What is the deal with statewide MLSs?
Do statewide MLS’s exist? How can you search all of the available listed properties in a particular state? How many MLSs are there in the US? With the internet becoming the cornerstone of accessing listing data, why are there not more statewide MLSs? Wouldn’t having a statewide MLS benefit real estate practitioners as well as the general public? These are the questions that we will be covering. As with many seemingly simple questions, it has some complex answers.
You can spend thousands of dollars and months of valuable marketing time before you recognize you have been duped.
It’s important to understand there are between 600-650 MLSs across the United States. That number is constantly changing because of MLS mergers and restructuring on a constant basis. Most of those local MLS are either fully tethered to (one and the same), or solely owned by the local REALTOR board. Each state has a state REALTOR organization as well as multiple local REALTOR organizations or Boards.
For years, NAR (the National Association of REALTORS) has been telling local, affiliated to run their REALTOR Board independently from their MLS’s.
“Don’t rely on MLS dues to run your REALTOR Board!” was the message delivered over and over again.
Were the Associations listening???? I think not! Needless to say, all across the United States, since each local board has some level of individuality and decision making, it’s challenging to give specifics unless we pick one state to use as an example. Many states are dealing with consolidation and the obvious benefits of having ONE statewide MLS. Louisiana is one such state that can be used as an example.
The question here is, does the LOCAL board of REALTORS have any real value (relative to the cost of their dues) besides the MLS? They organize bowling parties, provide free CE, and pass out lockboxes for sure. But would that be enough to entice members to continue to pay local dues? If Louisiana REALTORS were to create a statewide MLS – we think most local associations would have a hard time surviving. Without the MLS, what would become of the local board? Do they currently provide enough value to their dues-paying agents to continue to exist without the real estate data side of the business?
Would YOU be a member of your local board if they didn’t have an MLS?
Let’s speak of the value of being a REALTOR – being a dues-paying, card-carrying, pin-wearing member of the National Association of REALTORS. There is the REALTOR brand. The fact that you can call yourself a “REALTOR” and not simply a real estate agent. Some would argue that the REALTOR title holds little weight in today’s world where online presence dominates the real estate landscape. Zillow has no association with the REALTOR brand but somehow has dominated the industry since its inception in 2006. Of course, there are some agents take great pride in calling themselves a REALTOR and not “just a real estate agent”. But no REALTOR association has not hurt Zillow, they have dominated online real estate without the . As a matter of fact, many agents despise Zillow for many reasons including the inaccuracies of their Zestimate. Then we have the work that RPAC does. This is the congressional lobbying apparatus and the financial backing of candidates who claim to represent the interests of REALTORS. Most would agree that having a Political Action Committee the size of RPAC should be able to pull some political strings. Whether REALTORS are aware of it or not, this is arguably the strongest asset that NAR has. Of course, we also have technology. NAR has consistently attempted to implement strategic technology over the years. Some would say that Realtor.com takes our money just like Zillow does. Some may even go further and bring up the massive losses NAR has taken with the RPR project. Let’s hope they can find a way to recoup some of our dues money with the NEW RPR, AMP, and Project Upstream project. NAR also leverages their size to provide some technology tools either Free or at a discounted rate. Additional pieces of the REALTOR value proposition include arbitration, the Code of Ethics, social gatherings and I have no doubt that I’m missing a couple more.
What’s happened in Louisiana is that the large real estate brokers (over 1,000 agents) have become cognizant of the money flow generated by their local MLSs. For years, many large real estate brokers nationwide, have used technology to recruit (and keep) agents by has having a distinguishable value proposition. Meaning, if you place your license with us, you get unique and “better” technology tools than the other guy. With MLSs adding new functionality to their systems, this has “leveled the playing field” in many markets. This has been compounded by the shrinking “company dollar” which is a result of a new wave of real estate brokers offering agents a bigger “split” of their real estate commission. What’s happened in Louisiana is that the large real estate brokers (over 1,000 agents) have become cognizant of the money flow generated by their local MLSs. With years of battling with the local boards (and their MLSs) to not use the dues money from their agents to provide tools to ALL agents, they are looking at alternatives forms of revenue. Some have decided to get a piece of the MLS action.
