In a post last week, I asked a pretty open-ended question: “Are the costs of an MLS [coverting to a standard format] worth the long-term benefits?” I asked this question because we have several MLSs contemplating this very question now, and I thought it might be interesting for them to hear some outside perspectives. We received some great comments on that post, and in this post I want to put some more meat on the bone by outlining in more detail the potential cost savings for regionalizing MLS data.
Importantly, there are several ways to regionalize MLS data and so I think the first requirement is defining the objectives (benefits) of regionalizing. Once the benefits are quantified, then the costs of the potential solutions can better be judged and the “bottom line” or ROI of the entire effort will hopefully be clearer.
Some of the oft-sited reasons for regionalization are:
The next step is to quantify these costs or opportunities.
| Cost of Duplicate Listing Entry | |
|---|---|
| Formula | # Duplicate Listings Per Year x Cost Per Listing |
| #Duplicate Listings | Finding the number of duplicate listings is not always easy. One of the biggest challenges is that the data likely is not stored the same way for each of the MLSs involved, and so comparing addresses or parcel numbers may not be accurate. Also, you may not have ready access to the listing data from all of the other MLSs involved.Importantly, though, we’re not looking for perfection here but an estimate. In that regard, if you don’t have access to all the data for such an analysis or the address matching is too unreliable, an alternative approach would be to survey your brokerages/offices to ask them how many MLSs to which they belong and to estimate the percentage of their listings they enter into other MLSs. (This same info will be helpful in assessing duplicate membership fees discussed below.)For example, let’s say your MLS has 200 offices and ten percent (20 of them) belong to more than your MLS and have a policy of entering all their listings into those MLSs. Of those twenty, perhaps your survey finds that twelve offices enter listings into three additional MLSs, four of the offices enter into two additional MLSs, and four others enter their listings into just one additional MLS. You could then take the annual new listing count for each of those 20 offices and multiply it by the number of additional MLSs revealed from the survey for that office and you’d have a rough estimate of the number of duplicate entries for a year. |
| Cost Per Listing | There are a couple of methods for estimating the cost for entering a duplicate listing. First, you could use the cost for data entry personnel and an average amount of time for entering a listing as an estimate of the cost. For example, an average data entry salary is approximately $30,000 per year or about $15 per hour (rounding up). Assuming someone can enter a listing and upload the photos in 30 minutes on average (our time estimates are less than this, but 30 minutes is a conservative high-side estimate), the cost per duplicate listing is $7.50. On the other hand, many agents enter their own listings and so the cost really is the opportunity cost to them of their time, which is much more difficult to assess. For this reason, I’d recommend using the outsourcing cost as an estimate. However, I’d also add some additional cost for review by the listing agent and other compliance issues that arise. Accordingly, perhaps doubling the cost of listing entry is a good estimate for the cost of entering a duplicate listing. (Note: Of course, these costs may differ for you locally depending on relative salary costs in your area and other compliance requirements.) |
| Example | 1,000 duplicate listings entered per year x $15 per listing = $15,000 potential cost savings per year
Caveat: I’m just making up these examples. You need to put in your own numbers for your MLS. |
| Duplicate Membership Fees | |
|---|---|
| Formula | # Duplicate MLS Memberships x Average Cost Per Membership |
| # Duplicate MLS Memberships | If each MLS uses the NRDS ID as a tracking identifier for members, finding duplicates should be relatively straight-forward if you have access to the data. Other possible matching methods are email address or, as a last resort, name and possibly street address. Or, as mentioned above, you can get an estimate of the number of extra MLSs to which members belong by surveying your membership. Again, a solid estimate is what we’re after.
In designing your survey, you should be clear that you’re asking about MLS memberships other than yours. Or, alternatively, ask for total MLS memberships and then be sure to subtract one when doing your calculations. Another complicating matter here is that members may belong to multiple MLSs for a variety of reasons unrelated to data sharing or regionalization. For example, lock box access often is an issue that needs to be solve simultaneously with MLS data exchange. Overall, however, estimating the total number of duplicate members will provide an outside estimate of the potential cost savings. |
| Cost Per Membership | The cost per membership likely will need to be an average as calculating the exact number for each person would likely be impractical. |
| Example | 50 duplicate memberships x $240 average cost per membership per year = $12,000 potential savings per year.
