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2009-05-22 17:35:34

Ten Reasons why MLS is Dead Already

Once again, as REALTORS converged for their MidYear meetings in Washington, D.C., the forces of stability and sameness were present, coming up with last-gasp-ways to protect the tattered vestiges of Real Estate, the Last Generation. New white-papers and shiny-Powerpoint presentations proclaimed the “we-can-renovate” mentality of Gen 2.0 MLS systems struggling to enter the 3.0 version of the industry.

Much like Google and Yahoo - who refuse to admit their advertising model is crumbling in the face of social networks - MLS’s are trying one last time to burnish a brand that has already worn off the chrome. What’s left underneath are the mostly rusted pieces of a structure whose time has come and gone, even if some REALTORS still believe the Comparables Book will someday make a comeback.

It’s time for the real estate industry to implode the MLS model so they can build something better suited to the next generation of real estate practices.

To prove the point, let’s try to list 10 Reasons why MLS systems really must go. Only then can we see that we’re out of fingers on which to count the ways they might survive.

  1. They are expensive. It’s absolutely incredible that brokers pay the kinds of fees they do, on a per-member per-month basis, for essentially data warehousing. A Google Mini, which is a kind of server/software system to let you create your own in-house Google database, only costs about $4000 for 100,000 document capacity. Clearly even a few years of local housing data doesn’t reach that capacity level, but double or triple it and it’s obvious the exorbitant fees aren’t for the hardware. If a 5000-person MLS pays $100 per person annually, that’s still $500,000… and we know it’s more than that in most systems. Deduct staff, technicians and programmers, you’re still overpaying for data warehousing. How can Craigslist store so much more data for free to its users?

