The Marketplace MLS Mandate

© marchmeena29 / iStock / Getty Images Plus

It’s 2021. If you operate an MLS organization, or if you’re a REALTOR® who’s involved in oversight of your MLS, there’s never been a more complex time to make decisions about the MLS’s future.

In a five-part series on MLS planning for 2021, we look at questions that all MLSs should be discussing as the year unfolds.

 

The mechanics of the MLS are under intense scrutiny by both investors and investigators. Lawsuits, consumer transparency demands, and national policy edicts all scream for your attention. That this confluence of trends may be inconvenient is irrelevant. A marketplace mandate has been laid at the feet of the MLS: Earn and keep the consumer’s trust.

A philosophy of affirmative transparency can be your organization’s guide. The MLS’s value is best communicated when it’s accessible to its end users. Seeking out ways to shine sunlight on the MLS’s pro-competitive and pro-consumer processes and benefits has never been more important.

As you’re planning for 2021, there are critical topics and questions for your organization to consider. Some are best handled locally. Others will be debated at a national scale; in those cases, an objective framework for analyzing the impact of MLS policy will help guide transparent and systematic decision-making.

Earning the trust of professional customers (participants and subscribers) and consumers requires MLSs to focus on transparent access to services. Because most consumers receive MLS benefits through a broker participant, this series begins with two segments on participant access, followed by two segments on consumer access. The final segment discusses national MLS policy decisions. With new NAR mandates seeming to grow in frequency and impact, MLSs would benefit from a transparent framework for identifying the line between local flexibility and national consistency. I've discussed such a framework with industry colleagues, and I'll share a proposal in Part 5.

There’s work to be done, so let’s get planning.

Part 1 of 5: Participant Access to Listings, Showings, and Data

Square one, the most basic tenet of the MLS broker cooperative, is sharing listings. When should MLS participants gain access to other participants’ listings, and what information should they be allowed to access?

The choices seemed clearer just a few years ago. On a number of fronts, MLSs need to identify ways to improve transparency and efficiency around broker participants’ access to listings, showings, and MLS data.

First and foremost, there’s the popular topic of Coming Soon status:

• Does your MLS have a policy around Coming Soon listings? Should it?
• If it does, do Coming Soon listings go out to broker participants but not consumers? If so, for how long?
• Has your MLS defined how long a listing can be Coming Soon, or in a delayed showing status? Clarity will guide many downstream decisions.

And while there might be general consensus on these questions, there most certainly is not on the fringes. In Part 5 of this series, I’ll share an example that illustrates how inconsistent policies on Coming Soon status can create confusion and make life difficult for agents and brokers.

Participant Access to Listing Addresses

Is an MLS broker participant required to share a listing address with other participants? Common sense would say yes, but even this most basic requirement of listing cooperation has been challenged in the past year.

Some agents are asking that MLSs allow them to hide the address of their listings and deliver it to participants on an agent-to-agent basis. A change of this magnitude requires a big-picture analysis of what the brokerage cooperative is. Are there other data sets that agents and brokers might want to restrict in the future? If the MLS opens this door, where does it draw the line?

Fair housing compliance and equitable access practices come into conflict with these kinds of efforts. MLSs would be wise to tread lightly in areas that limit participant access to critical listing information for their clients, and his theme will continue throughout this series.

Participant Access to Showings

2020 brought many new challenges to in-person showings. Pandemic regulations banned open houses and required pre-scheduled, small-group showings in many regions. The pandemic forcibly sped up agents’ adoption of digital showing scheduling services and remote showing options.

The distinction between pre-recorded listing videos (virtual tours) and livestream video showings or open houses was codified by the industry and mandated for technology at a speed not seen during normal times. Remote showings will likely remain popular going forward, even after pandemic measures subside.

Many MLSs are providing organized education about how to efficiently set up, designate in the MLS, and perform distanced showings and open houses. Sellers will demand these services at least for the near term future. Agents should be equipped to employ them.

And health concerns aren’t the only consideration when it comes to participant access to showings; MLSs also need to be keeping an eye on legal trends. Specifically, brokers’ ability to show listings to their clients is a critical link in fair housing compliance.

MLS participants in some areas are asking that sellers’ addresses be obscured from the MLS in some cases. Such a policy decision would affect showing access, creating a subjective human screening bottleneck that could take transparency backward. Any time a process appears to allow the “right kind of agents” to show certain properties to “the right kind of buyers,” great caution should be taken. Is the benefit to the MLS so broad that another tiptoe on a regulatory cliff is advisable?

The recent efforts to limit address access claim to seek privacy for sellers, but there are privacy options already available to sellers:

• Sell privately
• List FSBO
• List with a broker who is not an MLS participant
• List with an MLS participant as an office exclusive
• List with an MLS participant and opt out of IDX display
• List with an MLS participant and require pre-scheduled appointments with financially pre-screened clients and listing agent-attended showings

Obscuring addresses from listings appears to be a solution seeking an escape from what a small slice of the industry perceives as a problem (Clear Cooperation?) rather than a true privacy utility for the MLS. It might be feasible, but is it in line with the MLS’s strategic vision?