Note: An interesting side note here is that the saved duplicate membership fees are lost revenue to the other MLSs in the region. The members save by not having to pay duplicate fees but the MLSs actually lose some revenue. |
| Costs of Maintaining Disparate IDX and Other Data Feeds | |
|---|---|
| Formula | (Total # of Data Feeds Delivered by All MLSs in Region – # of different entities receiving the feeds) x Average Cost to Maintain Each Feed
plus (Total # of New Feeds Delivered by All MLSs in Region – # of different entities receiving the feeds) x Average Cost to Setup Each Feed x Discount Rate |
| Total # of Feeds Delivered | This number should be relatively easy to obtain by looking at the RETS manager in your MLS system or inquiring with each MLS vendor involved.The number of new feeds delivered each year could be estimated by looking at the number of new requests received in the last year, and using that as a proxy or estimate for the number expected in the future. |
| # of Different Entities Receiving Feeds | You need to subtract the number of developers receiving feeds from the total number of feeds, because each developer would have to convert and maintain at least one feed no matter what. Note: Subtracting this number will only provide an average, because some developers may receive more than one feed from the same MLS, but, as mentioned above, we’re estimating here and this should provide a close proxy for the total extra feeds. |
| Cost of Converting and Maintaining Disparate Feeds | As an MLS vendor, we’re not on the receiving side of too many IDX data feeds, but we do have quite a bit of experience with data conversions. In a typical conversion, you have both programming and QA personnel involved and these processes collectively may take approximately 24 hours per property type to convert and test. Assuming an IDX feed would take about a third as much time (or 8 hours) and that an average MLS has 5 property types, that would be 40 hours per feed to get it set up. Assuming an average cost of $133 per hour for programming and QA, the cost to set up an IDX feed is about $5,320. (If there is anyone reading who has more exact cost estimates for converting IDX feeds than this, please comment or send me an email.)Of course, the conversion expense is a one-time cost, and, for those vendors already operating in your markets, the cost has already been incurred, and so will not be saved except for new feeds. The only cost that will be on-going is the cost to maintain the disparate feeds. Once the conversion program is written, the cost of maintenance is relatively minimal unless the MLS changes fields frequently, which is unusual. I would think a conservative (high) estimate of the cost to maintain a feed per year would be about $1,000 (7.5 hours per year at $133 per hour average for development and QA). |
| Discount Rate | A potentially important issue here is that the costs for processing the feeds often are not born directly by brokers or agents but rather by IDX and other product vendors. Accordingly, even if the process is made more efficient for these vendors, that doesn’t mean the prices paid by the brokers and agents will be lower. Of course, some brokers and franchises also hire developers in-house to process these feeds and competition likely will force prices lower over time, but it may be prudent to build in a “discount” rate on this potential cost savings to reflect that the savings may not all pass through to your members. |
| Example | (50 new feeds per year – 20 different entities receiving the feeds) x $5,320 per feed = $159,600 per year
(200 totals feeds – 50 different brokers receiving the feeds) x $1,000 per year per feed for mainteance = $150,000 per year As mentioned above, some discount rate likely should be applied to these formulas, because all the cost savings may not be passed through to your members. |
| Increase Exposure of Listings; Potentially More Sales | |
|---|---|
| Formula | Even though this is one of the biggest potential benefits, I’m not sure it can be estimated properly. First, there is at least some argument that no increase in sales will occur because the listings that benefit from exposure in more than one MLS already are being exposed by the duplicate entry. Second, if there are some people who aren’t willing to spend the time or money on duplicate entry now such that there would be some additional or faster sales from more exposure, estimating that number would be pretty hard. Perhaps one method would be to try to find out how many inter-MLS sales there are now on the duplicate entries and extrapolate that number to the non-duplicate listing base. However, such an extrapolation is filled with potential inaccuracy given that the agents and brokers likely weren’t entering it into the other MLSs already because they didn’t see a big benefit to doing so. Overall, I think this is the area where many regionalization decisions can go awry. The potential benefit of the extra exposure and sales seems limitless and so justifies nearly any cost when, in fact, the benefit may be negligible at best. |
The above are some of the key cost savings and efficiencies that can be gained by regionalizing or standardizing the data processing for an MLS. Perhaps there are others I’ve missed or different ways to estimate the savings. Please let me know in the comments. Also, if you have numbers for your area you’d like to share as real-world examples instead of my made up examples, that would be very interesting.