If you took an economics class in college, you are well aware that there’s power in numbers! Currently, in Louisiana, the MLS’s range in size from 500+ members to over 6,000 members with a total number of around 15,000 members statewide. If all of the agents were using the same MLS system, the cost per agent would decrease drastically. The cost to the brokers that span multiple markets would also plummet as there would be no need to pay for multiple sets of MLS dues, charges for multiple RETS feeds for IDX websites, RETS feeds for Broker-back office feeds, etc., etc. Even small brokers that only do business in one of the ten current MLS markets would see their costs plummet as we all know that a 15,000 member MLS pays a lower cost to their MLS vendor than does a 600 member MLS.
In addition, there would be no need for 10 MLS Directors (one in each market), 10 sets of MLS committees which all attend the NAR Conventions, MLS user groups, and the dozen or so other conferences that take place every year. Yes, all of these trips are paid for with MLS dues revenue. Not to mention, that usually the Boards charge their MLSs rent to co-exist in the same building that they currently occupy. At the end of the day, the MLS portion of the REALTOR Board pay for the electric bills, the receptionist, and usually one or two other employees that should be paid for with Board revenue and not MLS revenue. The same “fudging” that we all do on our taxes every year also occurs at your local Board with the MLS picking up the tab. It’s important to keep in mind that in most locations across the country, REALTOR boards understand that the majority of their value (to their dues-paying real estate agents) comes from the Multiple Listing Service. Although most local REALTOR Associations provide other services such as providing CE classes, they understand that the MLS, and the dissemination of IDX to participants, is the cash cow of their organization. If they were to lose the MLS side of the business, their future could be bleak. This point was brought up in an e-mail that was sent from Notorious ROB to the new NAR President Bill Brown. In the e-mail (which he personally responded to) –Rob went as far as say:
“You think NAR has 1.2 million members; I do not. I think NAR has 180,000 members based on the national average response rate of 15% to Calls For Action.”
He also cited a recent report by Inman saying that 70% of NAR members felt they had “no choice” in being a member of their local board. Rob even went as far as saying:
“Those are not members; they’re hostages.”
He is talking about the fact that many agents feel they must be a REALTOR to gain access to the MLS. Most people are under the impression that their local REALTOR board IS the MLS. Although this is still the case in some smaller areas, most REALTOR Associations own a separate business, the MLS. Local REALTOR Associations (which are sponsored by NAR) are non-profit entities. Most of the larger, forward-thinking boards clearly understood that the Multiple Listing Service was going to be much more. They then created a FOR PROFIT company, fully owned by the local REALTOR Association. This lets the MLS make a profit and not interfere with the boards non-profit status. Another MLS option that exists is a broker owned MLS with no direct ties to NAR at all. As a matter of fact, the largest MLS in the country is structured like that. No REALTOR association needed.
Face it, the Real Estate industry is drastically changing due to the likes of Zillow, Discount Real Estate Brokerages, and High Commission/Fewer Services (to the agent) Brokers. Agents are now mandating that they keep the majority of their commission. Traditional Real Estate Brokerages are being squeezed (losing agents and smaller company dollar) and are looking for other ways to generate income as they struggle to reinvent themselves.
Local Brokers that have served on MLS Committees and Boards of Directors of both the MLSs and the REALTOR boards, see where the money goes and have begun to say to themselves that one of two things has got to happen. That is, either the number of services offered by the MLS has got to increase and take the burden off the brokers to provide such to their agents or profits generated by the MLS need to go back to the brokers based their number of Sold transactions. Why should this not be the case as the MLS cannot exist without the Brokers and their listings? In Louisiana, history has shown that the Local Boards are addicted to the MLS “Crack” revenue and simply refuse to quit feeding their habit. Their parents (NAR) have continuously warned them about robbing the MLS piggybank to feed their habits and understand the local boards must stand on their own. Yes, some Boards milk their agents more than the others. However, there’s not a single Board in the State that can honestly say that they are not in a financial position to survive as an Association without the revenue currently stolen from their MLS/Brokers. Rumor on the street is the Southwest Louisiana Association of Realtors is at least trying to change as they have “swapped” their dues and now pay more for Board and less for MLS. Doing so would allow them to exist as a Board should their MLS disappear.
