Real estate is still a local business. Real estate is about human connections and relationships.
These truisms were understood more than a century ago, when the telephone was a new concept. They still hold up today against a technologically superior landscape of wireless video home tours, machine learning algorithms and the weight of billions of dollars in Wall Street capital. It would be deeply mistaken to use an old mantra like this to justify ignoring fundamental changes in listing and marketing real estate over the last century.
The MLS is a perfect example.
An MLS database is a powerful tool and a vital part of real estate. It was essential to the realty industry’s success when it was just a pile of papers covering a few small towns. Now, it is digitalized, granular, nationwide and vital. Many companies that manage or own this data are moving towards more cooperation and consolidation. There has been a flood of Wall Street money into the sector and a push toward standardization, data-sharing, and there is more opportunity for good.
Teresa Kinney, CEO of MAR, states that MLS is clearly not the same as it was. It is more than the MLS.
Here are the top MLS thought-leaders’ and industry insiders’ predictions for the industry in the future:
Pitfall: Losing Focus
MAR is one of the largest MLSs in the nation, with more than 60,000 members. Kinney told RISMedia that her organization is committed to maintaining a keen understanding of real estate fundamentals, despite Wall Street and tech start ups bringing their own agendas and perspectives.
She says that I have the practical experience because I was a REALTOR for many years. We are able to work with these companies to customize and make their product more REALTOR-friendly and more consumer-friendly.
The burgeoning influence of Big Tech in real estate is a serious threat. They could lose sight of the true purpose of MLSs and let them become gimmicky tech markets or walled gardens full of data to make a quick buck. If MLSs lose sight of their core mission of providing a real and accessible service to real estate agents, consumers, and consumers, there is no other way for the industry except down.
Real estate professionals must tread carefully as big money investments and tech start-ups offer ways to more effectively accomplish this mission.
Sam DeBord (founder of the Real Estate Standards Organization) says, “I think the foundation of all the organisations being able to place their data into this universal vocabulary is allowing us to create insights into market that we didnt have before.” The organization seeks to standardize the presentation of MLS data nationwide.
RESO’s mission is to at least partially guide the industry through the growing pains and consolidation. DeBord states that RESO is working to educate tech professionals and investors on the needs and wants of real estate professionals. They also oversee an evolution that maintains connections between MLSs and keeps them on the same team.
He believes that we should always build technology based upon what is common in all technology systems within the industry. This is where competitors can relax a bit and help educate incumbents and start-ups.
Companies will use their data only to maximize profits and market power. This is why tech companies compete for dollars rather than service.
Art Carter, CEO of California Regional MLS, (CRMLS), says that data that MLSs curate must be accessible to both brokerages (who actually own it anyway) as well as consumers. He quotes Dave Liniger, RE/MAX cofounder and author, to describe the attitude of many younger players in the MLS market.
He said that it is like people coming to a dinner party with only a fork and nothing else. To get out of this data hub, people must give. This is the thought process that we have going forward. It is about making sure that value in equals to value out.
The broker perspective is that too many people in and out of the industry are jumping from one idea, product, or approach to the next, says Dan Forsman CEO and president Berkshire Hathaway HomeServices Georgia Properties. This is what he calls the age of interloper.
The interloper is someone who tries to make money by cruising the internet and doing whatever he wants. It is the most irritating thing I have ever seen. How can we, as individuals, brokers and REALTORS, respond to this interloper?
This poetic phrase describes a real problem. Forsman says it is about balancing focus and commitment with the fundamentals while also evolving into a new landscape.
It’s a dichotomy. It’s hard to think about, Forsman sighs.
Opportunity: Quantum Leap
It is a good thing to have some of the most innovative minds in tech and the deepest pockets on Wall Street, as well as the ability to dive into the industry. Carter believes that these powers are not threatening the viability and dynamics of the MLS despite the fear surrounding the industry.
He said that we are continuing to invest in technology. We remain confident in the ability of MLS to perform in this new environment.
There is a vibrant ecosystem of tech startups out there that can take MLS data and do amazing things with it. Although proptech has seen its ups, downs, MLS leaders believe that there are many new ideas and companies emerging, some of which will make a big splash.
Liz Sturrock, chief of MLS and Innovation at MAR, provides tech expertise to their MLS team. She says there are many amazing opportunities, as start-ups offer new ways of doing things better or offering entirely new services.
She says they’ll come to you even if there is no minimum viable product. It is possible to shape it into what you want. It doesn’t matter if I want it to guess what we need or not, but it is all about reducing friction.
Sturrock states that MAR has used REALTOR scouts to search the tech sector for opportunities. This shows just how many opportunities there are. Sturrock also mentions the National Association of REALTORS’ (NAR) expansion of their tech outreach through a program called “REACH Labs”, which connects local associations (Miami being just one) with investors and entrepreneurs driving innovation.
The fact that so much is available right now presents a unique opportunity for MLSsto take control of the future. Instead of falling behind a rush to be the entities at the crest of a wave, instead of being the ones at the bottom.
Carter says that a lot MLSs are dependent on outside vendors for their technology.
