property listings
featured on the Internet, for their own benefit.
"Point2 NLS brings to bear the true value and power of organized real
estate. It has enhanced the best features of a traditional regional MLS,
those being advertising and organized cooperation amongst professionals,
and mixed them with web 2.0," said Brendan King, chief operating
officer, Point2 Technologies." "Complete control of listing assets,
choice in marketing partners, wide syndication exposure, rich deep data,
virtual tours for every listing, consumer empowerment and participation,
no regional boundaries and, a drive to provide detailed analytics and
return on investment (ROI) data on advertising investments across the
network are really what Point2 NLS is all about."
Point2 NLS also breaks down artificial geographic barriers and
standardizes listing content data structures to maximize listing
exposure, facilitating a richer, more comprehensive real estate search
experience, increasing value and benefit to end consumers.
Said Saul Klein, InternetCrusade President and CEO: "I applaud and
support Point2's efforts to give control of the advertising and
marketing of listing information back to the real estate professional.
It is the right move at the right time."
Based on Point2's proprietary, patent-pending technology, Agent
HandshakeT powers the peer to peer advertising capability of the new
service.
Point2 NLS members can add and store unlimited listings, each including
up to 36 photos and extensive property details. The system also empowers
consumers by allowing them to directly participate in the marketing of
their property. At the discretion of the real estate agent or broker,
home sellers can add content to their property listing, through a Seller
Login option.
Once entered into Point2 NLS, members can easily and efficiently
advertise listings on a limitless number of peer websites, and on any or
all of Point2's listing syndication partner sites, for free, including
Google Base, Yahoo! Classifieds, Trulia, Point2 Homes, Oodle, Propsmart,
Livedeal, Edgeio and others.
Additionally, members can leverage listing content to book spotlight
advertising on applicable sites including NYTimes.com, all through the
same, simple check box process and interface.
Users can also integrate their Point2 NLS listings into their existing
website or blog, irrespective of who their service provider is.
Other key Point2 NLS capabilities include an advanced lead management
and incubation component, and performance analytics that capture traffic
data generated from each of the advertising channels.
Membership in Point2 NLS is open to all licensed real estate
professionals irrespective of geographic location or affiliation. The
system is easy to use and can be accessed from any computer with an
Internet connection. Comprehensive training is offered to the members,
online, also free of charge.
The Point2 NLS website is now live. Licensed real estate brokers and
agents in the United States, Canada and around the world can sign up at
www.Point2NLS.com.
About Point2 Technologies Inc.
Point2 Technologies provides online marketing and eBusiness software
solutions for the real estate and heavy equipment industries. Leveraging
Point2 proprietary and patented technology, Point2 develops and markets
software solutions that enable organizations to conduct business over
the Internet more easily and more profitably. The company is the largest
provider of online marketing and lead management software for real
estate professionals, led by its flagship product, Point2 Agent, with
nearly 105,000 subscribers in 85 countries. Point2 is also one of the
largest providers of e-commerce solutions to the heavy equipment
industry, powers Caterpillar Inc.'s global heavy equipment dealer
network and owns and operates UsedIron.com, one of the largest used
equipment venues online.
Founded in 1996, Point2 Technologies is privately held and employs a
staff of 100 at its headquarters in Saskatoon, SK and its Vancouver, BC
offices. More information can be obtained at www.Point2.com.
###
Point2R is a trademark of Point2 Technologies Inc. All other company and
product names may be trademarks of the respective companies with which
they are associated.
Media contact:
Roger Noujeim
Public Relations Director
Toll Free: 1-888-955-7900 Ext. 224 (U.S. and Canada)
Tel: 1-604-675-9393 Ext. 224
rnoujeim@point2.com
Jan. 4, 2007
Categorized in: MLS Issues
Hi everyone,
Below is a recent statement I made to an Association Executive, which was than forwarded to a local director. After reading the statement, the director asked the question which is stated below, along with my answer.
Here is the statement I made:
REALTORS need to know not only technology, but what the future will demand from them in the way of service...as MLSs disintegrate and consumers market their homes themselves, turning to REALTORS for negotiating, contract writing, and a stress-reduced closing.
