Can I get a death watch for the MLS DeathWatch?

The real estate industry spends WAY too much time worrying about going out of business. I guess some of it is warranted. Things change; just ask a former travel agent. Certainly, a new model for buying and selling a home will come along, and when it does, it will be pretty obvious to all of us that we’re screwed. That day is not here yet, and I happen to think it’s a long way off.

outbizFears of disintermediation often peak in the lead up to Inman Connect. New companies/models launch, press releases are written and pundits ponder. As a result, the establishment freaks out and tries to figure out how to quash the innovation uprising. Relax. Unless someone figures out how to improve on your core value proposition, you’re going to be okay.

Take for instance the MLS DeathWatch. Pundits have argued for years that the MLS will be a casualty of the internet. Bill Chee warned us it could happen nearly 20 years ago. As Trulia and Zillow launched, the hysteria really started to blow up. But in case it’s not yet obvious to you, there is no danger of these portals wanting to go into the MLS business. In fact, the opposite is true. They benefit greatly from partnering with MLSes. Those who theorized that “Zillow + a couple fields for a copay = an MLS” aren’t taking into account the MLS’s core value proposition to its members is, “the orderly correlation and dissemination of listing information to participants so they may better serve the buying and selling public.” Emphasis on ‘orderly’ is mine and it’s key to why the MLS is in no danger of being disintermediated by the portals. The technology to share listing data is the easy part. Building and enforcing a governance system that ensures a fair marketplace is far more difficult.

More recently, it’s been the rise of the pocket listings, and non-MLS transaction platforms that seem to have the industry all worked up. The argument is that technology and social media are creating opportunities to sell homes outside of the MLS. The idea is that when two agents have a strong enough relationship, they trust each other to work together without the enforcement of the MLS. They share these listings in non-MLS online forums. I can understand why this would concern quite a few MLS execs, but consider some of the realities of the situation. Many agents start out marketing these listings in a private forum, but eventually list the property in the MLS. Even if a deal is practically done, and it’s just for a day. Why? Because they want the security of the MLS governance structure. In other cases, the property sells off the MLS, but the agents selling them continue to pay their MLS dues. Why? Because they don’t do every deal off-MLS. Most consumers aren’t going to go for it. Furthermore, those agents want access to the listings already there.

Pocket listings could lead to bigger problems for MLSes, but measuring the percentage of off-MLS closings that occur to judge how this is effecting the MLS’s bottom line is misguided. Figure out how many actively selling participants are dropping out of the MLS and you’ll understand the impact a lot better. My guess is that the number is very small.

There will be a day when the sharing of listing data is far more communal than it is today. Technologies like RETS can make syndication a lot more democratic. But as long as agents need a governance system to help assure they can work with an agent they’ve never met before, I think MLSes will be fine. The key will be for them to adapt their core value proposition to the realities of innovation.

Photo: Creative Commons license via Flickr user Alex Holyoake

5 thoughts on “Can I get a death watch for the MLS DeathWatch?

  1. Julian Hebron

    Well said. We see a lot of non-MLS marketing of luxury properties and new construction in San Francisco. But I agree that doesn’t mean the imminent demise of MLS.

    Reply
  2. John Mosey

    Reports of its imminent demise have been circulating for as long as I can remember. I think the hand-wringers and doom-sayers are about as sincere and “helpful” as the Reverends Al Sharpton and Jesse Jackson at this week’s outrageous example of something or other.

    Reply
  3. Ray Schmitz

    Agreed, the MLS is not going away, but what is it that is really feared?

    I do not think it is that the orderly dissemination of listing information to participants will stop, but rather that it might become an orderly dissemination to everyone.

    Reply
      1. Ray Schmitz

        No.

        I think “Zillow + a couple fields for a copay = an MLS” is getting there. A completely public MLS would change things for the better.

        Many of today’s buyers want *all* the info. The expectation that it is out there somewhere leads them to search for it.

        The very idea that there exists some important info a members only trade database collides with this expectation. I think it hurts the industry more than helps at this point.

        That’s my opinion.

        But it is not only mine.

        Ask any member if they would want to see all the local MLS info on a home they were thinking of buying personally. Of course they would.

        Other buyers have the same expectation.

        I have spoken to almost 10 buyers in the last year who all told me some version of this:
        First, they decided to buy a home.

        Second and shortly thereafter, they decided to get their real estate license.

        Actually buying the home came third, if they got that far.

        It is not exactly evidence that the system is better serving the buying public.

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