Once you have an estimate on the annual savings, you can then begin to compare those savings to the cost of getting there. The cost, who pays, and how likely the solution is to produce the savings identified above will depend on the strategy you choose for harmonizing the data. I’ll be addressing these different approaches in a follow-up post, so stay tuned. When we’re done, we should have a decent model for MLSs to assess the costs and benefits (or the “bottom line”) of regionalizing their MLS data formats.
During the CMLS conference a few weeks ago, the now perennial topics of raging regionals, syndication, parcel based MLS systems, and consumer facing MLS sites were still hot. I’ve covered these topics at length here on the FBS Blog for the last year or so but just started thinking about another, seemingly mundane issue that runs through all these issues, namely the best way to organize (and, therefore, search) MLS data geographically.
This issue impacts all the hot topics being faced by MLSs today: (1) regionalization and cross-MLS data sharing directly raise the questions of boundaries and geographies; (2) syndication of listings should be done in a consistent manner and the geographic data points are critical; (3) parcel maps are key to accurate geographic positioning; and (4) consumers want the easiest way to find properties in the areas in which they’re interested, and they want to see statistics and other data organized around those same areas, which requires solid and shared definitions.
Let me provide some examples to highlight the challenges. First, many MLSs have created their own “ares” or “regions” to make organizing and searching data easier. Here’s an example MLS area map from our customer in Santa Barbara.
MLS Defined Areas
The advantage of MLS defined areas is that they are easily learned by the agents and often represent the market fairly well. One of the disadvantages of MLS defined areas is that markets change, and maintaining the areas and the consistency of the data has historically been difficult. Also, as shown in the image below, the MLS defined areas raise the continual problem of the outer boundaries of the MLS. Lastly, there is some concern that MLSs defining boundaries or areas is a potential fair housing issue.
Outer Boundaries of MLS
Notice how when the map is zoomed out, the boundaries of the MLS become apparent and the issues of cross-MLS data sharing via the MLS defined areas raises all sorts of challenges.
To address some of these issues, many consumer facing web sites focus on city or zip code as the key geographic criteria, primarily because those are most familiar to consumers. The challenge with city and zip code is that they are just too broad and often bear no relationship to the actual real estate markets within the city or zip code as shown above in the first image where the zip code actually is split across two different MLS defined areas.
Zip Codes Are Too Big and Not Market Defined
To combat the problem of zip codes and cities being too big and the boundary limits and constantly changing nature of MLS defined areas, some MLSs have gone to a “grid” format that simply carves up the geography into squares or rectangles.
Map Grids Provide Consistency and Scalability But Are Not Descriptive of the Actual Market
These grids are very useful because they can easily be extended to new areas with consistency, but the problem is they do not describe the actual market, which has twists and turns every which direction and those twists and turns often mean tens or hundreds of thousands of dollars in median home prices. Accordingly, market analysis is not useful based on a grid system and the grid system isn’t easily used by consumers.
New Mapping Technology Allows Custom Areas
To address some of the limitations above, some MLS systems and consumer web sites allow users to draw directly on the map to define exactly the area in which they are interested. There are several limitations to this approach in most systems: (1) many agents and most consumers don’t want to or don’t know the detailed boundaries of the true market areas; (2) the areas that are drawn are not shared with others who may want to use them as well so users can learn from each other; and (3) they aren’t consistent enough to enable gathering of statistics and other data for agents and consumers.
Yet another approach has been to gather neighborhood boundaries. Two companies working on collecting this type of data are Maponics and Urban Mapping. In addition, Zillow has put forward some neighborhood files as open source files for contributions from many.
What I’ve been thinking about recently is how we might be able to create a massive win-win for MLSs, agents and consumers by enabling the real estate professionals to contribute neighborhood information directly into efforts like those linked above. The result could be a nationwide set of neighborhood boundaries that accurately define the market areas and allow for easier organization and searching of MLS data and presentation of market statistics.