The value proposition a REALTOR makes needs to be examined, recreated, and articulated.
To which a Local Director commented and asked:
I would be very interested to understand his position on the disintegration of the MLS's. Is this based on the attack by the DOJ and the discount brokers?
To which I answered:
In my view, the Discount Broker aspect of the DOJ claim against NAR and organized real estate is a fiction on the part of the DOJ.
It is an imaginary evil conjured up by the DOJ for their purposes, their purposes being both overt and covert action to "bring down"
organized real estate as we know it.
Personally, I believe the attack by the DOJ goes way beyond the MLS and their claims of anti competitive activity. I see it as a full scale assault on organized real estate. It is the beginning of what could lead to excessive damages (this is an anti trust action after all) and loss of control of the most valuable marketing asset of brokers...their listings. You can call me an alarmist, but I'll put it on the table right now...the DOJ may not be done after the MLS case, should DOJ prevail. This action could be followed by future attacks on the pillars of organized real estate, the three way agreement and the broker dues formula. Never happen you say? I would not put anything past the political aspirations of the altruistic-claiming DOJ. There is much more here than meets the eye.
Based on DOJ actions and a reading of the documentation, and an understanding of the history of IDX, VOW, ILD and the industry itself, there should be no doubt that the DOJ is out to make a statement and inflict harm and penalty on the REALTOR organization, and, unfortunately to consumers as well. An organization whose duty it is to protect the consumer is acting in a way that is contrary to the best interest of the consumer...the DOJ is either too stupid to understand what it is doing or the DOJ is "sly like a fox."
So, the answer to the question posed by the local association director is yes, DOJ and also FTC actions are a part of the reason I believe what I do about the future of organized real estate and MLS.
Of equal importance, however, is the emergence of online marketing and advertising sites such as Craig List and Google base (which now has all of Houston's listings). Sellers of homes to future generations of homebuyers will not see any value in proprietary data bases when there are public data bases with built-in marketing tools and content beyond the minimal content found in many MLSs, as well as powerful search tools that allow consumers to find just about anything that is on the Internet. The need to aggregate data on computer systems in a local geographic area no longer exists.
The evolution of the Internet and technology and the evolution of consumers and their ability and inclination to do more online themselves are driving forces which will assist in the death of MLS as we know it. Access to listing information and the advertising of listings will remain a part of the buying and selling process, but the means to achieve this end are chagrining right before our eyes.
How "into" online and virtual worlds are consumers? Go to http://SecondLife.com for a veiled glimpse of the future and look for the frequent articles about what some refer to as the "metaverse."
At InternetCrusade we have been saying since the creation of REALTOR.com, and the road since traveled with IDX, VOW and ILD, that REALTORS need to "Take back their future." We continue to believe this and the time for waiting has ended...that time is now. It is time to get involved, to understand, to educate, and to take action.
Saul
Jan. 4, 2007
Categorized in: MLS Issues
In California, a real estate licensee need not be a member of any REALTOR Association to participate in the MLS. This as a result of the Palsson case in 1976.
Here's a summary of the Palsson case:
California Supreme Court Holds Board of REALTORS Membership Guidelines Violate Antitrust Laws
In Marin County Board of Realtors v. Palsson, the Supreme Court of California held that a Marin County Board of REALTORS (Board) bylaw which limited membership to persons "primarily engaged in the real estate business" violated the Cartwright Act (the state equivalent of the Sherman Antitrust Act). The court also ruled that a Board rule which denied non-member salespeople affiliated with a REALTOR member access to its multiple listing service information violated the Cartwright Act.
The court analyzed the bylaws under the Rule of Reason Test which weighs economic effects to competitors and consumers against justifications for the practice.
The Marin County Board of REALTORS was an association of 255 REALTORS, or approximately 75% of the brokers in the county. In 1972 alone, the Board accounted for 2,964 sales with a value exceeding $130 million. One privilege of membership was access to the Board's multiple listing service. The exclusive nature of the information in this service was assured by a Board bylaw which prohibited members from sharing the information with non-members.
Palsson, a licensed real estate salesman, applied for Board membership after he secured employment with a broker who was a Board member.
