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The multiple listing service (MLS) began several decades ago, before the internet, when local brokers met over coffee to exchange their listings and offer compensation for other brokers to help sell their listings.
Presently, there are over 500 MLS networks in the United States, with each one setting their own rules, creating forms, contracting with MLS software providers and monitoring listings for accuracy and compliance. This fragmented landscape leads to great inefficiencies and frustrations for agents, brokerages and software providers alike.
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Agents who serve more than one MLS area or state have to access multiple MLS networks and software systems to do searches for buyers looking across MLS boundaries.
Larger brokers serving multiple areas and MLS networks struggle with multiple software integrations to feed their broker software systems, leading to extra costs and delayed implementation. Further, MLS software providers are constrained by catering to the varying demands of MLS networks, thus restraining their ability to innovate.
Local? Not so fast!
Real estate is local, but that doesn’t mean our MLS databases and software need to be. Ever since Zillow created a national consumer portal to share the listings we provided to the general public, the role of the MLS and how real estate agents interact with clients have changed significantly.
No longer are agents the sole source of information for homebuyers who once relied completely on their agent to perform the best search to find their right home. Many old timers say we made a huge mistake when we shared our listings and lost some control.
I argue things have changed for the better, as our buyers and sellers are now more engaged in the process, they feel more in control, and the result is more satisfied buyers and sellers. The idea of a national MLS has long been an aspiration, but for various reasons, we have made little progress so far other than consolidating over 1,000 individual MLS networks to 500-plus today.
Now is the time to make this a reality; we need to achieve this goal in the next three to five years, or the whole system may fail.
Create a national MLS
The first step in the process of creating a national MLS is adopting strict data standards that are common across all states so we can get to a unified source for listings in a national database.
The Real Estate Standards Organization (RESO) has done a very good job of creating a common data dictionary, but there is more work that needs to be done.
Reformulate the MLS organizational structure
The second step is to create a new MLS organizational structure. Because each state has its own laws that govern real estate, it makes sense to have a statewide MLS for all listings in a state.
An example of how this type of structure could work is MichRIC, the regional database that is home to my local MLS. The national database, much like the role of MichRIC, is there to set data policies to make sure the database is safe, secure and operating efficiently.
The proposed database would be independently hosted by a secure cloud database provider and not tied to any MLS software vendor. Each state MLS would be empowered to set rules, create statewide contracts and forms, and implement the enforcement of rules.
By doing this, the goal of a national listing database can be achieved while still allowing some autonomy at the state level to address issues relevant to each state.
How it could work
The best path forward to a national MLS, with the least impact on the current MLS networks, would be to transition to an MLS software provider of choice so brokerages can choose the software that works best for them and the markets they serve.
Of course, most local MLS networks have contracts with software providers, and those contracts will need to be honored, but when they expire, brokers will be free to choose their own software provider. This transition may take several years, but so will the process of establishing the new MLS structure and policies needed to implement a national listing database.
Local associations can still collect MLS access fees from members and pass along state MLS fees used to maintain the national database, state-level administration and forms creation.
Local associations can also retain a portion of the MLS access fee for administering compliance of the listings entered by their members. Local associations can still offer software access to members for preferred vendor(s) if they choose a pass along the software fees to the vendor. By allowing brokers to choose their software provider, they can have the same software across all offices and all stat
Any certified MLS software vendor can get access to the MLS database and offer subscribers access using their software. By changing to this new model, MLS software providers are free to innovate and provide new tools to brokerages and agents to gain a competitive advantage.
A national listing database would also provide real estate professionals access to all nationwide listings so they are no longer required to use third-party portals to access listing information when searching outside their local MLS network. The more detailed agent-level information would only be available to those agents licensed in that state with paid subscription fees to the state MLS for agent-level access.
Make your voices heard
The strength of the MLS comes from the cooperation among brokers assisting their buyers and sellers and the efforts of dedicated MLS staff who verify all listings are accurate and rules are followed.
Although the MLS is no longer able to publish co-op commission information, cooperation remains as important as ever. I view the MLS much like a public utility or infrastructure that serves the needs of real estate professionals and the public alike. NAR has been the custodian of the MLS networks for as long as they have existed, but it’s not imperative they remain the owner if another cooperative ownership structure makes more sense in the future.
For now, every effort should be made to keep the MLS under the NAR umbrella, which is the easiest path forward. However, if NAR leadership is not able to make the challenging decisions that may be unpopular to many, there may be no other choice but to find a better way by creating a new non-profit cooperative to achieve the desired outcome.
The biggest challenge to NAR achieving the goal of a national MLS is its organizational structure. With over 500 MLS networks being represented and all of the administrators who manage those networks having self-preservation motives, the task may seem insurmountable.
Now is the time
Now is the time for brokers to make their voices heard. The solutions need to come from the members who are on the front lines of selling real estate and not from our bloated committee structures.
It may be timely to get a survey out to all members so they can voice their concerns so those voices can be heard and the best decisions can be made to chart a new course for the MLS of the future and make the right decisions to mitigate risks from current and future lawsuits.
The mission of the National Association of Realtors is “To empower Realtors as they preserve, protect and advance the right to real property for all.” The goal of achieving a national MLS should be given top priority as that would best serve our mission.
The recent announcement that NAR has hired Sherry Chris as a consultant gives me the promise these issues are being given the attention they need to focus on real solutions.
Chris Marzke is a real estate broker with over 20 years of experience assisting clients in Southwest Michigan. Connect with him on Instagram.