Illinois REALTOR® Magazine | July 2012

The Future of MLS

What’s next for MLS? Experts say…

By Stephanie Sievers, Associate Editor

Listing information at your fingertips from your mobile device no matter your location, a wider array of specialty features to choose from and the ability to send your listings to hundreds of sites on the Web through syndication. Technology and market demand have brought changes to Multiple Listing Services (MLS) and more are always on the horizon.

“It’s not your father’s MLS system anymore,” says Dan Sale, association executive of the Capital Area Association of REALTORS®. “Gone are the days when you had three MLS products to choose from: vanilla, vanilla and vanilla.”

The Multiple Listing Service is one of the most important tools in a real estate agent’s arsenal and today’s MLSs are challenged to offer users innovative and effective technology while keeping costs in line for a shrinking membership base.

Illinois REALTOR® magazine talked to the leaders of four Illinois MLSs — Midwest Real Estate Data LLC, Southwestern Illinois Regional Multiple Listing Service, Capital Area Multiple Information System and the  Decatur Association of REALTORS® — about the issues facing MLSs today and what lies ahead.

The Syndication Debate

The issue that everyone seems to be talking about these days are the pros and cons of syndicating listings to third-party aggregation sites such as Trulia, Zillow and REALTOR.com.

Nearly nine out of 10 buyers used the Internet last year to search for a home, according to an 2011 National Association of REALTORS® (NAR) Profile of Home Buyers and Sellers. With that in mind, it only makes sense for REALTORS® to send their listings to as many online sites as possible, right?

Not always, some agents are finding.

Critics say third-party sites may bring more visibility, but the listing information isn’t always accurate and it’s sometimes unclear who the listing agent is unless they are willing to pay for extra exposure. In May, Trulia announced changes to its site aimed at improving data accuracy and advertising.

“Initially brokers just wanted the data out there and asked MLSs to put it everywhere. Now they are backing off that and saying it’s in too many places and some of them are not even useful,” says Tim Dain, executive director of Southwestern Illinois Regional Multiple Listing Service (SIR-MLS) serving the REALTOR® Association of Southwestern Illinois and the Greater Gateway Association of REALTORS®.

Minnesota’s Edina Realty made industry headlines last fall when it announced that it would no longer syndicate its listings to most third-party aggregators in an effort to have tighter control over its data. Brokerage companies in San Diego and Milwaukee took similar steps this year.

Russ Bergeron, CEO of Midwest Real Estate Data LLC (MRED) says it’s unlikely that many Illinois brokerages would entirely opt out of syndication. Edina Realty has a unique advantage of being the dominant brokerage in its market, whereas business is more fragmented in most Illinois markets.

A likelier outcome is that agents and MLSs become more selective in where they syndicate and when they do, they will find ways to better control the data. More MLSs may choose to go the “opt-in” route, which means they will automatically syndicate to a few big third-party sites such as REALTOR.com and then allow brokers to individually “opt-in” for more if they want, said Dain with SIR-MLS.

SIR-MLS, like many others, uses ListHub, which allows brokers to choose where to syndicate their listings from a menu of nearly 900 national and “powered by” websites. Dain says SIR-MLS has formed a syndication task force to review syndication policies, tools and future action.

As agents become more strategic in determining what works when it comes to syndication, so too are MLSs, which are looking for changes to make things fairer for their members’ listings, said Sale of the Capital Area Multiple Information System, serving the Capital Area Association in Springfield, as well as the Jacksonville Association of REALTORS®.

Capital Area is considering following the lead of California MLS, Sandicor, and opening up the advertising remarks field that feeds to syndication sites. This would allow agents to add brokerage, agent and contact information more prominently to the listing, Sale said. SIR-MLS is already making such a move with its MLS vendor.

MRED is looking at self-syndication, which would include signing deals with Trulia, REALTOR.com and possibly Zillow to send listing data directly to third-party sites, giving MRED greater control in ensuring listing information is accurate while still honoring its brokers’ rights to opt-in. MRED is also spearheading a movement with the Council of MLSs (CMLS) to create an MLS “seal of approval” called sourceMLSTM, which will be used to identify websites and listings that are based purely on MLS-controlled data and follow all rules for display and updates.

Technology Trends

With more agents using smartphones and tablets, it’s no surprise that offering more mobile options has become a priority for many MLSs. Demand is only expected to grow.

The 2011 REALTOR® Technology Survey found that smartphones (38 percent) and iPads (29 percent) topped the list of technology that respondents planned to purchase or replace in the next year.
“Anything mobile is a no-brainer these days,” says MRED’s Bergeron.

Many MLSs are mobile and offer the full MLS system when accessed from any device, whether it is an iPhone, Droid, BlackBerry or tablet. MRED recently launched the MLS search app, Midwest Homes, and will be following up with an IDX version with which agents can link to consumers just as they do with their traditional IDX sites.

Mobile is a must as the younger generation of agents and consumers have grown up on it and expect it, Bergeron says. The hardest part of technology is deciding what works best for your business and not falling into the trap of thinking that you have to buy the latest and the greatest, or that you have to use everything.

The key is determining which technology is relevant to your members’ needs and trying to select the one that is going to be successful, Sale said. Next up on Capital Area’s wish list is a transaction management system upgrade that would allow agents to complete property profile information offline, perhaps in the seller’s home, and later upload directly into the MLS. This eliminates the duplicate entry that often occurs.

The move to mobile has been slower for smaller MLSs. The Decatur Association of REALTORS® MLS offers a limited mobile version, but its applications are few and it is not available for tablets, says Association Executive Norm Willoughby. The barrier for many technology upgrades is cost.

“The biggest problem we have, being a smaller MLS, is economy of scale. It makes it a little more expensive per user than it does if you have a big MLS,” he said.

Revenue Generation

In the past, MLSs relied on basic fees and spread the cost throughout the membership base. As membership declined during the housing downturn and technology and service demands have grown, MLSs face the dual challenge of offering more while keeping fees reasonable.

One option is what SIR-MLS’ Dain calls the monetization of the MLS: Offer members a base service but then offer upgrades and premium services for those willing to pay more. Think e-Bay, where you enter a listing and then have options to upgrade that listing, Dain says.

This spring, SIR-MLS will launch “freemium” versions of Listingbook, a client management system, and DotLoop, a transaction management system.  Freemium is a new term that refers to the MLS’s ability to offer a core service at no cost with the option to add premium services a la cart for a cost. If an agent opts to pay more for the upgrades, the MLS gets a share of the additional revenue.

Another option, which MRED has pursued, is selling advertising on its website and within the MLS. Advertising is a true alternative source of revenue that doesn’t ask more of members, Bergeron said.

What else is on the horizon?

Given the current market, Capital Area’s Sale said he expects base MLS user fees to decline as MLSs negotiate new contracts. There’s pressure on MLSs and vendors to hold the line on user fees even if that means agreeing to longer contract extensions or holding off on upgrades.

Few see a statewide MLS in the future, but regionalization and a sharing of services and resources could help neighboring MLSs contain their costs by giving them greater buying power and, for smaller MLSs, services and upgrades they might not be able to afford on their own. For example, MRED recently announced that the Kankakee-Iroquois-Ford Association of REALTORS® will be joining MRED later in the year. 

 

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