Palsson, an airline flight engineer, was denied membership because he could not satisfy a Board bylaw which required that associate members be "primarily engaged in the real estate business." This provision was enforced through sanctions against a member broker who shared offices with or employed a person denied membership in the Board. Thus, a salesman denied membership was also denied employment with 75% of the residential brokers in the county. Palsson contested the denial, asserting that the Board's access rule and "primarily engaged" bylaw violated Cartwright Act provisions regarding restraints of trade.
The Supreme Court of California held that only unreasonable restraints of trade are prohibited, but that there are certain practices which are conclusively presumed to be unreasonable (called per se violations).
Other practices affecting competition are evaluated under the Rule of Reason Test which weighs the economic effects of the practice on competition against the possible justifications for the practice. In its analysis of economic effects, the court held that both the rule and the bylaw posed serious dangers to competitors and consumers. The court based this holding on the 1972 Board sales results and the high percentage of broker members.
The Supreme Court of California then shifted to a discussion on the justification of Board practices. With regard to the primarily engaged bylaw, the primary justification was to further the professional and ethical competence of the real estate industry. After weighing the justification against the effects, the court concluded that the bylaw, by excluding from membership all part-time salesmen, including the most ethical and qualified among them, was an anti-competitive regulation which could not be justified by the Rule of Reason. As for the access rule, the primary justification was to make membership attractive. Upon weighing, the court found that access to the MLS was so essential to non-members that such access must be granted to all who chose to use it.
Marin County Board of REALTORS v. Palsson, 16 Cal. 3d 920, 549 P.2d 833, 130 Cal. Rptr. 1 (1976).
Saul
Saul e-PRO/CFP/GRI
President/CEO, InternetCrusade
Oct. 3, 2006
Categorized in: MLS Issues
The discussion and resulting position of this paper must start with the basic question, what is a Multiple Listing Service (MLS)?
>From the NAR MLS Handbook:
>>
A multiple listing service is:
. a facility for the orderly correlation and dissemination of listing information so participants may better serve their clients and customers and the public
. a means by which authorized participants make blanket unilateral offers of compensation to other participants (acting as subagents, buyer agents, or in other agency or nonagency capacities defined by law)
. a means of enhancing cooperation among participants
. a means by which information is accumulated and disseminated to enable authorized participants to prepare appraisals, analyses, and other valuations of real property for bona fide clients and customers
. a means by which participants engaging in real estate appraisal contribute to common databases (Revised 11/04)
Entitlement to compensation is determined by the cooperating broker's performance as procuring cause of the sale (or lease). (Revised 11/94) <<
Of critical importance to the conversation and debate over what type of listings should be accepted into an MLS (and published on REALTOR.com) is understanding the fact that an MLS is a "unilateral offer of compensation,"
and why the issue of compensation is important and a key element.
It seems we lose sight of this (maybe as a matter of convenience by some)...or in some cases maybe we never knew this...and in other cases, maybe we do not really understand the importance of this basic and fundamental fact.
so for emphasis, I want to say it a few more times...
An MLS is an offer of compensation.
An MLS is an offer of compensation.
An MLS is an offer of compensation.
An MLS is an offer of compensation.
Just in case some are unclear about this, let me reiterate:
An MLS is an offer of compensation.
An MLS is an offer of compensation.
An MLS is an offer of compensation.
When an MLS accepts a listing into its inventory, that listing is then made available to all of the Subscribers and Participants of that MLS, for the purpose of sale of the property, per the terms of the listing agreement or any other price and terms the owner may accept. Why would someone other than the listing broker want to sell another broker's listing? Because there is, by virtue of the MLS, by the very definition of an MLS, a means for a "cooperating broker" (broker other than the listing broker) to earn compensation for bringing a buyer (ready willing and able to purchase the property under the exact terms of the listing agreement, or any other price and terms the seller may accept). If there were no means to earn compensation on the purchase of a property, why would a broker work to help their buyer obtain the property? Absent some promise of compensation and means to enforce it, brokers would only work to sell their own listings, as the only assurance the broker would have for compensation would be only the listing agreement the broker has with their sellers under listing contract.