What do you think is the best approach to organizing listing data geographically?
I’m excited about the panel we’ve assembled for our FBS Summit on June 12 to discuss the issue of whether or not MLSs should have consumer-oriented listing search sites:
This panel brings a variety of perspectives on listing search sites, and we’ve convinced them to spend three hours with us so we can delve deeply into the issues. We’re going to have three one-hour sessions: (1) initial overviews by the panelists of their views; (2) a panel discussion moderated by me; and (2) round-table discussions with one panelist at each table for 12-15 minutes and then rotating to the next table until each table has had an opportunity to ask questions of each panelist.
With the recent settlement of the NAR/DOJ litigation on VOWs, I think this topic is more relevant than ever and I can’t wait to delve into the issues. If you have any questions you think I should ask of the panel, comment on this post and I’ll follow up after the event here with their responses.
I’ve had my first pass over the terms of the settlement of the NAR/DOJ litigation over VOWs (virtual office web sites). Though I was surprised by the announcement of the settlement, I’m not surprised by the fact the litigation finally settled. In fact, during a couple of different meetings in D.C. a week or so ago, I mentioned to people that I felt the litigation was, for practical purposes, irrelevant. As such, I don’t see the settlement as huge news (it won’t likely be a game changer), though it’s definitely interesting news.
The action on the web has shifted over the last few years from VOWs (authenticated access) to syndication (advertising oriented, non-authenticated sites), with everyone racing to get listings nearly everywhere instead of trying to figure out how to control where the listings are going to be shown. If anything, I think the settlement puts an arrow back in the quiver for brokers, MLSs, their vendors, and others to develop hybrid systems bridging the gap between syndication sites and client service oriented sites. In this regard, I definitely see the settlement as a win for everyone, as it clears away the last vestiges of this issue.
Though I think the settlement is a “good thing” and don’t believe the NAR gave up much of importance given the current reality of listing distribution on the web, the DOJ did get pretty much everything they wanted in the settlement. The primary issue in the VOW litigation was whether a participant could keep some VOWs from displaying their listings while allowing others. This was known in the litigation as the “selective opt-out” provision because it allowed participants to select which web sites could display their listings in a VOW and which could not. On that front, the DOJ clearly prevailed as there is no selective opt out in the new policy. In fact, the only opt-out available now is by the seller:
An MLS shall, if requested by a Participant, provide basic ‘downloading’ of all MLS non-confidential listing data . . . . Confidential data includes only that which Participants are prohibited from providing to customers orally and by all other delivery mechanisms. . . . If an MLS provides a VOW-specific feed, that feed must include all of the non-confidential data included in the feed described . . . above excpet for listings or property addresses of sellers who have elected not to have their listings or addresses displayed on the Internet.
Settlement Agreement Sections III(2) and III(4) (emphasis added).
Earlier, Section II(5) of the Agreement specifies that, in order to have their listing excluded from the VOW feed, a seller must “affirmatively direct their listings brokers to withhold their listing or property address from display on the Internent” by signing a document that says “I understand and acknowledge that . . . consumers who conduct searches for listings on the Internet will not see infomration about the listing property in response to their search.”
In other words, this seller exception is no back door way of getting a selective opt out. First, it’s not selective, it’s all or nothing. Second, very few sellers will want their listings completely off the web. The end result is that a VOW will be able to display all listings from all participants, with no blanket opt-outs allowed except by the seller. This is a clear departure from the selective opt-out fought for by NAR and even the IDX blanket opt-out.
I think this last point is important. Way back when, the impetus to VOWs was to get around the limitation in some IDX policies allowing participants to opt out or even requiring them to opt in to include their listings in the IDX feeds from the MLS. There were and are several markets where participants with significant market share were not participating in IDX, making that program ineffective, and so those who wanted to display all the MLS listings on the web argued that a VOW should be able to display all the listings just like they could show all the listings if a consumer came into their physical office. That’s where everything fell apart, because there were participants who didn’t want to be told what they had to with their listings. With this new VOW settlement, however, no opt outs are possible and everyone is opted in, which means the DOJ won this point decisively.
