Notorious R.O.B. – Conversations on Marketing, Technology, Real Estate

In my previous life (at Windermere), I spent a good 10 years bouncing around from board to board trying to convince brokers to adopt IDX, or, give us data under reasonable terms once they had passed the rules (Greg, I feel your pain). In almost every market the political process was 10x the technical challenge.

That said, we generally found it to be less effort to change the rules inside an existing MLS (simple majority vote), than to try the 'alternate MLS' approach (95% threshold to work).

@Marilyn -

Thank you for, as Public Enemy might say, rocking the hard jams, treating it like a seminar.

:)

-rsh

@Brad -

So, suppose that someone were to start a third competing MLS... let's call it BNIXMLS. BNIXMLS charges 30% less than GAMLS, and FMLS. It offers very relaxed display rules, patterned after something like Creative Commons. (Just acknowledge the listing broker, and that's it.) It offers feed output in a variety of formats, from .csv to XML to RETS and so on.

Instead of charging $12,000 a year for a feed, BNIXMLS charges something like $1,200 a year -- or, being that this is the 21st century, it charges $0.002 (2/10ths of a penny) per record downloaded via XML web services.

And BNIXMLS is run by a guy who cares about keeping his customers happy, so he offers top-notch customer service.

I'm trying to understand why BNIXMLS wouldn't swiftly put both GAMLS and FMLS out of business -- or at a minimum, force them to raise their game to stop the flood of customers leaving them for BNIXMLS.

I suspect Tony Longo has sketched part of the answer: the vast majority of agents/brokers in a given market are uneducated and don't care. In fact, I suspect that part of the reason why some MLS's have restrictive rules is that their members demand them.

-rsh

Like any industry there are great MLSs and not so great MLSs. From our experience consulting with several MLSs around the country and conducting member satisfaction research, though, satisfaction levels are much higher than suggested by blueroof.

While all MLSs, like all service providers, can certainly continue to improve their satsifaction levels - most are providing services which meet their member's needs. WAV Group has survey data from thousands of REALTORS - and we can say confidently that REALTORS are pleased with their MLS services. I know that's probably not as interesting as the "horror" stories shared by some, but that is what satisfaction data suggests.

I disagree with the notion that MLSs are money-grubbing for profit capitalists. The fees paid to MLSs around the country also differ greatly. Many of the largest and most well-run organizations in the country are offering a variety of very reliable and robust services for $30 or LESS per month. Some offer as many as 9 or 10 services which help realtors offer professional, real-time responsiveness to their clients. Remember that the MLS fee can include MLS, Tax, Document Management, Showing Appointments, client portals, efax, consumer websites, data syndication, customer support, research and development, reserve accounts, and more.

My cable bill is $139/month and my cell phone bill is $129/month. The relative value delivered by MLSs is incredible versus other standard technologies purchased by REALTORS.

While many MLSs ARE structured as for profit organization, many follow the NAR mantra to provide services without chasing significant profit. In the face of reduced membership, many are cutting budgets to hold fees down. There are some that are raising fees, but none that we're aware of are charging fees even close to the cost of ubiquitous technology providers like cell phone or cable companies are charging these days.

Today we see the emergence of Association of Choice and MLS of choice - concepts promoted by the National Association of REALTORS. You can easily look to California to see an example of REALTORS having a variety of choices when it comes to MLS Membership. Los Angles area MLSs now allow brokers or agents to join any one of 5 MLS that are members of CARETS - a shared database with a front end MLS system of choice. Soon there is likely to also be an option of a Statewide MLS. Although MLS of Choice is a new concept, data sharing and front end of choice options are springing up all across America This seems to unravel the argument constructed in the title of this thread suggesting that "MLSs are Monopolies" today.

I also do not believe that any programmer could build a MLS database over the weekend. Even if it could be built, the business of providing a MLS system is a whole lot more than simply deploying a database. The maintenance, business rules, management and protection of the information is where the MLS creates is value. Without this service, the real estate community could not operate it as we know it today. If the MLS is doing such a bad and irrelevant job, how come every VC-financed start-up is courting them for their data?

Take a look at Europe, for example, There is virtually no cooperation in this region and it creates pure chaos for consumers and for the real estate industry. Homes can be listed for two prices from two different real estate offices. No office has all of the inventory in any region so a real estate consumer has to visit several offices and hope they have seen all of the homes available. I think the MLS has created a significant value relative to this disorganized model.

With all of that said, there are still ways for MLSs to improve their relevance. First, there is a lot of room for them to become more sensitized to the needs of their subscribers. Some do have too much focus on "compliance" and project an attitude like the DMV. Some could project better attitudes and more flexible and adaptable policies.

