On Syndication: Is A MLS A Data Repository, or An Exchange?

This is an exchange, that happens to throw off data

A current discussion within the MLS and tech vendor industry is around the issue of listing syndication. This post by Brian Larson, and the discussions therein, is a pretty good summation of the thinking on the part of MLS executives, vendors, and consultants. As Victor Lund of the WAV Group, a leader in the world of MLS consulting, notes in the comments:

Syndication is absolutely a nightmare on many levels – the control of the data quality is gone – leaving behind dregs like duplicate data, false data, reproductized data, resold data, loss of ownership by brokers, loss of copyright by MLSs, reduction in the quality of curated listing content – yadda, yadda.

For what it’s worth, I agree with Victor 100%… if the MLS is a data collections company, like say NPD Group which collects retail data from thousands of point-of-sales systems. Then the practice of syndication is a nightmare, and a disaster.

I believe, however, that there is a real question as to whether the subscribers to the MLS, the brokers and agents who actually create the data that constitutes the valuable intellectual property at question, see things that way. Most working real estate brokers and agents I know think of the MLS as a way to advertise properties for sale (let’s stick strictly with listing brokers/agents for now). I don’t believe that they think of what they’re doing, when they’re at the MLS screen entering data, as anything other than putting in information to get a house sold.

The popular and oft-heard response to this line of reasoning is, “Well, it’s both, Rob”. (Shortly followed by or preceded by, “You’re so black-and-white; the world is shades of grey, son!”) It is true that I tend towards black-and-white thinking, even if I recognize that in the real world of implementation, sometimes you have to tolerate shades of gray. But it is because without such clarity in thought, effectiveness in action is impossible.

Another way to think about it is from a prioritization standpoint. Fine, a MLS is both a data repository and an exchange. Which is its primary identity, and which is the secondary? Consequences follow from the answer.

If the MLS Is A Data Repository

Let’s say that the answer is that a MLS is a data repository. It may have begun as a way for brokers to cooperate in getting a house sold, but in this day and age of the Internet and sophisticated data analytics, the primary purpose of a MLS is to provide clean, accurate, timely property data to real estate professionals, consumers, and other users of real estate data.

Certain consequences follow this definition of the MLS.

  1. Syndication must be eliminated, except in cases where the MLS can make a reasonable business decision to do syndication, under its licensing terms, with varying degrees of control dependent on compensation.
  2. In fact, if the MLS is primarily a data repository, its membership agreements probably should spell out that it will be the exclusive provider of listings data, and that the listing brokers and agents will surrender their rights to send the same intellectual property to a different source. If I contract to write columns for AOL, I cannot then send that same column to Yahoo, unless our agreement says I can. The same analysis must apply to listings entered into the system by brokers and agents.
  3. Intellectual property rights, sharing of those rights, and various mutual licensing arrangements must be clarified and agreed upon by all participants, including the real estate agent who is actually doing all of the data entry. At a minimum, if the MLS is a data repository, and its subscribers are paying to create the valuable intellectual property that is being deposited into the repository, then some accommodation has to be reached between the MLS and the subscribers as to if, when, and how those content creators ought to be compensated for their efforts.
  4. The data that is being entered, aggregated, and re-sold/licensed needs to be examined for more than what it is today. There are hundreds of data fields in a listing that go unfilled because they’re not particularly relevant for attracting buyers to the property. But maybe those fields — like soil type, distance to power lines, etc. — are very relevant for sophisticated users of the data.
  5. IDX must be put back on the table for discussion.
  6. There has to be a discussion about the equal treatment that listing brokers and buying brokers receive in the MLS. The former creates IP that will be leveraged and monetized; the latter does not.
  7. A real discussion has to be held as to the minimum useful geography if a MLS is to be thought of primarily as a data repository. Real estate may be local, but data is not particularly useful unless it’s at a certain size. It’s impossible to do trend analysis on four closed sales in one zip code.

Each or all of these things can be modified, tweaked, or changed based on how strongly the secondary purpose of advertising a home for sale is to the MLS and its subscribers. But if the MLS is widely understood by all stakeholders and participants to be a data repository, the relationship between the brokers, agents, Associations, and the MLS will likely need to be renegotiated.

