Real estate is still local, and real estate is still about relationships and human connection.
These truisms—understood more than a century ago when the telephone was still a novel concept—absolutely hold up today against a technologically superpowered landscape of wireless video home tours and machine learning algorithms, as well as the weight of billions in Wall Street capital. At the same time, using an old mantra like that to justify ignoring the fundamental ways listing, marketing and transacting real estate has necessarily evolved in the last century would be deeply misguided.
Case in point: the MLS.
An MLS database is an incredibly powerful tool, a fundamental part of real estate. It was a vital part of the real estate industry when it existed as a stack of papers covering a few townships, and remains vital as digitized, granular and nationwide. With many companies who manage or own this data moving toward more cooperation and consolidation, a flood of Wall Street money entering the sector and a big push toward standardization and data-sharing, there has never been a moment with more opportunity for change—both bad and good.
“MLS clearly is not what it used to be,” says Teresa Kinney, CEO of the Miami Association of REALTORS® (MAR). “It’s become more than just the MLS.”
Here are what MLS thought-leaders and industry insiders say are the biggest opportunities and biggest pitfalls for their industry going forward:
Pitfall: Losing Focus
MAR operates one of the larger MLSs in the country with over 60,000 members. Kinney tells RISMedia that one of the most important things her organization does is maintain a keen sense of the real estate fundamentals, even as Wall Street and tech start-ups come in with their own agendas or perspectives.
“I have the practical background, because I was a REALTOR® for many, many years,” she says. “We have a unique capability of working with these companies to really customize and make their product more REALTOR® friendly and more consumer friendly.”
With the burgeoning but accelerating influence of Big Tech and Big Finance in real estate, there is a real and present danger of losing sight of the real purpose of MLSs, letting them become gimmicky tech marketplaces or walled gardens of data to make an extra buck. Without maintaining their fundamental mission of providing a real, accessible service for real estate agents and consumers, there isn’t really anywhere for the industry to go—except down.
At the same time, big money investments and savvy tech start-ups are offering ways to more effectively carry out this mission, forcing real estate professionals to walk a delicate line.
“I think that foundation of all the organizations being able to put their data into this universal language is allowing them to create insights into the marketplace that we didn’t have before,” says Sam DeBord, founder of the Real Estate Standards Organization (RESO), an organization that seeks to standardize how MLS data is presented nationwide.
RESO’s mission is at least partially to guide the industry through the growing pains of cooperation and consolidation. DeBord says RESO is explicitly working to educate tech investors and engineers on the needs of real estate professionals, and oversee an evolution that maintains connections and keeps MLSs on the same team.
“We should always start building technology based on what we know is common across technology systems in the industry,” he says. “This is a space where competitors sort of let down their guard a little bit and do help and collaborate and educate—start ups and incumbents back and forth.”
Without this kind of openness, companies are apt to use their data solely to maximize profit and market power, and competition among tech companies maximizes dollars instead of service.
Art Carter, CEO of California Regional MLS (CRMLS) says that at an essential level, the data that MLSs curate needs to broadly serve brokerages (who really own it anyway) and consumers. He paraphrases a quip by RE/MAX co-founder and author Dave Liniger to describe the attitude of many newer players in the MLS industry.
“It’s akin to people coming to a potluck with nothing but a fork,” he says. “People have to give in order to get out of this data hub…that’s really the thought process for us going forward…making sure that value in equals value out.”
From the broker perspective, too many people both in and outside of the industry are flitting from one new idea, product or approach to another, says Dan Forsman, CEO and president of Berkshire Hathaway HomeServices Georgia Properties. He calls this landscape “the age of the interloper.”
“The interloper is someone trying to make money off of people who are cruising the internet, doing whatever,” he explains. “It is absolutely, unequivocally…the thing that bothers me most. How do we as REALTORS®, brokers, individuals—respond to the interloper?”
This poetic turn-of-phrase describes a real problem, Forsman says—a problem of balancing focus and commitment to the fundamentals, while still evolving into a dangerous new landscape.
“It’s a dichotomy, it’s a really hard thing to contemplate,” Forsman sighs.
Opportunity: Quantum Leap
Having some of the keenest minds in tech and deepest pockets in Wall Street diving into the industry has its upside, of course. Carter says that the viability and “dynamic” of the MLS is not threatened by these powers, despite fear around the industry.
“We are investing in technology,” he says. “We continue to be pretty bullish on the ability of the MLS to deliver in this new environment.”
Out in the wild, there is a flourishing ecosystem of tech startups with the potential to take MLS data and do incredible new things with it. Though proptech has certainly seen its ups and downs in the last few years, MLS leaders say that a bevy of new ideas and new companies are just getting off the ground, and some are certain to debut with a splash.
At MAR, Liz Sturrock is the chief of MLS and Innovation, providing the tech expertise for their MLS team. She says that there are “incredible opportunities” popping up all the time as start-ups pitch new ways to do things better, or even provide entirely new services.
“They’ll come to us even pre-minimal viable product,” she says. “We can really help shape what we want it to be. I don’t even know if I want to guess about what we need and don’t need, but it’s all about reducing friction and being easy to use.”
MAR has utilized REALTOR® “scouts” that scour the tech sector for opportunities, Sturrock says, which illustrates just how much there is out there. Sturrock also references the National Association of REALTORS’® (NAR) expansion of its own tech outreach through a program called “REACH Labs,” connecting local associations in certain regions (Miami being one) with entrepreneurs and investors driving innovation.
The fact that there is so much available right now offers a unique and maybe one-time chance for MLSs to take charge of the future—to be the entities on the crest of the wave, instead of falling behind a rush of more nimble, open-minded outsiders.
“A lot of MLSs, in my opinion, are too dependent on outside vendors to provide most of their technology,” Carter says.
