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2010-07-08 23:04:46

How to Build a Statewide MLS

An Introduction to MLS Consolidation

Consolidation has taken many forms in the MLS industry. Whether it be the merging of MLSs or the standardization of MLS platforms into a consolidated unit, the idea that consolidation is necessary has gained ground only slowly. Thus far, the inability of the MLS industry to overcome internal divisions through consolidation leaves our industry exceedingly vulnerable.
 
Consider the debate over whether an MLS should have an online presence in the form of a public MLS website. With a few notable exceptions, until recently the real estate industry (and MLSs in particular) viewed the release of listing information to the public as a threat instead of an opportunity. Many fought the idea (and still do), yet there can be no argument that the Houston Association of REALTORS® (HAR) and others’ early-to-market presence of a single, consolidated MLS public website provided their brokers with an effective online presence. The result: Houston brokers choose to allow the HAR public website to be their only online presence and are happy to spend the money they would have spent creating and maintaining a website on other things.
 
Despite this evidence of success, rather than building public websites to meet the public desire for listing information, many tried to keep it to themselves – a decision that left brokers with no choice but to either create their own website or provide listing data to a company that already had an online presence. Enter Trulia, Zillow, et al. Ironically, many of those in our industry troubled by the these non-industry partners - and even realtor.com - apparently never stopped to wonder why these companies came into being. Each of them, in their own way, meet the needs of an industry and the public – our industry and our public – not being met by us. Because of our own failings, they are now partners helping us use our own data to serve our members and the public.
 
With the benefit of hindsight, can anyone truly argue that it is somehow easier, better, more efficient, or more cost effective in any way to have many, many websites with the same data, instead of a few comprehensive sites? How then can anyone argue that it somehow benefits real estate agents to not have more comprehensive listing data through MLS consolidation? The public doesn’t want choices so much as they want good data. We forced them to go looking for a website with the data they want, and when they did, they found… not us.
 
Websites are but one example of the many issues plaguing the MLS industry, a symptom of a larger ill; lack of consolidated, comprehensive listing data. History shows us that with consolidation comes standardization. In turn, standardization permits growth, in part because the money that had been spent on dealing with a fragmented market, after standardization, gets spent on research and development.
 
Consider the railroad industry; consolidation helped spur growth in the east, but it wasn’t until after the Civil War when the North imposed standardization on the South’s railroads that they were able to explode into the west. Now consider how our interstate highway network opened the country’s roads to efficient, standardized transportation. Our MLS data highway is no different. Imagine what could be achieved if the money our industry currently spends on overcoming the technological hurdles of different data feeds, different MLS vendors, different fields, etc., was suddenly freed up for R&D. Better yet, imagine what could be achieved for our broker Participants if MLSs had the membership and resources of an entire state behind them.
 
Why, then, does a statewide MLS make more sense than large regionals? To begin with, the NAR framework of 50 state associations already exists. Having statewide control of listing inventory allows the flexibility necessary to accommodate the different laws and politics enacted by each of the states. Secondly, by applying the standards required by licensing laws the statewide MLS can help reduce unlicensed access to the MLS. Thirdly, influence with NAR gets wielded by the state via regional representative bodies at NAR. Finally, while it may make sense for certain markets to override the objections noted above in favor of a multi-state regional, with the ever greater demand for listing data comes the question of how much it is worth. Some states will be in high demand, and some will not. Having a statewide MLS allows brokers within a state to control their own data use, its monetization, and protection, within the statutes established by the state. Multi-state regionals may have to contend with different data demands, expectations, and data protection laws from each participating state.
 
At its most basic level, data sharing as an excuse not to consolidate hijacks technology for the sole purpose of avoiding difficult political issues. Requiring an elaborate, expensive maze of hardware, software, and personnel, data sharing cannot resolve the underlying duplication and costs of multiple data sets, staffs, buildings, vendors, contracts, etc. Only one consolidated system can ensure all parties have equal access to complete, timely MLS data, and maximize reduction in costs through improved efficiencies and economies of scale. Yet, the one down side to consolidation is political – something that can appear insurmountable because consolidation requires that everyone agree on one common MLS system. Forging a common path where everyone can be brought to agree on the merging of data, staffs, locations, and MLS systems, is often so difficult that data sharing seems like a more reasonable choice because, in short, it appears achievable. Yet, consolidation can be achieved. Assemble the right people (i.e., people who can check their egos at the door) and change the conversation from what members will lose to what they will gain.

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