The Houston Association of REALTORS has been a value-based MLS trendsetter for a long time. They have seen exponential growth over the years, which has allowed them to reduce costs. HAR has “split the baby” by providing two options that agents can subscribe to. If they have their own technology tools they can take the lesser or if they feel that the additional $20/month has value, they can opt for a pretty robust real estate technology tool-set. For $20/month agents receive:
For $30.75/month agents get all above plus:
Watch me make a bunch of people angry in one sentence…Perhaps the Louisiana Agents should just go and join HAR’s MLS? Why not? Their local Associations are not acting in their members’ best interests! HAR provides a ton of technology for less money than ANY other MLS in the State of Louisiana. Of course, now that many Louisiana real estate brokers have their eye on the revenue generated by the MLS, it’s going to be really hard to get them to agree to join the MLS in Houston.
For at least the last 5 years or so, there has been a consistent trend of local NAR boards consolidating through acquisitions and mergers. Where it wasn’t that long ago, NAR had sponsored over 900 local MLSs – they are now down to well below 700. Although we have seen an increase in overall NAR members, we see a decrease in local associations. Especially associations that do not have their own MLS. Many local boards, even WITH their own MLS, have struggled to stay financially viable. As an example, in the Panama City Florida area, they currently have two competing REALTOR associations and MLSs. If you are a buyer, looking for condos for sale in Panama City Beach – your chosen REALTOR may only have access to a portion of the listings, unless they subscribed to both BCAR and ECAR. Many do not, so some agents don’t have MLS access to all of the listings. These are the situations where it is inevitable that the MLS with over 51 percent of the active listings will eventually win out. This is not to say that ALL boards and MLS are having issues staying afloat; that is not the case at all. There are extremely powerful boards such as HAR (Houston Association of REALTORS) that have even gone as far as capitalizing on SEO for real estate to where they even beat out Zillow, Trulia, and Realtor.com on Google. But just like anything else the strong get stronger and the weak die off.
Needless to say, an MLS product would have to be chosen, the obvious choice for that would be RPR. We would anticipate that NAR would most likely give it to the state REALTOR board for free. RPR has been trying to get the data from all of the Louisiana brokers for years; we would expect that they would jump at the chance. It’s important to mention that in its current form, RPR is NOT a full-blown MLS. Keep in mind, the people behind RPR are very willing to morph their product; just like they are doing by creating AMP and the strategic alignment with the Project Upstream. Needless to say, this is all conjecture at the moment, but these powers have been tugging at each other for a long time.
Understand that for the local boards to come together for the benefit of the REALTORS in the state means a reduction in size (or possibly all-out closing) of the local boards. The only reason that boards are not willing to combine into a statewide MLS is fear for their own existence. Although many claim their part of the state is so unique that they need their own MLS, this simply is not true. If you use the term MLS very loosely, Zillow could be considered the largest MLS in the country. They don’t take into consideration the “uniqueness of your area” and consumers seem to use quite effectively.
The local Boards of Realtors should be prepared for what’s going to happen if they DO NOT take the best interests of the agents to heart. That is, the bigger brokers are going to take over the MLS. Once they do, they are going to offer just the “required” technology and then make all brokers pay for their own CMA Programs, Forms/Transaction Management systems, Websites, Native Apps, etc. After all, the larger brokers are in a better situation financially and can usually afford the fancy “bells & whistles” that lure prospective agents away from the smaller firms that cannot afford real estate technology for their agents.
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