The DOJ also appears to have won the other major issue in the litigation: referral fees. Section III(11) of the Agreement says, “An MLS may not prohibit, restrict, or impede a Participant from referring Registrants to any person or from obtaining a fee for such referral.” This was the big argument raised by RE/MAX, Realogy and others, namely that they didn’t want to provide their data to a web company only to have it sold back to them in the form of a referral fee. As Dave Liniger is often quoted as saying, this is “like the guy who shows up at a pot-luck dinner bringing only a fork.” RE/MAX even went so far as to say that they’d advocate withdrawing from MLSs if selective opt-out was not allowed, and that ultimately gave rise to the ill-fated ILD policy and the DOJ litigation.
I suspect the reason the litgation was able to be settled was because no one really cares about this issue any more. The listings are flowing everywhere already, referral fees and other models are developing regardless and the main issue now is effectiveness and cost and not who is providing what service. Perhaps the litigation bought some time for a variety of competitors but I think the more likely conclusion is that the market just found the solutions around the litigation, making it irrelevant enough that a settlement could be crafted.
One of the more interesting provisions from an enforcement perspective is what I’ll call the “no outsourced call center” provision, which appears to be a requirement NAR sought to balance the referral fee provision won by DOJ:
A Participant’s VOW must prominently display an e-mail address, telephone number, or specific identification of another mode of communication (e.g., live chat) by which a consumer can contact the Participant to ask questions, or get more information, about properties displayed on the VOW. The Participant, or a non-principal broker or sales licensee licensed with the Participant, must be willing and able to respond knowledgeably to inquiries from Registrants about properties within the market area served by that Participant and displayed on the VOW.
Enforcing this provision is going to be interesting. What does knowledgeable mean in this context? What is the “market area” served? The provision definitely has the potential to thwart abuses of the referral fee provision by trying to require that VOWs be operated by “real” agents but it seems to open a huge can of worms for MLSs and others trying to figure out who the real agent is or isn’t.
There are all sorts of other interesting provisions that are different from the earlier ILD/VOW policies, such as the indirect recognition of Zillow and Trulia in Section II(5)(c) by allowing the seller to require removal of automated value estimates (zestimates) and comments or other discussion about the listings. I’ll likely cover these and other provisions in a separate post, as I want to get this posted first to see what others are finding before delving into more of the minutiae.
The main conclusion I have from the settlement is that it’s about time and doesn’t really change the game in a big way, but it clears the field for innovation in the space between the MLS system and listing portals.
Coverage elsewhere:
Whoa, check it out, our little niche hit the New York Times today. They call it M.L.S., which I find funny, but most likely is correct. Anyway, on to the article. I wonder if Bob Hale knew they would start the article like this:
The triple threat of a weak market, legal pressure and increasing competition has compelled real estate professionals to offer their information more freely online, putting cracks in a walled garden of data that stood strong while the industry enjoyed its breakaway growth. It also presages an end to the days when sellers must list their homes with a broker so buyers can see them.
I also find this quote interesting:
Tom Hurdlebrink, chief executive of Northwest M.L.S., said his service’s shift [in allowing Redfin and others to display FSBO's and non-MLS foreclosures intermingled with MLS listings] was meant to “create a balance of giving consumers what they want while promoting the best interest of our broker members.â€
Bob Hale concludes:
But Mr. Hale, of Houston’s M.L.S., suspects that resistance will wane. “Their attitude has been, ‘Just because the consumer wants it doesn’t mean we have to give it to them,’ †he said. “It’s the sure way to your demise.â€
Hmmm, at some levels, this seems like a “dead if you do, dead if you don’t” conundrum, but, at the least, it poses a very good prelude to the discussion we’ll be having at our FBS Summit June 12 regarding public-facing MLS sites. We’re assembling a panel with Brian Larson from Larson/Sobotka and Marilyn Wilson from WAV, who each have written papers recently on the issue of public-facing MLS sites and have somewhat different views. We’re also in the process of getting at least one MLS executive and one broker with differnt views. We’ll start with some presentations and a panel moderated by me and we’re going to then follow with a speed Q&A session that I think will be really interesting.