If the MLS Is An Exchange

If, on the other hand, all of the stakeholders and participants understand the MLS to be an exchange, created for the primary purpose of selling a home, then other consequences follow.

  1. Whatever value the property data might hold, that value is subordinate to the primary value of advertising a home for sale. Syndication must not only continue, but be expanded, and the propriety of charging licensing fees and other revenues at the cost of wider advertising distribution must be examined.
  2. The whole concept of data accuracy and data integrity has to be understood in the context of advertising a property for sale, rather than the context of third party users such as government agencies, banks, and academics.
  3. MLS rules and practices should be re-examined in light of the clarified understanding of the MLS as an exchange facilitating the sale of a home.
  4. MLS products and services that do not advance the primary goal of advertising homes for sale need to be validated by the leadership and by the subscriber membership.
  5. There has to be a discussion not of minimum geography, but of maximum geography. It isn’t logical to believe that if the MLS is merely an exchange, and real estate is local, then a super-regional MLS could serve the advertising function as effectively as a hyperlocal one.

Again, these consequences can be modified, tweaked, altered, and so forth based on the particular MLS’s stakeholders deciding how much to be influenced by the secondary function of data services.

My Take On The Issue

My personal take, after laying out the issues, is that a MLS is first and foremost an exchange, created for the primary purpose of advertising homes for sale. The exchange activities happen to throw off extremely valuable intellectual property as byproduct: accurate, timely, and comprehensive data on real estate activities. To the extent that the activity generates valuable assets — much like how fertilizer is often a byproduct of raising cattle — the MLS should attempt to control and monetize those assets. However, like any other byproduct, one would not impinge on the primary purpose for the sake of the secondary.

The whole syndication debate is far more complex and far more detailed, of course. And as I’ve mentioned, in the real world of implementation, there are going to be some grey areas. But I believe much of the confusion in the industry today around the issue stems from the fact that the big assumption has not been adequately communicated, discussed, or accepted by some of the main stakeholders: brokers and agents. Debate and settle the big question, and the details can be resolved using the clear understanding of primary vs. secondary purposes.


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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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12 thoughts on “On Syndication: Is A MLS A Data Repository, or An Exchange?”

  1. It is an interesting conversation to have. Listings are agents commodity. The scary part to me is that most would not even begin to comprehend this important conversation.

  2. My apologies in advance if my comment ends up almost as long as this post! After reading your post, there was one thing that struck me as a former MLS executive and as someone who still works closely everyday with MLS organizations. Most MLS organizations are still REALTOR owned/controlled and tend to have their purposes and governing documents somewhat defined by NAR guidelines on MLS policy. So, I went to the 2011 Handbook on MLS Policy from NAR to see what their definition of an MLS is….suffice to say it could probably use updating πŸ™‚

    A multiple listing service is:

    * a facility for the orderly correlation and dissemination of listing information so participants may better serve their clients and customers and the public
    * a means by which authorized participants make blanket unilateral offers of compensation to other participants (acting as subagents, buyer agents, or in other agency or nonagency capacities defined by law)
    * a means of enhancing cooperation among participants
    * a means by which information is accumulated and disseminated to enable authorized participants to prepare appraisals, analyses, and other valuations of real property for bona fide clients and customers
    * a means by which participants engaging in real estate appraisal contribute to common databases (Revised 11/04)

    I wouldn’t “discount” the core purpose of cooperation and compensation too much. Yes, the internet can facilitate the cooperation part but being a member of the MLS ensures you don’t have to create a contractual arrangement to get paid on a transaction by transaction basis. MLS rules require compensation to be disclosed in advance, ensuring members know what they will be paid. Whether we LIKE the way compensation in real estate happens or not – the current structure is a significant REALITY that shouldn’t be overlooked.

    Matt Cohen wrote an interesting blog post in 2008 about the mission of the MLS that includes many examples of what MLS orgs believed to be their function and purpose. It’s still an interesting read: http://www.realtown.com/mattcohen/blog/mls-mission-statement

    I think if the MLS were being built from scratch today, things might look a little different (damn that perfect hindsight!!). That said, I have seen MLS organizations react and respond to changing needs in the market and in subscriber demand many times before. My best guess is MOST will be successful in doing so again. In short, I think the MLS is both and MORE and will continue to evolve their mission and their offerings to meet local demand.