The MLS allows Participating brokers to offer compensation for a sale to any broker who brings in an offer which is accepted, even though that broker has no contractual agreement for commission from the seller.
Brokers
bring buyers because they trust they will be paid and the vehicle which provides that trust is the MLS. MLS has provided tremendous consumer service for many years by creating the apparatus for competitors to cooperate and share compensation. MLS has created trust in the structure, format and discipline which allows for the orderly marketing of real property. MLS is part of a system which has resulted in a real estate marketplace where once illiquid assets can be sold efficiently and timely.
The compensation structure in real estate can best be described as a contingency based compensation structure (Work for Free...Work for Free...Work for Free...Work for Free...close a deal and earn compensation).
For the most part, real estate licensees are only compensated when a property closes and title is transferred. Licensees work for free until the transaction closes. Many transactions do not close. Often consumers will go from one licensee to another...getting the free work of one agent after another, and then, in some cases, buying from a "For Sale By Owner."
Would an agent, who works for free, want to show any properties where there is the chance that they will not be compensated for their work? Does an agent have an obligation to show properties where they earn no compensation because "someone" says it is in the consumer's best interest for them to do so?
Should licensees be required to support systems which will decrease their opportunity for income and systems which allow for consumers to avoid justifiably earned commissions? Might licensees lose confidence in a system that allowed for them to be "cheated" by consumers?
What makes an MLS work is the fact that Subscribers and Participants are confident that should they show another broker's (Participant's) listing which has been submitted to the MLS, then the agent (Subscriber or
Participant) bringing in the buyer, even though they have no contract with the seller (or contract with the buyer for compensation), will be compensated for the sale should one ensue. This is a key factor in a contingency based compensation system.
If that confidence about compensation did not exist, would not agents with buyers be reluctant to show another broker's listings? I submit that they would be reluctant. This reluctance would result in fewer MLS listed properties being shown and this would not be in any one's best interest...the seller's, the buying public, the listing broker, or agents working with and representing buyers.
Anything which jeopardizes or minimizes that trust and confidence in one's ability to collect compensation for their efforts would be detrimental to the MLS. It is our position that MLSs can and should set up and enforce business rules which ensure the benefit of those who belong and also which ensures the successful operation of the MLS.
Exclusive Agency Listings in the age of instant dissemination of listing information, could result in a decrease in the trust and confidence brokers currently place in their MLS. Think about this...are agents working with a buyer willing to show their buyers FSBO (For Sale By Owner) properties?
Usually not. Why not? Because there is no confidence that the agent showing a FSBO will be compensated...there is no "trust and confidence."
Position:
MLS allows competitors to work together for the benefit of buyers, seller, Subscribers and Participants.
An MLS should have the right to determine the type of listings it accepts into its MLS inventory of properties.
REALTOR.com has the right to publish the listings provided to REALTOR.com by the MLS.
Allowing Exclusive Agency Listings into an MLS inventory, and then requiring the subsequent posting of those exclusive agency listings to REALTOR.com, would establish a direct path from a buyer, not using a REALTOR, to a seller directly, avoiding the payment of a commission to an agent. Forcing MLSs to accept Exclusive Agency Listings may in time, erode broker trust and confidence in the MLSs as it pertains to payment of commission. MLSs might then decide not to publish MLS listings on REALTOR.com and this would not be a benefit to REALTOR.com or to the public, as the public loves REALTOR.com as is evidenced by the fact that REALTOR.com is the most visited real estate web site in the world.
This is a complicated issue with many comments being made by those who are ignorant of the business of real estate brokerage or who have their own agenda to accomplish.
InternetCrusade applauds Realcomp for taking a stand and not caving into the bullies of the DOJ and FTC, who once again prove they are ignorant of the workings of the real estate industry and the value the industry provides to the economy and to our country.
*Definitions of Listings from the NAR MLS Handbook:
Exclusive Right-to-Sell Listing: A contractual agreement under which the listing broker becomes the agent of the seller(s) and the seller(s) agrees to pay a commission to the listing broker, regardless of whether the property is sold through the efforts of the listing broker, the seller(s), or anyone else; and a contractual agreement under which the listing broker becomes the agent of the seller(s) and the seller(s) agrees to pay a commission to the listing broker regardless of whether the property is sold through the efforts of the listing broker, the seller(s), or anyone else, except that the seller(s) may name one or more individuals or entities as exemptions in the listing agreement and if the property is sold to any exempted individual or entity, the
seller(s) is not obligated to pay a commission to the listing broker.
