Welcome!




Expand Your Education with These Courses from
A Consumer Advocate Approach to Real Estate: Course 1.
Becoming a Successful Sales Professional: Skills for Sales Success: Part One.
The Psychology of Consultative Selling: Skills for Sales Success: Part Four.
ACE: Purchase Reverse Mortgage Course.
Bundle 2: CIPS Elective Courses (Non-US Version).

The MLS Gold Rush – MLS Data to Become Increasingly Valuable

Have a comment on this article? Share on Facebook!

White Paper by Cameron Paine, CEO, Connecticut Multiple Listing Service, Inc.

RISMEDIA, September 17, 2010—In 1848, gold was discovered in the Sierra Nevadas, then a part of Mexico, but soon to become California. From every corner of America, people abandoned livelihoods, hometowns and even families to become newly minted prospectors and strike it rich by finding the “mother lode.” Today, with MLSs sitting on top of their own little data ‘gold mines,’ companies are practically falling over themselves to help us prospect it. As nice as it is for any company to find money, MLSs face some critical questions that should be answered before trying to cash in. First, what is MLS data worth? Second, what other markets might be interested in buying MLS data analytics, and finally, do we lose control of the ability to sell MLS data ourselves if we allow middle men de facto control of the MLS data market?

What is MLS Data Worth?
We know what companies are willing to pay us (or not) for our data, but as an industry, we do not know what MLS data is actually worth. Some of us buy public records data from vendors and we know how much we pay for that. Doesn’t it make sense that since MLS data is both more timely and more comprehensive it should be at least as valuable as public records data? We are each retailers of our own MLS data and as such, we should be the ones to establish a retail price for what our individual commodity is worth. MLSs are so used to the other side of the equation, to negotiating with vendors over the retail price they present to us (and so giddy at the prospect of being paid for something we hadn’t realized was valuable) that we seem to have forgotten how the market is supposed to work.

The Realtor Property Resource (RPR) has said they expect to make between $30-$60 million nationally from the sale of MLS data analysis and improved AVMs to the financial industries. Since there are no good nationwide statistics on how many listings there are per MLS, it’s difficult to calculate exact numbers on what portion of the $30-$60 million pie each MLS could expect. Still, to garner a rough estimate, I have developed a calculation based on number of Realtor members, per state, as a fraction of the number of national Realtor members as a whole. It is rough, but should be representative.

Calculation:
Total State MLS members ÷ Total NAR members = (x)%

(x)% of $30-$60 million = State share of national profits

For instance, the Connecticut Association of Realtors, Inc. has about 16,000 Realtor members, which accounts for 1.3% of the estimated 1.2 million Realtor members claimed by NAR. Using this percentage, CT could expect roughly 1.3% of the $30-$60 million dollar profits published by RPR. Using the smaller $30 million dollar figure, CT’s annual income would be an estimated $390,000. Using the $60 million, its $780,000—considerably higher numbers than what CTMLS has been offered by any company for the sale of our MLS data/analytics.

Broadening the MLS Data Market

The sale of MLS data/analytics to the financial industries is only the tip of the iceberg because MLSs have vast amounts of information in their data. Statewide or large regionals in particular have an advantage due to their greater geographic coverage, but all MLSs can tell:
-How many homes are sold/rented in the entire state, giving them accurate insight into population numbers, per town. (Great info for builders, soft drink manufacturers, retailers, home improvement stores, the state government, moving companies, transportation, airports, etc.)
-Number of garages in the state. (Great info for car dealers)
-Number and kind of appliances. (Great info for manufacturers, home improvement, etc.)
-Pools
-Landscaping
-HVAC, oil, well, electricity
-Furniture
-Home security
-Higher education

This is probably only a partial list of the various industries that could benefit from MLS data analytics. It stands to reason that there may be additional uses in the future for industries we have not even contemplated yet. It also stands to reason that the compensation being quoted to us for the sale or gift of MLS data/analytics is only a fraction of its true value.

MLS Data Brokers Control the Market
Finally, are MLSs comfortable ceding rights to the sale of their data to data brokers? After all, we don’t know how much our data is worth, we aren’t particularly clear on just what markets MLS data and analytics will be sold to, and we have no idea how much of a ‘cut’ a data broker receives.

What we do know is that any data broker in their right mind is busy wrapping up data provider agreements with every company they can get their hands on. What does this mean for MLSs? If you contract with someone to broker your data, even if you withdraw from that contract, you may be locked out of selling your own data on the open market because the companies you want to sell it to may have exclusive agreements with the data broker you just terminated. It makes sense; national companies prefer one source to get their data from—not 883 (the number of MLSs there are in the country). By allowing middlemen to sell MLS data, we are effectively training the market to go to non-MLS sources for MLS data. MLS data is a commodity. We know it’s valuable and we have every reason to suspect that it will become even more valuable in the future. Doesn’t it make sense to find out just how valuable it is before we mortgage our future? Sure we may make a few bucks along the way or get a fancy new ‘vehicle,’ but we’re giving away the farm to do it. If MLSs don’t control the sale of their own data analytics, who will truly profit?

Want instant access to great articles like this for your blog or newsletter? Check out our 30-day FREE trial of REsource Licensed Real Estate Content Solutions. Need easy stay-in-touch e-Marketing solutions too? Try Pop-a-Note for 99 cents!
Join RISMedia on Twitter and Facebook to connect with us and share your thoughts on this and other topics.




Copyright© 2014 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com

Our Latest News >>