ARTUR'S ATTITUDES

Artur has opinions - be it on ongoing real estate evolution or why history and its lesson are important. He speaks up on local real estate market (San Francisco Peninsula) as well as on social and political events and processes impacting us all.

Wednesday, November 08, 2006

MLS In Turmoil


I remember a discussion I had 2 years ago with several brokers on the role of MLS. They were 900 of MLS' nationwide at that time and they had a monopoly on listing data. The bureaucracy created by MLS' caused a lot of resentment as they were extremely uncooperative and slow in sharing its data it with anyone. There was a lot of talk on cooperation and sharing data. National Association of Realtors (NAR) and regional real estate associations lead to creation of the Real Estate Transaction Services (RETS) standard to make the integration and consolidation of MLS data possible. However, there was no business incentives for MLS' to do anything until the launch of companies such as Zillow, Trulia and others. Finally MLS' realized, that while they still might have monopoly on most of the listing data, all other data transaction are in public domain once transaction is recorded and can be duplicated and provided to clients. That's what Zillow did. Trulia started to create its own listings. Customers embraced newcomers. These developments put a squeeze on Big Brokers (Coldwell Banker, Prudential, REMAX, etc), as they realized that customers not only demand data across MLS boundaries, but they have alternative choices to go with. To compete with Trulia and similar companies in the future - Big Brokers have to meet their clients demands. So Big Brokers put pressure on MLS to provide data across MLS boundaries.

MLS' got the message! Today MLS' in Northern California are in the race to consolidate their databases and meet changing market place demands. Within a few months, we will most likely be able to receive all real estate data in Northern California from 2 sources, NCREX and Quattro. Quattro is a new MLS data-sharing initiative among San Francisco Association of Realtors (SFAR), Bay Area Real Estate Information Services Inc. (BAREIS) in the North Bay and MetroList in the Sacramento area. Northern California Real Estate eXchange (NCREX) "is in the effort to explore how to consolidate the MLS operations across the region to better serve their subscribers needs". Local MLS organizations who initially founded NCREX included RE Infolink, Contra Costa MLS, East Bay Regional Data (EBRD), Central Valley MLS and SFAR. SFAR switched alliance to Quattro on September 25. You can find more information about Quattro and NCREX efforts by clicking on the link below.
http://www.rateempire.com/mortgage/10_12_06/news63789.html

What are potential implications of these changes? If MLS' do not adapt fast enough to meet requirements of its main customers - Big Brokers - it is not impossible for Big Brokers to take its listings away from MLS' in the future. This would mean the demise of MLS and would have extremely negative impact on clients and agents. One of the key virtues of MLS - a legal promise of paying commissions to cooperating brokers would go away and with it the ability and willingness of agents to quickly share their listings with other agents. Personally, I don't believe that MLS will go away, however it will loose its monopoly on the listing data.. In a few years from now, in all likelihood, there will be a single consolidated MLS in Northern California competing with other owners of listing data, such as Trulia and other companies to enter the market. Everyone expects Zillow to become listing provider in th future as their funding levels cannot be justified by projected advertising revenues. Additionally MLS', are starting to provide agents with functionality that used to be provided by independent vendors, such as Homeworks, e-Neighborhood, Settlement Room, etc. An example of a new functionality to be provided by MLS' is RELAY transaction management system. SFAR and other Quattro members plan to provide RELAY as a part of their membership as soon as in the beginning of 2007. The willingness and ability of MLS' to provide more functionality to agents upsets Big Brokers, as this was their value added they provided to agents. Even if MLS' will charge for some of this new functionality beyond that basic membership fee, it will undercut Big Brokers ability to attract and keep agents. Agents will be able to go to independent brokers who provide the same or better tools, but higher commission splits. As Trulia and Zillow provided services that are forcing MLS' to cooperate, consolidate and compete, new brokerages will emerge. They will provide highly automated transactions, high commission splits and lower operating costs.


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Subscribe to ARTUR'S ATTITUDES posted by Artur Urbanski @ 11:08 PM  2 Comments Links to this post