Owning the tech or the companies behind it, as more MLSs are trying to do, is what makes a company a participant in the tech boom rather than just a witness. With both consumers and agents expecting more based on what machine learning and automation can accomplishparticularly when it comes to granular data, speed and ease of accessMLSs have a chance to really push the envelope forward in a short period of time.
After many years working in tech and MLS for big names like Compass or Zillow, Bill Fowler now works as a consultant. RISMedia interviewed him earlier this year about his daily conversations with new companies. Many of these companies have innovative products or ideas, but no clear path to bringing them in front of a large audience.
I think it’s less about the MLSs cheating 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. He asks: “Where is the mechanism for this Shark Tank environment?”
The good news is that there are opportunities. That is, there is the technology and the money to scale them. Fowler also points out RESO, REACH Program and other venture capital funds as opportunities to expand visibility and access. All of this can lead to huge expansion and growth for those who take action in new markets.
Carter states that consumers are exposed to some pretty interesting stuff. Carter believes that if we as MLS cannot provide some of that cool stuff to our members, there is risk.
Pitfall: People and personalities
The people who don’t want to move on are often what stand in the way of progress. Many people in MLS spheres fear losing their power, influence, or market share. Others fear the backlash that new technologies could cause from consumers as well as agents.
Sometimes it seems impossible to find common ground between 600 companies operating in 50 states. Many of these companies were used to operating independently.
Carter says my job is probably equal parts politician, preacher, and both. My biggest challenge is to convince people that there are some benefits to aggregated collaboration.
Even if there is broad consensus on certain ideas and issues, coordination of so many stakeholders can be a constant challenge that can slow down the industry’s ability to adapt or react. Although it is not necessarily a disadvantage, the MLS industry lacks the same national leadership structure and the mandatory standards that many other industries. This makes it more difficult to work together.
Forsman claims that everyone who has worked in the industry for a long time has an idea of what the ideal system or transaction should look like. However, all opinions differ and are subject to the subjective nature of real-estate.
Real estate involves people, property and negotiation. He points out that no two properties are the same in real estate. Autonomy is not a real thing in the real-estate space.
There is no mechanism that can force people to cooperate or work together, especially when they are geographically distant. DeBord suggests that the solution is to mimic the RESO approach and provide incentives for MLS operators in order to learn the language and understand each others’ priorities and challenges.
He asserts that the core values of an MLS are cooperation and compliance.
DeBord also argues that this process should be and should remain democratic. He explains how RESO’s MLS standards are based on a consortium made up of member businesses.
He says that we don’t usually tell businesses what they should do. Businesses can do whatever they like, but if they want to build it in a standard RESO way, we can help them define how the data should be structured.
With all the new technology and ideas flooding the market, it is more important to have a single or more centralized method of hammering out these standards. DeBord states that as 3D images and desktop appraisals become more common, RESO can bring together many different approaches to include them without having to experiment in silos, confusing consumers and creating inefficiencies in the agents’ work.
It is not clear whether the inherently local nature real estate renders a perfect set national standards impossible. DeBord states that there is clearly room for more standardization and that people are starting to see it even though competition is increasing.
He laughs that there are times when MLSs may want to eat each other’s lunches outside RESO. But there is also a constant shift in mindset towards open standard, free source softwarethat floats all boats.
Carter said that organized realty people have historically been cautious to fault. This attitude can sometimes lead to obstacles that must be overcome in order for them to move forward.
The face of organized realty if there were one, it would be a facial tic. We are afraid of everything, he jokes.
Opportunity: Competition Mindset
MLSs were traditionally viewed as technology companies. Carter claims that this is false.
I’ve been repeating this for a long time. I don’t necessarily run a technology business, but I do run an broker cooperative, he said. That cooperative component is what we really need to double down on.
Carter says that brokers are involved in a competive alliance and should realize that the competition is not about providing the best services for consumers. Cooperation is required.
MLSs are in dire need of a way to meet consumers’ expectations, especially given the lack of Zillow and Redfin listings. DeBord says that agents and brokers must be able offer sellers and buyers something simple, useful, and accessible.
DeBord says that agents and brokers want clear, easy-to-use technology tools to communicate with their clients. They drive these consumer needs up to MLS.
Although it may seem common sense to allow decisions to flow upward from the consumer and not downward from the executive, it is not always the best practice.
Kinney stated that MAR will offer a platform, a database, or a piece of software if it is clear that agents are using the platform. Even if they don’t make up a large percentage of the companys members.
She says that there are 60,000 members and no one size fits all. We don’t have to limit them because of who they are. We can offer many different options that will work in the best way for each customer.
This requires a larger company, but it is possible. Carter states that he doesn’t recommend that smaller MLSs buy multiple, semi-redundant platforms in order to serve a few thousand or a few hundred agents and brokers. This could be possible again if people change their perspective about competition.
Carter says that if they think they can do it on their terms, Carter is wrong. What we focus on is the power of We. Despite the fact that there is not a single We in MLS, we must get closer to it, and very quickly.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas,[email protected].