For example, Trulia and Realtor.com are mentioned in the article as well. R.com is against FSBO’s for data quality reasons and Trulia is against them because they offend brokers. Who has the better model here? Does it all come back to Google in the end? Are we in a battle for links and link love? Because here’s the deal: Links require public-facing sites. Does the MLS have a role to play in that battle? Or not?
Matt Cohen from Clareity Consulting has produced a white paper “to generate discussion on possible MLS system future features by providing a big picture view of the changing relationship of real estate professionals with each other and with consumers, the changing relationship of local and regional MLSs with each other, and to illustrate, at least at a high level, how these changes may be either enabled or reflected technically in the MLS system of the future.”
Of course, this is right up our alley here at the FBS Blog, so I’m psyched I finally feel like I have something of substance to write about again. I’m going to focus on a couple of the ideas floated by Matt, because I think they are related and pose some of the most interesting possibilities. (I’m definitely stretching the ideas Matt proposed to my own needs, so don’t blame him for my crazy ideas. )
Widgets-Broker Tools-RETS
Three of the ideas Matt has put forward are widgets, broker tools and expanding use of RETS. I’m going to put my own spin on these ideas and try to relate them together as my contribution to the discussion.
I love the idea of MLS widgets and Matt’s are great examples. What I most like about widgets is that they often rely upon APIs (application programming interfaces) that allow for other developers to modify the tools or even create their own. For example, at the core of many widgets is the use of some sort of syndication (RSS/Atom) feed. The data is made available through the syndication feed and the widget re-purposes or figures out a clever way to display the data.
This type of creativity relates directly to developing better broker tools. If brokers (or their developers) had access to easy to use MLS APIs, they could develop all sorts of cool things. RETS, of course, is an API to the MLS system but it’s not terribly easy to use and is what Robbie Paplin would say is pretty close to the metal. In other words, RETS provides access to the data and images from the MLS system but pretty much everything else is up to the developer.
What I think is the future are RESTful MLS systems with excellent APIs that allow for all kinds of new ideas and developments by brokers to allow them to differentiate themselves. Brokers could then develop widgets and all sorts of other cool stuff. I think this also is the right vision for the NAR’s Gateway/TREC/[new name coming soon]. From Mark Lesswing’s comment on my last post about the Gateway, NAR can’t develop another public-facing search engine outside of Realtor.com, but I don’t think that would prohibit [New Name] from developing an API that would allow brokers to do that. Then imagine an API that not only does listing searches but also exposes through simple requests all sorts of statistics, graphs, heat maps and what otherwise would be complex data-warehousing type queries. Bloggers with a bit of coding skills would be in heaven, creating all sorts of market analyses for their customers and the public.
The key to all of this, however, is developing the API with an excellent permission model. The MLS aggregation is built on cooperation among competitors and the type of creative freedom fostered by a more open API needs to work within that model of cooperation. However, I’m convinced it can be done and that such tools would re-empower brokers to compete at an even higher level. I’m also convinced that fostering such competition is the role of the MLS and that cooperation is a necessary part of that competition.
Last week at the RETS trimester meeting, a draft of a syndication data format was approved by the general session. A brief history:
There remains some work to do with the specification, including ensuring that the spec is consistent with the full RESO Schema. Also, the specification currently is expressed in XML/schema and the workgroup also may flatten it out and express it in a comma-delimited or other format more easily read by non-specialists. There also need to be some tweaks to allow for hit tracking from the various syndication destinations. Nonetheless, the concensus was to have some companies move forward with using the specification to better determine where improvements need to be made, with the expectation that the specification will be finalized at the August trimester meeting of the RESO in Chicago.
Personally, I’m very pleased with this result and thankful to all those who’ve worked hard on the specification. The workgroup met nearly every week in person for the last month or so to get it done, and, knowing how hard travel is these days, that’s a great commitment. Having a standard for syndication is going to be a great improvement in efficiency for distribution of listings to advertising sites and this is a major step forward in the realization of such a standard.
Once the data standard is finalized, my expectation is that a transport/update standard also will evolve to ensure that there is a standard method for ensuring that the standard data is kept up to date easily on all sites.
I was talking on the phone the other day with Alex Chang from Roost and, through a broad-ranging discussion, we touched on the question of how consumers select an agent. I’m very interested in honing in on how listing search is relevant to agent selection. I mentioned that last week when I was at the Clareity MLS Workshop, someone flashed a statistic that said 68% (or something lke that) of agent selections were by referral from someone the consumer knew (parent, sibling, friend, co-worker, etc.).