Exclusive Agency Listing: A contractual agreement under which the listing broker becomes the agent of the seller(s) and the seller(s) agrees to pay a commission to the listing broker if the property is sold through the efforts of any real estate broker. If the property is sold solely through the efforts of the seller(s), the seller(s) is not obligated to pay a commission to the listing broker.
Open Listing: A contractual agreement under which the listing broker becomes the agent of the seller(s) and the seller(s) agrees to pay a commission to the listing broker only if the property is sold through the efforts of the listing broker. (Amended 11/89)
PS: Real estate, real estate law, and the real estate brokerage business is complex and detailed. While I have worked to achieve a certain level detailed in this Position Paper, even more detail and definition is always possible and so I assume a certain level of industry knowledge, hoping the threads of thoughts and conclusions can be easily followed.
Saul
Saul Klein
President, InternetCrusade
http://InternetCrusade.com
Sep. 6, 2006
Categorized in: MLS Issues
Here is a Guest Perspective comment from NAR President Thomas M. Stevens published in Inman News Sept 5, 2006 at http://www.inman.com/hstory.aspx?ID=56240
Please post a comment below.
MLS: The essential difference
Guest perspective: Interbroker cooperation defines the system
Tuesday, September 05, 2006
By Thomas M. Stevens
Thomas Stevens, NAR president
Ever since brokers and Multiple Listing Services began posting abridged
versions of MLS listings on the Internet some 15 years ago and real
estate consumers have been able to see for themselves what's available
in their neighborhoods, the public has confused MLSs with online auction
sites like eBay or electronic classified ads like CraigsList. To the
layperson, the MLS looks like any other marketplace where properties are
bought and sold. But nothing could be farther from the truth.
What makes MLSs special is not just that they introduce extraordinary
efficiencies into the real estate transaction, or that they level the
playing field so that the newest, smallest, greenest broker has just as
much ability to profit from the system as the biggest guy in town. Even
the fact that they are probably the safest databases on the Internet --
thanks to the standards of quality and care exhibited by the
organizations that own and run them -- is not the single most
distinguishing feature of MLSs.
What makes MLSs unique in the business world is that they exist first to
facilitate cooperation between brokers, and that includes interbroker
compensation.
Lately a number of people -- among them those who don't understand the
MLS system at all and those who do but would like to change it to fit
their own agenda -- have voiced concerns with the principle of a
seller's broker compensating a buyer's agent. They believe the practice
is anachronistic, illogical, or that it should be ended because it
raises suspicions among federal regulators who, in my opinion, truly do
not understand how and why the system works.
To eliminate interbroker cooperation in the MLS is to eliminate the MLS
as we know it today. Once compensation offers are stripped from the
system, no longer is there a significant reason for the MLS to remain a
broker-to-broker system and it can become what so many outsiders would
like it to be -- a simple database that can be opened to all and mined
for the value resident in the real estate listings it contains. Welcome
to the MLS as a public utility.
There can be no doubt that stripping compensation from the MLS will make
interbroker cooperation infinitely more difficult. What the current crop
of reformers fails to recognize is the value the current system brings
to the buyer and the buyer's agent. The current system has made the
proliferation of buyer's agency possible, and with it, the vital
benefits of professional representation for home buyers, especially
first-time home buyers.
Consider for a moment the importance of buyer's agency -- and
interbroker compensation -- to the cause of minority home ownership in
America. Progress toward parity in home ownership has been
excruciatingly slow, and now the housing economy is slowing it even
more. Interest rates are ramping up in response to the Fed's policies to
check inflation, and many expect rates on a 30-year fixed mortgage to
exceed 7 percent. Higher rates coupled with high property values make it
more difficult than ever for lower- and middle-income families to cross
the threshold of their first home.