Participant Access to Data Services: Efficiency

There’s momentum within the industry’s trade organizations and brokerages to overhaul data access policies. The Real Estate Standards Organization (RESO)–inspired Networked Office and Web (NOW) policy would maintain all safeguards necessary for protecting the integrity of MLS data and combine them into one single set of rules and one holistic access process for all of a broker participant's data needs. The concepts behind the NOW policy are being vetted with Council of Multiple Listing Services (CMLS), and an implementation-ready proposal is expected to move to the National Association of REALTORS® in March for consideration by the MLS Technology and Emerging Issues Advisory Board and possibly the Multiple Listing Issues and Policy Committee and NAR Board of Directors.

Why is consideration of the NOW policy so critical at this time? Comfort in the status quo may exist within some MLSs, but it most certainly doesn’t with brokers. IDX is unnecessarily limited with its focus solely on display of listing data. The virtual-office website (VOW) policy clunkily hides behind a registration wall and is frozen in time by the shadow of the Department of Justice. Policy on back-office use of data by broker participants is almost nonexistent.

There’s no better time to make everything easier for brokers who play by the rules with a holistic, efficient new model for data access. It’s not just that we need common fields; we need a single set of instructions for different uses of MLS data, retaining the important security protections that MLSs currently have in place.

And though it’s unfortunate that this has to be said, it’s clear from the industry whisper network that it does: Any organization so haunted by the specter of new tech-savvy entrants that it rejects new, efficient models for MLS participants is cutting off its nose to spite its face. The MLS exists to facilitate cooperative competition. Why not set strong rules for compliance, open the floodgates, and let it flow?

Participant Access to Data Services: Consistency

Those who tuned into Inman Connect NYC this month heard Joe Rand, managing partner of Better Homes and Gardens Rand Realty, fume about the data black hole that exists for brokers working in New York City. In 2019, Rand said, New York brokers couldn’t tell if the market was up or down, if prices were soaring or stagnant. A focus on technology, broker cooperation, and data accuracy is improving that situation. And while New York stands alone in some respects, data fragmentation is a theme that resonates throughout organized real estate. In the MLS world, we often point at rural areas to describe overlapping market disorder, but brokers in large cities endure it as well, San Diego and Atlanta being just two examples. MLS overlap in a single market doesn’t necessarily create market data fragmentation, but it’s a common cause.

Observing from the outside, fragmentation is widespread, and it’s not a good look for brokers. Of course, the inconsistency in broker access to data isn’t just fueled by the lack of MLS uniformity. There are brokerage companies that choose not to be involved in standards development with the goal of reinforcing their perceived technical moats. MLSs should ask successful broker participants in their market: If you’re not already pushing the industry toward better data by participating as members of RESO, why aren’t you?

Consumers don’t really care what their motives are. They just see a shared mess.

The circumstances of these scenarios are far too broad to paint a single solution for them. But the goals remain the same. Give brokers a unified set of services and data that present a true picture of the market, and leave consumers with a high level of satisfaction with their professional service provider.

Avoiding data shares, standards, efficient distribution of data and consolidation for the sake of organizational self-preservation leaves us all with egg on our faces.

Participant Access to Data Services: Expansion

Providing MLS participants with more data isn’t just about technical capabilities. It’s also about thinking in a more holistic way.

The MLS’s customers do more than list residential resales. They get called to help buyer clients with a FSBO seller. They represent consumers in iBuyer and other turbo-transaction scenarios.

They lease rentals, do property management, sell multifamily and commercial real estate. This information is critical to your customers’ growing knowledge base about market conditions.

The old mantra of the MLS was, “That’s not our transaction so we can’t include it.” But all information, if accurate, is good information. Talk to neighboring MLSs: Do they track comps-only sold listings, defined as sales procured before a listing is entered into the MLS? Such data is a critical component of competitive market analyses; it’s also much more valuable to subscribers when they get this directly as a core service of the MLS instead of from an outside tax data service.

Has your MLS incorporated tags that tell a broker or an appraiser whether a sale was an MLS resale, new construction, distressed, REO, or an iBuyer sale? Bringing more of this data into the tent of the MLS adds value, giving brokers the ability to meet their customers’ expanding needs.

NAR: Working Toward Core MLS Standards

The National Association of REALTORS® is actively engaged in efforts to bring consistency and transparency to the operation of MLS services throughout the country.

The association’s MLS Standards Work Group, which is working to establish minimum standards for MLSs, has received a tremendous amount of feedback from the industry, and a significant portion is focused on improving data access for broker participants. Last November, the Work Group brought forth eight recommendations that were approved by NAR’s board of directors, and the group is expected to bring a full set of standards forward in the spring.

Here are a few questions the work group is asking, and MLS organizations should be discussing as well:

• Is there a transparent process for consumers and data partners (such as consumer-facing portals) to report inaccurate listing data to the MLS? Is there a straightforward mechanism for fixing inaccurate data?
• Is getting access to data from your MLS a clear, well-publicized, and easily navigated process? Does the MLS have an objective framework for approval decisions?
• Is an independently RESO-compliant MLS database interface in your MLS's future?
• Does your MLS have a set date to sunset traditional RETS (real estate transaction standards) data access? If they don’t sunset, will brokers ever upgrade to Web API?

Up Next: Participant Access to More MLS Services

In the next article, I’ll cover participants’ access to additional MLS services: lockboxes, new business opportunities, physical offices, and MLS advertising.