    PS – This will be one of many great topics at the Clareity MLS workshop next week in Scottsdale. The event is sold out but I will definitely be tweeting. Stay tuned!

    • I think this is great, Amy, because three of the five definitions go towards Exchange. And I agree that cooperation and compensation really shouldn’t be discounted. But that goes towards MLS as Exchange, not MLS as Database.

      I differ with you on “MLS is both and MORE and will continue to evolve” — that blithely papers over what such evolution would mean for some of the others in the industry — Associations, Brokerages, Franchises, to name just a few. Perhaps the MLS will evolve, but that evolution will be red of claw and bloody of fangs, like all evolutions are.

      • I think most MLS orgs would lean heavily toward exchange, like I said – if it were built today….When you say “papers over” what it would mean for associations, brokers and franchises it makes me think aren’t US and THEM the same people? For the most part the MLS organizations are owned/controlled by the REALTOR associations and/or broker owners. Key decisions by any MLS will be heavily influenced by that population. Frankly, I think that’s how we got into the current mess – many conflicting values. In my experience evolutions happen over time and tend to be more peaceful than your “bloody fangs” description which sounds more revolutionary than evolutionary. I’ve yet to see real estate do revolution well.

      • I suppose my view is that people like to use “evolution” as meaning some sort of peaceful, everybody-get-along slow change over time. But actual evolution is bloody competition between species (or mutations thereof), wherein the more highly evolved species eliminates the less evolved. πŸ˜€

        Similarly, if you think MLS’s will evolve (as they surely will), it won’t be without winners and losers. That’s probably a good thing, that the less efficient, less productive parts shrivel away, die, and go bankrupt… but bloodless, it is not.

        And no, I don’t think “US and THEM” are the same people as it comes to those four organizations, especially nowadays in the real world. You only need to look at syndication as an example, where the MLS might decide one way, the broker decide another way, and Coldwell Banker decides yet a third way.

  3. Rob, I’ll put your syndication perspective out there with others at the upcoming Clareity MLS Executive Workshop and, as Amy said, she’ll tweet out what gets said. I just don’t think we can get brokers/agents to put that genie back in the bottle and *uniformly* agree to let the MLS control the IP. And I don’t think uncontrolled syndication works either. I think we’re going to have to keep working on a real world solution that won’t fit into either theoretical model you’ve laid out.

  4. Thanks Matt and Amy. Why am I suddenly feeling like y’all should invite me to that Clairety workshop? πŸ˜€

    In any event, the issue for me is that everybody in our industry goes immediately to the details without actually taking time to agree on First Principles. You can always compromise and tweak after you agree on those; but it’s impossible to reach First Principles from haggling about how much and who and when and what and where.

  5. Rob, I always enjoy your take on our industry and you have a wonderful ability to frame a debate (the black white thing). This is something I share with you in my approach to a discussion, and it often helps to convert an opposing opinion if you can clearly state the opposite point of view. One downfall of this approach is that ideas begin to reign supreme over the real world – and in this case I believe that to be the case. Neither model works in my world (even as it is evolving) without parts of the other. What seems more likely to me, as we move into the grey unknown of the future of Real Estate, is that something else entirely crops up and changes everything – think Egypt.

    • Appreciate the comment, John. πŸ™‚ I think the issue — and I thought I pointed this out over and over again — is “which identity is primary”. Put another way, is the DATA the by-product of ADVERTISING, or is the ADVERTISING the by-product of DATA? Both are valuable, but all this talk of “real world” and such results in non-solutions because the main stakeholders (I believe) have some disagreement on which is the more important function.

      If, as I believe, the first principle is exchange, and data is an important by-product, that will dictate how the real world participants trying to craft policy will approach the issue of syndication. If, on the other hand, I’m wrong and the MLS has evolved to where the exchange is the important by-product of data collection, then we’ll have different outcomes.

      By the way, I wouldn’t rule out “something else entirely different”. In fact, I’d give it about a 5% chance that the data repository role is taken over by the Federal Government in the next five years.

  6. “much like how fertilizer is often a byproduct of raising cattle” … sounds like a a not-so-subtle indictment of the quality of the data being produced by and stored in any given MLS. πŸ˜›

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