Upon reflection, that statistic wasn’t too surprising, because that’s how so many decisions are made. When I moved to Fargo from Minneapolis ten years ago, I selected an agent in Fargo from a referral from my brother. Think about this: I was coming to work for an MLS software vendor used by all the agents in Fargo, such that I had available to me all the data I could ever want on the productivity of every agent and yet my decision was made based on a referral from my brother. Why is that? We’re all looking for short-cuts. There is so much information available to us today that we need short-cuts, a way to synthesize the data and tell us what to do. If the 68% statistic is accurate, apparently those we already know and trust are just such a short-cut.
The last few days, I’ve been discussing with Greg Swann, Mike Farmer and others the value of a “seal of approval” as a short-cut for consumers. Greg’s theory is that we need an Underwriter’s Laboratory for real estate agents. Brian Boero from 1000Watt Blog agrees and adds the possibility that agent review sites like Homethinking, Agent Scoreboard or Incredible Agents might help fill the gap, too. The commonality of these endeavors (let’s call them “agent search” or “agent recommendation systems”) is to provide the consumer a short-cut to deciding which agent to choose, as well as providing the agents a path (network) to the consumers.
In many ways, agent recommendation systems are the essence of the web movement, exposing more information to individuals and giving them more control. The questions I want to pose in this post, however, are two: (1) is agent recommendation related to listing search; and (2) is agent recommendation likely to be ineffective or maybe even too effective. I’m going to discuss the first question in this post and the second question in a later post.
Let’s go back to the beginning of the post, where it was posited that a large number agent selections are made by recommendation from people we know. In light of this, listing search would seem to be quite separated from agent search. If a consumer is looking for listings, have they already found an agent or are they wanting to find listings first and then find the agent? Perhaps more important, is there a path from listing search to agent selection? In many ways, the two seem in conflict, because the listing search is going to identify listing agents representing the seller and not the buyer. (VAR Buzz has been conducting a great discussion on single-agent dual agency, showing the inherent conflicts in that practice.)
This raises a significant question about MLS listing portals that I’ve been pondering a lot lately. During the Clareity conference last week, I was once again enamored with Bob Hale’s presentation regarding HAR.com. Chris McKeever from CRT was there, too, and he posted some details regarding the presentation. Clearly, HAR.com is driving a lot of traffic back to listing broker sites. The question I have, however, is what is happening to that traffic? How does a listing agent convert a buyer inquiry on their listing into a client? Presuming most are not practicing single-agent dual agency, the most obvious answer would be that they refer the inquiry off to another member of their firm. Is that what the consumer wants? I’d love to see more data about how leads from MLS portals convert to customers.
Listing search does seem related to agent search on IDX sites, where the site owner is promoting mostly listings that are not their own. Yet, the question remains, is a consumer looking for an agent when they are looking for listings? In other words, are they going to pick an agent from their IDX site? This question is raised most prominently by Roost’s model of a national portal rotating IDX sites. When a consumer goes to Roost, they are directed into an IDX portal of a particular broker and inquiries on specific listings are directed to that sponsoring broker’s web site. So, the question becomes, will the consumer value the tools being provided by that broker enough to select them as their agent? Rephrased again, will the click-throughs convert to leads and the leads to customers? That question likely will be answered in the near-term as Roost and other IDX vendors collect data on these metrics, and I look forward to learning more.
Unfortunately, I have more questions than answers about how or whether listing search relates to agent selection. The path certainly doesn’t seem direct and yet listing content remains the gold everyone seeks. The question is what is the most natural path for the consumer to take from listings to agent selection, or are the two really distinct?
Tomorrow, I’ll turn to the second topic I raised above, namely whether agent search or recommendation sites are a more natural path for consumers to select an agent. One tentative title I have for the post is The Tyranny of Ordered Lists.
I’ve been at the Clareity MLS Workshop in Scottsdale for the last few days and yesterday was the first day of sessions. There were sessions on:
There were other sessions on security and web site privacy policies as well, but I won’t be covering those here.