  2. The data integrity is awful. And that’s pushing away consumers. Let’s stop pretending that there’s any policing of MLS data; maybe a few fields are required and a few token fines issued. But one look at any site whose data is fed by an MLS (like REALTOR-dot-we-don’t-care-dot-com) and it’s clear that once you transfer responsibility for data quality from the broker/owner/manager to a MLS staff member, nobody is watching out for the consumer. Seller are horrified to see their property information incomplete online, with “too new for photo” for days, while buyers are duly unimpressed by the quality of data and its arrangement into pathetic “listing sheets.”  Data integrity is actually a barometer of brokerage oversight, which eventually falls to zero with the existence of MLS systems.
  3.  MLS “organizations” are dominated by No Men. These are the programmers, directors, engineers and others at the “software/hardware” department who essentially say “No” to anything brokers want to do with their own data. No, you can’t use your data in the ways you want. No, we can’t add that field. No, you can’t store more than 20 photos. No, you can’t feed your data by FTP but must type it in manually. No, it doesn’t work on a Mac. No, it won’t work with Internet Explorer (any new version for weeks). No, we won’t program it to look good on a smartphone. No, No, No. We won’t let you ruin our nice, neat little database!
  4. MLS rules are anti-competitive. Forget any legal rulings, because they are meaningless. What’s anti-competitive about MLS rules is that they continually suck the life out of any competitive advantages a broker might try to implement. In a death by a thousand cuts, brokers are prevented from using their own data in ways they want - such as watermarking a photo or filtering certain results on their web page. They are forced, through horrific concepts like IDX or data-exchange, to display the uber-crappy data/photos of their worst competitors on their own million-dollar-plus websites, simply because it’s all-or-nothing in the rules. If one broker invest huge sums of his own money to get ahead with new feature on his website, you can be sure his competitive advantage will be diluted once the “MLS” adds that same feature for everyone else to benefit from later - at a group-subsidy rate.
  5. MLS systems inhibit business model innovation. What if your company didn’t want to market properties by price - just features or neighborhood or some other feature. No chance, say the MLS software priests: price is a “required field” no matter what your marketing plan, simply because the gestalt says so. Want to link-out to your own video library. Nay, ye aren’t permitted, sayeth the Village Elders. We don’t supporteth links to the external world. And any further attempts to innovate or trick the system will land you in the Tower of London, you blasphemer!
  6. MLS systems think like databases, not consumers. Consumers buy homes because their family grows or shrinks, they lose or find a new job, they want a longer or shorter commute, they need more or less space, and so on. They type real words into search engines. On you can search by terms like “high heels” or “disco” and find relevant shoes. Yet MLS systems force consumers to search like a computer, not a person. They’re all “beds, baths, price” driven. How dull. But if you try anything else, you end up with HAL staring red-eyed at you. I’m sorry, Dave, I must insist you enter a town. I’m sorry, Dave, I’m afraid I can’t display that without a price. I’m sorry, Dave, but registration is required before I can show you any data.
  7. MLS systems spawn MLS committees. And committees make horrible soup. Everything that makes committees good for wasting time makes them bad for developing MLS policies that bind the business practices of other members. Name one good, effective rule-making body on the face of the planet…. Ok, end of discussion.
  8. MLS systems distort markets by creating artificial operational costs and barriers. In addition to the other ways they constrain a broker’s use of his own data, MLS organizations create artificial markets of “our MLS” and “their MLS” based upon mercantalist concepts like geography. Lest we forget, all real estate is local, except in the minds of consumers. That’s why “local” MLS systems perpetuate such barriers (often controlled by committees of competitors, see #7) while they distort operating costs for brokerages who must operate as “multi-regional” rather than “one cohesive organization.” Costs for different software, training, support, standards and data management soar for companies who grow beyond their “local” markets. Even single “statewide” MLS systems, usually found in smaller states, creates borders between neighboring states in mobile regions, such as New England, for traditionalist reasons. While other industries have worked to eliminate operational incompatibility across regions - and around the globe - the persistence of multiple different MLS systems within close proximity can may artificially preclude the formation of innovative business models of larger scale. Potentially even consumers are harmed as these barriers prevent cost economies that could otherwise be passed along in lower commissions.
  9. MLS systems are a layer of operational redundancy. Huge portions of the real estate industry operate within a franchise structure that provides (at little or no cost) a variety of operational systems that already do what MLS systems can do, and frequently better. Since most brokers use MLS to communicate primarily with other brokers, the residual value of this purpose is waning daily. In olden days, MLS sytems served a purpose of collectivizing costs for computing power which smaller, independent companies could not afford on their own. After nearly two decades of consolidation and dramatic decreases in computing and programming costs, that reason for MLS existence has disappeared. Even non-franchise companies have to maintain their own internal listing databases, of highly redundant information to what they input into MLS, for accounting and management purposes. And every broker duplicates significant portions of their own data yet again, when they add it to their website and internet marketing. Even if they receive a feed of their data “back” from MLS into their website, they frequently have to add “more” content than what MLS can handle if they want to create marketing advantages like additional photos, videos or text-message response systems. No matter how you look at it, most brokers are double or triple-entering their listing data every day. Without MLS systems they would eliminate a layer of redundancy, and could still share data with other brokers by sharing data feeds with each other on a peer-to-peer basis.
  10. MLS systems confuse agents. Perhaps the final nail, and most ironic at that, in the coffins of the MLS systems is that most agents cannot really use them well. The technical support for MLS systems is enormous, even after training is offered. Sadly, most of the hurdles are on elementary activities, such as uploading, resizing or managing photos. Generating reports or emailing listings to consumers, also rudimentary activities, require agents to perform arcane or counter-intuitive activities, even on newer systems. Yet agents can’t take the blame for this: When they can master dozens of other web tools within minutes, without training or technical support, but still struggle as frequently as they do with their primary sales data tool, something is fundamentally wrong with the model, not just the technology.

Unfortunately, none of these ten reasons (and perhaps dozens more) are likely to make MLS go away soon. MLS is one of the few places the real estate industry is holding on tightly to its past, even when the information revolution has already passed it by. Like a Pontiac dealer down the street from newly built Honda factory, it might take another ten reasons, and as many years, for brokers to face the facts. So for good measure, let’s add just one more. Perhaps this one - a consumer reason why MLS must go - is enough to push the industry over the edge.

Today’s sellers are Baby Boomers and Generation Xers. They are computer savvy enough to come to the conclusion that MLS printouts and web displays are pathetic. They are horrified to see their homes on “ink-jet” display on their kitchen tables at open houses. And they are mystified by any system that would permit the display of their property online with the icon “Too New for Photo” rather than forcing the agent to upload at least one. Yet even if we ignore Boomer sellers in a buyer’s market, that leaves us with Gen Y first-time buyers who doesn’t use a computer to shop for things or print things to take to the store any more.

In an age where iPhones and Blackberries can order movie tickets or plane tickets, the crudeness of so many MLS  displays on smartphones isn’t something that can be “fixed.” Because the Gen Y consumer has already book-marked some other site, where homes display nicely and searches are touch-screen simple.

There’s little to no chance the consumer is going to be wooed back by the “we can renovate it” last-gasps of the MLS monster. The faster REALTORS realize this, the quicker they’ll be able to move forward and revitalize their industry.

(Matthew Ferrara is CEO of Matthew Ferrara & Company, a technology organization that delivers training, consulting and technical support to real estate companies worldwide, including their new "Support on Demand" REALTOR help desk service available at 866-316-4209.)


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