Now comes the Consumer Federation of America with a proposal that will
make minority home ownership even harder to achieve. CFA would restrict
the ability of sellers to offer partial commissions to buyers' agents to
pay for their services in the real estate transaction, forcing buyers to
be responsible for some or all of the cost of professional
representation. The result could be that buyers' agents would not be
paid from proceeds of the transaction received by the seller but by fees
charged directly to buyers. For thousands of lower-income and minority
buyers, professional help would be out of the question under these
conditions.
The CFA plan, proposed in a white paper issued June 19, would also have
a devastating impact on the small but growing corps of minority agents
and brokers that specializes in turning minority renters into
homeowners. Those professionals help their customers access an extensive
array of services such as credit counseling and home-ownership
education. Without help from those professionals, people unfamiliar with
the home-ownership transaction may never make it over the financial and
cultural hurdles standing between them and their first American Dream.
Don't get me wrong: We believe in change. The MLS has evolved over the
years to meet the needs of the marketplace and will continue to do so.
At NAR, we have created a Presidential Advisory Group to look at the
future of the MLS, and the PAG will consider a wide range of options on
handling compensation. It's anticipated (but not guaranteed) that a
report with recommendations will be made to me at the Convention in
November. The PAG has met with people from outside the Realtorfamily
like Michael Adelbeg of Google and Pete Flint of Trulia. I'm sure that
its findings will make a very positive contribution to the debate -- and
foster changes that will improve the service that MLSs provide for
consumers and the industry alike.
Thomas M. Stevens
President
National Association of Realtors
Jun. 18, 2006
Categorized in: MLS Issues
From a recent NYT Article - Commission Accomplished:
"For starters, this legislation should make clear that multiple listing
services must provide all properly licensed brokers access to the
marketplace on equal terms. Moreover, while individual states are the
primary regulators of real estate markets, this legislation should enable
the Federal Trade Commission to monitor and pre-empt laws that are intended
more to protect Realtors from new competition than to protect consumers from
possible abuses by discount real estate agents."
It drew this comment: Let's face it guys, aren't we all fed up with this "protecting our data"
nonsense? Who are we protecting it from, the KGB? I totally agree with the
author that all properly licensed RE Professionals should have access to at
least all listings in the state they are licensed in. Just imagine how this
should register with the Seller: "Mr. Seller, I want you to understand that
your listing is very well protected, in fact only a few members of one board
in our county will see it. Isn't it just great?"
Saul's response:
You should have the right to protect the value that your listing contracts bring to you.
You should have the right not to let your listing contract value be used to put you out of business.
You should have the right to charge whatever you want to charge.
You should have the right to list buyers only if that is your choice.
You should have the right to go out of business if no one wants to work with you because the cost of doing business with you is greater than the value you bring to the consumer.
Listing contracts have a cost to create...stated here many times before. The critical mass created by the money and work of brokers and their "agents" (lower case) should not automatically go to the benefit of a FSBO who does not want to hire a broker but who wants to use the eyeballs captured by the broker.
A broker who wants to participate in an MLS, which is for brokers and not consumers, should be allowed if the broker agrees to play by the rules...ethics, etc.
This article may be well written, but it shows an ignorance of what it takes to sell real estate.
What is a discount if there is no standard commission? That statement right there alone shows a bias and ignorance of the writer of that op ed piece.
Saul
Mar. 27, 2006
Categorized in: MLS Issues
-Comment from Allen Benson:
I'm surprised I haven't heard much talk about the new Google Real Estate category they just launched on Thursday.
I know it doesn't show up every where but if you type in "Seattle Real Estate" you will get a new option just above the normal results.
Refine your search for Seattle real estate
With a form below it.
This form posts to a real estate search tool. Check it out.
All the listings post to the suppliers website.
I have looked at a few major cities and this seems to be the case. It is feed from Google Base.
Some things you should know about "Google Base"
1) you can load data into it
2) you can update the data
3) it is only available for 30 days or less if you choose
Here are my questions.
1) How do you think it will impact the traffic to your site?
2) How is Google going to monetize this product?
3) Is this going to be the FSBO MLS system?
4) Are your clients going to expect you to put their listings on there?
5) Could this become the national MLS?