Second, there could do a much better job of building relationships with their subscribers. They can do more individual outreach to brokers, agents and offices. They can also leverage web 2.0 technologies to create a better dialog with their customers. Many REALTORS do not even know the name of their MLS provider. When we ask the name of MLSs, many times we hear "paragon" or "mlxchange" or "xyzassociation".

Third, MLSs need better methods for monitoring satisfaction levels. We have helped several MLSs implement satisfaction benchmarking programs to monitor satisfaction levels consistently. These programs include measuring real-time satisfaction levels for all communications with the MLS. They measure awareness, perceived relevance, adoption and satisfaction of the services offered. In other words, they do a really good job of staying in touch with the emotions and needs of their customers.

I hope this helps answer your question about "what am I missing?"

Marilyn Wilson
Founding Partner
WAV Group
wave.wavgroup.com

@John -

No, you're not the idiot -- we are for making that hard to find. :) I'll deal with it on Monday. Thanks for the heads-up.

-rsh

Rob. I have a pretty simple answer for you.

Most (and I mean most like 99.9999%) of real estate agents/brokers are not nearly involved in the RE:tech world as we are and this tiny group basically surrounding the Inman network.

Ok, so out of the 1M+ Realtors who use MLS's nationwide to publish and research property data maybe .005% actually have a grasp on IDX or any kind of custom MLS solution. And out of that group even a smaller percentage of them want to invest time and money to bring a better solution into public play. Are you with me on this?

So point being made: it is extremely hard to start an MLS or even push one out to market for "FREE" because it is worthless until you have all of the data (that is being uploaded by agents) the majority of them not really caring about our issues in creating a better service/tool for consumers.

Getting an agent/broker to switch their habits is not the easiest thing in the world, especially if it cost money and espeically in this market.

We actually have this situation going on in Boston, MA right now as we have 2 MLS's. 1 of them in my opinion going extinct very quickly.

I love this topic and plan to follow it, but I believe bottom line is that it will nearly be impossible to compete in the MLS game right now. The monopolies are close to indestructible. I am paying MLS dues and custom raw data set fee's in more than 10 cities right now. They are all over the place...and its an ugly ugly world.

Hope your well!

Tony L.
CondoDomain

Found it buried at the bottom. Yes, I'm an idiot.

@Rob- on a side note, I found your Onboard Informatics blog, but why is it so hard to add it to my feed reader? There's no RSS feed link on the blog, and my Google reader can't figure out anything I try. Looks like a great source of information, but you guys made it difficult to follow. Even the individual blog posts don't come up with their own URL. I'm sure I'm missing something. Do you know what it is?

I operate in one of the few markets (Atlanta) in the country where we have competing MLS' for a large MSA. The existence of GAMLS and FMLS both competing for listings in Metro Atlanta has made very little difference in the frustrations mentioned by Greg. I still can't show the data on my web site that I can easily print or email to hundreds (heck, thousands) of customers at a time. The pricing problems are not as big a part of the issue as Greg has, but the compliance issues are frustrating.

I have even pushed for a public-facing MLS, like HAR. Alas, the message falls on deaf ears. If MLS' really want to provide value to it's broker members, then embrace a more open policy and share the data we provide you in the format we need.

@Marc -

I thought your insight re: MLS having vital content was spot on. I mean, as we're rolling out the Lifestyle Listings Engine with Onboard, one of the things I came to realize is that our clients place huge value on having MLS data.

All that I was wondering about was what Greg points out -- and I do need to spend more time reading Michael's post. But since MLS's are not governmental entities, and are furthermore for-profit ventures, the principles of business dictates that a competitor would arise to take their business away, y'know?

The easy-to-work with MLS's have nothing to worry about from competition, presumably. They have network effect on their side, and their customers are happy. The crappy ones, in theory, should be getting their butts kicked in the market as smart operators pop up, knowing that the crap-MLS's customers are unhappy, and take their marketshare.

The offers of cooperation and compensation are in the membership rules of any MLS, I assume, which means that every MLS (startup or not) will write those into its membership rules. Technology is not the barrier. So it has to be inertia, right? Some sort of "if it ain't broke, don't fix it" mentality -- except if the MLS is really offering crap service at expensive prices, then a competitor should offer good service at decent prices and take that market over in the blink of an eye....

The lack of competition, in this case, is what is strange.

-rsh

Good points all around. Without question much of what brokers view as competitive has much to do with their experience with their MLS. Our POV is sliced from the perspective of a few MLS's we've encountered that are doing right by their members. We see these as shinning examples of how MLS's can kick ass working in tandem with and for their their members.

The reality check here regards the many outside vendors who are accessing MLS data and using it to either build new consumer destinations that drive traffic which they sell to brokers or create IDX mashups that they then sell to brokers.

Either way, all this points to one clear fact - the MLS has vital content everyone wants. And since that content all comes for their broker members, our vision is about taking stock of this special environment through a call to action for the MLS to start getting creative, progressive and to do as Greg suggests which is get back to the mission of being member centric and up the ante on the benefits they ought to be bringing to their broker members.