Owning the tech or the companies that make it, as more and more MLSs have sought to do, is what makes a company a part of the tech boom instead of just a witness to it. With both consumers and agents expecting more based on what machine learning and automation can accomplish—particularly when it comes to granular data, speed and ease of access—MLSs have a chance to really push the envelope forward in a short period of time.
Bill Fowler is currently working as a consultant after many years in tech and MLS with big names like Compass and Zillow. He told RISMedia earlier this year that he has “daily conversations” with new companies, many of whom have truly innovative and important ideas or products but have no clear path to bringing them to a wide audience.
“I think it’s less about the MLSs creating little fiefdoms of technology as it is about, how does Sacramento ever get exposure to the company in New Hampshire that has built the better mousetrap?” he asks. “Where is the mechanism for this ‘Shark Tank’ environment?”
The good news is that the opportunities are there—that is, the technology, and the money to scale it. Fowler also highlights RESO, the REACH Program and a few other venture capital funds as expanding visibility and access. At the highest level, all this combines to create the potential for huge expansion and growth—for those who are proactive in participating in the new markets.
“The consumer is exposed to some pretty cool stuff, and if we at the MLS level can’t get our arms around providing some of that pretty cool stuff to our membership, there’s risk there,” says Carter.
Pitfall: Personalities and People
Often what stands in the way of progress is quite simply, the people who don’t want to take that next step. Many in MLS spheres are afraid of losing the power, influence or markets they currently own. Others are afraid of the pushback that new technologies could incur from both agents and consumers.
Finding common ground across 600 companies across 50 states, most used to operating independently, sometimes seems impossible.
“My job is probably equal parts politician equal parts preacher,” Carter says. “I think my biggest challenge is to get people’s heads around the fact that there are some benefits to this aggregated cooperation.”
Even when there is relatively broad consensus on certain ideas or issues, simply coordinating so many stakeholders is a constant challenge and can leave the larger industry slow to react or adapt. The MLS industry does not have the same national leadership structure or the mandatory standards of many other industries—which is not always a disadvantage but certainly makes moving together more difficult.
Forsman says everyone who has been in the industry long enough has “in their mind’s eye” what an ideal system or transaction looks like, but all of those differ from person to person and also run up against the open-ended, subjective nature of real estate.
“You involve people, property, negotiations and circumstances. The thing about real estate is no two properties are alike,” he points out. “Autonomy doesn’t really exist in the real estate space.”
There is no real mechanism to force people to get along or work towards common goals, especially when they are far removed geographically from one another. DeBord says the solution is to do what RESO is doing and create incentives for MLS operators to begin speaking the same language and understanding each other’s ideas, priorities and challenges.
“Cooperation and compliance are the core values of what make an MLS different and make it great,” he asserts.
This process is—and should remain—heavily democratic, DeBord also argues, describing how RESO bases its MLS standards off “a consortium of member businesses.”
“We don’t usually tell the businesses what they need to do,” he says. “Businesses can go out…and build whatever they want to, but if they wanted to do it in a RESO standard way, then we could define how that data is structured.”
Having a singular or more centralized method of hammering out these standards is even more important when new ideas and new technology are flooding the market. DeBord says that as something like 3D images or desktop appraisals become ubiquitous, RESO can bring together a multitude of approaches on how best to include them without a hundred different organizations experimenting in silos, potentially confusing consumers and creating inefficiencies for agents.
Whether or not the inherently local nature of real estate makes a perfect set of national standards impossible is an open question. There clearly is room for more standardization, DeBord says, and people are beginning to realize it even as competition grows hotter.
“Certainly there are times when MLSs want to eat each other’s lunches outside of RESO,” he laughs. “But there’s also a continued mindset shift to open standard, open source software—things that float all boats.”
Carter says that historically, people in organized real estate are cautious to a fault—an attitude that sometimes must be overcome in order to move forward.
“The face of organized real estate—if there was one face, it would have a facial tic, because we’re afraid of everything,” he quips.
Opportunity: Competition Mindset
MLSs have traditionally been seen as technology companies, most simply. Carter says that is not really true.
“I’ve said this for a long period of time—I don’t necessarily run a technology company, but I do run a broker cooperative,” he says. “And that cooperative piece is what we really have to double down on.”
Brokers are engaged in a “competitive alliance,” according to Carter, and should realize that the competition is over providing the best service for the consumer—which requires cooperation.
Doubly so for MLSs, which now more than ever have to find ways to meet consumer expectations in the face of what Zillow and Redfin have been able to offer (and market). That flows up to the agent and broker, according to DeBord, who need to be able to offer buyers and sellers something accessible, simple and useful.
“The brokers and the agents want efficient technology tools that are clear and straightforward to show their consumers,” says DeBord. “So they drive those consumer needs up to the MLS.”
Letting decisions flow upward from the consumer instead of downward from the executive might seem like common sense, but of course it does not always work that way.
Kinney says that when data shows that agents are using a platform, a database or a certain piece of software, MAR keeps offering it, even if those agents don’t make up a huge proportion of the company’s membership.
“With 60,000 members, there is no one size that fits all,” she says. “And because of who we are, we don’t have to limit them to one. We can provide a lot of different options for them that work in the way that they want to work for that particular customer.”
Admittedly, it requires a larger company to do this. Carter says he does not necessarily recommend that smaller MLSs try to go out and start buying multiple, semi-redundant platforms to serve a few thousand—or a few hundred—agents and brokers. Working together could make that possible—again, something that also requires people to change their mindset about what competition means.
“If they think they’re going to go it on their own—probably not,” Carter says. “The power of ‘We’ is what we focus on. And as much as there is not a singular ‘We’ in the MLS industry, we have to get closer to that, and pretty quickly.”
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas, jwilliams@rismedia.com.
