Local MLSs are doomed. Real estate data integration case

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Real estate has always been a local industry. In the early days, information was exchanged almost entirely by word of mouth. As the Internet grew, it became clear to the world that controlling data was like holding modern gold. That’s why brokers, associations and MLSs protect their data fiercely.

This battle for control, driven by ego and financial gain, is harmful to the entire industry. The history of real estate information sharing demonstrates the urgent need for integration between local REALTORS associations and MLSs.

The history of the power of information

In the late 1800s, real estate professionals in the United States began gathering in person to share information about their listings and sales. This practice has not officially become an MLS and involves verbal communication and personal notes. These groups rely heavily on each other’s knowledge. The founding of the National Association of Realtors (NAR) in 1908 provided a framework for these groups, but not yet for the MLS.

Standardization over a distance was impossible when information remained in written, analog form. Although the MLS evolved into book form in the 1900s, the cost and constant updates made it impractical for agents to have personal copies. During this time, it became increasingly clear that information sharing among real estate professionals was a source of strength. However, with the advent of the internet in the 2000s, attempts to maintain control of information at the local level turned into an age-old power struggle that continues to hinder industry progress.

The role of local associations

Before NAR, local associations of REALTORS were informal groups that shared information. In the 1900s, under the umbrella of the NAR, they played a vital role, providing a place to collect and share information, obtain MLS books, and receive training. Without internet, agents need to join in person and the association must be within a reasonable driving distance. Today, the role of local associations is diminishing or becoming obsolete, although they will oppose any discourse that threatens their existence.

However, national associations provide essential services such as standardized forms, policy advocacy, and education that local associations cannot match. Many real estate agents believe local associations are ego-driven, with leaders vying for power in a school-like popularity contest. Members pay millions of dollars for local buildings and staff, and those costs could be streamlined and unified under one state association.

Fragmentation of the MLS system

While real estate agents may tolerate the existence of irrelevant local associations, many are frustrated by the fragmented MLS system. Some agents must join multiple MLSs, resulting in multiple memberships, fees, platforms and redundant activity to maintain listings and searches in multiple systems. It’s no wonder consumers often turn to sites like Zillow, which provide unified data more efficiently than the fragmented MLS used by agents.

In 2002, NAR launched a working group that later became the Real Estate Standards Organization (RESO). RESO developed the Real Estate Transaction Standard (RETS) and subsequently introduced the Material Dictionary and RESO Web API to standardize materials. Despite these efforts, full reunification remains elusive.

There are currently a sickening number of 535 MLS systems in the country. For example, this includes 43 in Texas, 39 in California, 31 in Florida and 27 in Georgia. Of the 535 systems, 59% are certified to the current RESO standard, 2% are certified to the old standard, 31% have completed technical testing but are not yet certified, and 8% are not certified. Each MLS system allows technology providers and brokers to use different methods to access approved information.

While many MLS systems have adopted modern APIs, many have not. Bridge Interactive, which was acquired by Zillow in 2016, created a platform that converts MLS profiles into a simple API for others to connect to.

Many MLS systems do not work with these Leading companies make data access increasingly difficult for technology providers and brokers. Even more concerning is the fact that MLS relies on other companies to distribute its data.

Additionally, these inconsistent APIs require technology vendors to unify multiple systems in an extremely cumbersome manner, as each of the 535 MLS systems makes changes independently at different times.

Integration case

1. Unified Messaging and Operations: A huge loss for the industry, especially in light of the recent NAR settlement, is that local REALTORS associations and MLSs have no unified information, actions, or training regarding the settlement. They can’t share any information other than the fact of the settlement, so their message isn’t exactly news and they are repeating the same message as other associations and MLS across the country. Some MLSs have taken hard stances, such as ignoring settlement requirements and creating seller concession fields to overcome the lack of buyer commission fields. Many in the industry will say that the right hand doesn’t know what the left hand is doing, or that they are not cooperating at best, and that the fragmentation of messages and operations is leading to more confusion and solutions.
2. Improve efficiency and reduce costs: Consolidating local REALTORS associations and MLS systems into a single state entity will streamline administrative processes, reduce redundant efforts and provide significant cost savings. These savings will benefit agents and consumers through lower fees and more efficient service delivery. Not only will brokers and agents save money because they won’t need to maintain multiple memberships, but the cost of operating a single entity will be extremely cheap, and the reduced costs can be passed back to members as savings. Nationwide, such consolidation could cost hundreds or even thousands of jobs, which is part of the reason the fight against it will be fierce.
3. Data consistency and standardization: A unified state-level MLS would ensure that all listings follow the same rules and standards, unify field names and values, and reduce confusion and discrepancies. It is important for data providers that each state updates one MLS system, rather than dealing with many MLSs updating data at different times. This standardization will also make it easier to train real estate professionals and provide consistent support across the state through one MLS system.
4. Improve education: Rather than each local association and MLS creating its own training and education, integration is needed to develop a more comprehensive and consistent approach. Training now delivered in small groups by local professionals could be replaced by larger itinerant training at large leased venues led by more renowned trainers and educators. In addition to this, large-scale virtual educational seminars were held for agents across the state, which may be the primary form of education. The educational content can also be greatly expanded, and every part of the course will be endorsed by lawyers and experts.
5. Increased influence and bargaining power: A larger, more unified organization will have greater influence when negotiating with technology providers and other vendors that provide resources to the association and its members. This could lead to better pricing and access to advanced technology solutions and resources, benefiting all members.

Accountability?

While local real estate organization was once vital, modern technology has made many of its original features obsolete. The only thing that sustains these organizations is the sheer determination of those who want to maintain power.

They want to keep their influence, their data, their control, and the money they may consider theirs. In fact, it all belongs to industry, and the future of industry lies in unity. It’s time for the real estate industry to consolidate and become a strong, unified leader.

Sean Frank is the founder and CEO of a large real estate company in Florida. Connect with him on Instagram and LinkedIn.