Building a public facing search site that drives traffic and leads back to it's members for free is appears to us as a positive step in that direction giving the realities of today.

Technology is the easy part. I, along with about 100 other companies, already have the technology that could do a better job than the MLS's do.

The challenges are tradition, fear, politics and power.

Having some of the listings is worthless- you need ALL of the listings to truly compete with the MLS. Getting every broker to put their listings into another system would be very difficult. Dealing with brokers and agents is like herding cats- they all want to go their own way.

MLS's were started to ensure compensation between brokers and to share data. Now there are associations and powerful political groups that represent the industry in every state (as well as nationally) and these groups and the heads of MLS's would not let it happen without a fight.

Many brokers fear giving their info to anyone- for anything. Most are realizing now that the internet is a good thing, but many still don't want consumers to have addresses or property info without an agent because they think they have no value without the info- and those particular people probably don't offer value. Most want to give the data to consumers now, but like I said, to be relevant, you would need ALL the listings.

Each MLS is so completely different from others- some are so easy to work with and charge nothing extra for their members to access the datat feeds and then you have MLS's like WFR in Utah or ARM in Arizona that charge $12,000/year for an ftp feed and have tons of restrictions. Metrolist in Denver has pages and pages of absurd requirements and if you vary one bit they charge thousands of dollars in fines or pull your feed.

MLS's do not have to work with anyone- they can make their own rules because they have no competitors, which is why they are a monopoly.

Obviously I am speaking about certain frustrations and certain MLS's are much easier to work with and each have their own rules, fees and restrictions.

My point on 1000Watt's blog, and here, is that the MLS's in general have moved away from the purpose of being member-centric organizations that exist to serve their members to being big for-profit companies and now they are looking for ways to make more money and power from members and other vendors.

As an agent I want my MLS to help me do my business, help ensure the accuracy and timeliness of the data, and give me the assurance of compensation.

I don't want to compete with my MLS for web traffic or pay them $1000's/year just to be able to use the data feed (that costs them nothing to provide me) or pay them for web traffic (which many are now doing) which they get by using the data they get from me.

Is it a network effect issue, where once all the realtors in a given area are on a particular MLS, the game is over? (Like eBay?) Is it a finance issue, where the profits from operating a MLS are so low that entrepreneurs aren’t tempted to offer a better service experience at lower cost?

Yes, both of these are true.

I just can’t understand why these MLS’s, who are apparently so poor at serving their customers (brokers and agents) and are charging far too much to provide crappy service, aren’t going bankrupt due to nimbler, more customer-friendly competitors.

The "apparently" should be emphasized here. Yes, certainly, there are people who complain about MLSs but, for the most part, MLSs do their job very well and for very low cost. Competitors do spring up occasionally and quickly learn that it is much harder than it looks. (Lastly, I can't imagine why Greg's MLS charges that amount for a data feed. We service 115 MLSs across the country with our flexmls system and charge nothing extra for RETS access to the data.)

All this being said, I've argued before that competition among MLSs is not only possible, but it is desired and I've proposed a model for how to accomplish this nationally. See http://blog.flexmls.com/?p=229.

Rob- I agree with Tony's comments on the network issue. It's also tied to the way buyer's agents are paid for showing listing agent's homes. Since every broker is a member of the local MLS, they've all agreed to compensate each other for selling each other's homes, based on the commission stated in the MLS. If someone created a new, improved "MLS" and started listing their properties there, I think the agents who weren't members of that new system wouldn't show those listings for fear they won't get paid. I know, it sounds silly, but it's why it would be nearly impossible to get anyone to join the new system and pull out of the old.

There's also the issue that you couldn't just get individual agents to pull out of the old MLS and join the new one, you would have to get the entire brokerage to pull out. Just not going to happen in an industry where brokers, especially the larger ones, are as slow as molasses to make any sort of change away from the "business-as-usual" mentality.

I think Kris Berg's idea of a small group of independents could possibly make this happen, but the short term risk might make it nearly impossible. I can imagine going on a listing appointment and trying to convince a seller to list their home in your new, improved "MLS", even though all the other 10,000 agents in the area are members of the old system and won't even see their listing.

I do agree with you that it should happen, but I don't see how you get past these problems. I think someone who can figure out how to take advantage of newer ways to search, particularly Google-based searches (Kris Berg- you know who I'm talking about), might be able to slowly build something different, but it will take a major change, equivalent to an asteroid hitting the earth, to convince brokers to switch.

I would suspect it is a network issue. Building it would probably be pretty simple, getting all the agents to use it would be the challenge.

I could see the local associations that own their local MLS would make it difficult for their agents for using a competiting MLS system because in essence they would lose revenue.