Allen Benson
Graphicaldata Inc.
http://www.graphicaldata.com
253-851-0366
benson@graphicaldata.com
Saul's note:
Hi Allen,
Great to hear from you.
We have been talking about this eventuality in our classes for a few years now...since the Prudential/Yahoo deal.
What might happen if Google has trouble gathering content, is a deal with a brokerage firm (and IDX feed, etc). We think there will in time be alliances between the major portals and brokerage firms that can provide listing content as the industry continues to evolve into the use of technology for the dissemination of listing information (Amazon/e-BAY/Google/MSN, etc.
Watch for developments in peer to peer over the next few years as well.
The 30 day rule serves to keep the inventory current, a function of MLS but one we have said for years now could easily be handled by requiring resubmission to the database on a timeline (such as every thirty days).
You ask great questions...and the lion is coming over the hill and look and listen to all those damn Chihuahuas!
And...could the lion be congress?
<http://www.linuxelectrons.com/article.php/2006032315414432>
For those who think this bill, if enacted, would not affect MLSs.."Bet your Ass." (Please see my post on Betting One's Ass" if offended by this comment.)
Saul
Feb. 24, 2006
Categorized in: MLS Issues
-
I think it is time to do a little research so that there is better understanding as to what an MLS is and what an MLS is not. Do yourself a favor and go to http://REALTOR.org and search for MLS and begin to understand more about your business, and perhaps your future.
MLS is a very important business tool for many REALTORS. I believe that it is your professional duty to know about the tools you use and that are important to you.
I, know..."I just want to sell real estate, I can't be bothered with the details."
Would you go to the doctor who says..."I just want to practice medicine, I can't be bothered with the details."
or the attorney who says..."I just want to practice law, I can't be worried about the details."
NAR has, over the years, created and amended model MLS Rules and Model
By-Laws for local associations to follow. If associations follow the model
rules and by-laws for their MLS (of which some parts are optional and some
parts are mandatory), associations are covered by NAR's Errors and Omission
insurance. An association that prefers not to be covered by the insurance
provided by NAR can have any rules and bylaws the association wants to
adopt, and can then obtain their own insurance, or have no coverage and put
all the directors of that entity at risk (would you serve with no insurance
coverage?).
MLS governing documents for multiple listing services owned/operated as:
1) Committees of associations/boards, or
2) wholly-owned subsidiary corporations of the associations/boards.
These documents are designed for use by local associations/boards in the
development of local MLS governing documents.
I quote the following just so there is no mistake as to what an MLS is:
Part 13
Board Bylaw Provisions Authorizing a Multiple Listing Service as a
Wholly-Owned Subsidiary Corporation of the Board
Article ________________
Subsidiary Multiple Listing Corporation
Section 1-Authority: The Board of REALTORSR shall maintain for the use of
its members a Multiple Listing Service which shall be a lawful corporation
of the State of _________________________, all the stock of which shall be
owned by this Board of REALTORSR.
Section 2-Purpose: A Multiple Listing Service is a means by which authorized
Participants make blanket unilateral offers of compensation to other
Participants (acting as subagents, buyer agents, or in other agency or
nonagency capacities defined by law); by which information is accumulated
and disseminated to enable authorized Participants to prepare appraisals and
other valuations of real property; by which Participants engaging in real
estate appraisal contribute to common databases; and is a facility for the
orderly correlation and dissemination of listing information among the
Participants so that they may better serve their clients and the public.
Entitlement to compensation is determined by the cooperating broker's
performance as procuring cause of sale (or lease). (Amended 11/96)
For those of you who ask something like the following:
>>
I thought the MLS guarantees co-operation but does not require compensation.
That is the reason (I thought) that you can have exclusives and "0" %
offered to a particular agency
relationship....such as a Buyer's Agent or Transaction Broker?
Again and again I am told it is an agreement to "co-operate" but not
"compensate". But now you say it IS an offer of compensation. I'm confused!
Has
this changed for all States?
<<
Yes, you are confused. Again, I recommend you go to http://REALTOR.org and search
for "MLS Model Rules" for a better understanding of what to many, is their most important business tool.
Saul
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