John Mosey from RMLS-MN and Art Carter from CARETS conducted a session on the data consolidation efforts they are pursuing in their areas (Minnesota and California, respectively). As Art described the CARETS approach, they are creating a new listing repository to which all of the participating MLSs will send their data. Users also will have the option to upload listings directly to the repository. Each MLS will then be able to download the entire dataset to present it back to their users. In fact, the only access to the data will be through one of the MLS systems; there will not be front-end provided by CARETS, it is only a repository of the data.
In creating the one data set, Art described how they had to “kill some hamsters.” If you think of the fields in the current disparate data sets from each MLS as a bunch of hamsters in a cage, you have two choices of how to combine those hamsters: you can either build a bigger cage or you can kill some of the hamsters and only keep the best ones. CARETS chose to kill some of the hamsters and created a data set that is best of all the systems for their area.
John Mosey from RMLS-MN spoke next and described how he would rather be stripped naked, dipped in honey and covered with red fire ants than ever try to merge another MLS into RMLS-MN after his failed attempt with the Southeast Minnesota Association of REALTORS. Instead, John’s approach now is to follow a model similar to CARETS only using his Northstar database instead. John repeatedly lamented the fact that RMLS-MN represents 80% of the agents (or something like that) in Minnesota and yet has all the headaches of dealing with the smaller MLSs outside his area.
I think Gregg Larson had the best advice of all regarding regionalization, data sharing, etc., when he said that every market area is different. Sometimes data sharing makes sense, sometimes a repository makes sense, and the key is to consider the objectives you are trying to achieve and weigh those against the costs. There is no one-size-fits-all solution. Out in the hallways between sessions, I had conversations with several who were wondering exactly the same thing — what are the objectives being sought in these efforts? Clearly, trying to eliminate duplicate entry and providing easier data access for overlapping markets are laudable goals, but where is the value for less overlapping markets? There is a real sense, expressed well over at agentgenius this last week, that one unstated objective of the rush to data consolidation in some markets may very well be to consolidate power.
John and Art were followed by Chris McKeever from the Center for REALTOR Technology (CRT), who described the NAR’s plans to create what they’re currently calling The Real Estate Channel (TREC) and what used to be called the Gateway. As Chris described it, TREC is going to be very much like CARETS, except that no listings will be directly entered into the system, they will only received from local MLSs. NAR also intends to purchase/license public records to build a parcel-based system like Zillow’s. Maybe they should just buy Zillow instead? Nah, that wouldn’t work, because NAR intends for this to be open to agents only, not consumers. I’ve said before and I’ll say again, NAR could make something of this by simply focusing on creating a standard for a universal property ID to let the web organize the information. NAR could create a non-profit that could be the ICANN for property IDs, and that would be valuable for tying together the efforts of those publishing real estate info on the web. Trying to cram everything into one silo is never going to happen.
Next up was Saul Klein from Point2, Mark Tepper from Homescape, and Marty Frame from Cyberhomes, all of which were advocating syndication of listings to their or other sites. Saul’s pitch was that the listing is a marketing asset and should be promoted all over the web, similar to how agents use yard signs to promote the listing and themselves. Marty Frame had a very interesting discussion about how Cyberhomes is working on focusing their web site experience to the various stages homeowners, buyers and sellers experience, as opposed to treating all users the same. All of these speakers were very focused on the need to collect and analyze user activity data to improve the experience for users and to understand the return on investment (ROI) from syndication. In other words, focus on which sites provide the best leads from your ads.
The next panel included Bob Hale from HAR.com, Jim Harrison from MLSlistings.com, and Jenny Natale from MLSLI.com, all of which operate public facing MLS web sites. The message was clear: MLS web sites do not compete against broker sites for traffic. Instead, MLS web sites can drive enormous traffic to broker sites. Bob Hale presented a ton of stats from Media Metrix showing that in market after market across the country, broker web sites rarely rank highly in terms of traffic . In contrast, public facing MLS sites almost always rank highly, even more than popular sites like Realtor.com and others.
Those were the big highlights for me from the first day. Kudos to Gregg, Matt, Tina and the entire Clareity team for putting on a great conference.
Oh, wait, I almost forgot, Gregg gave the FBS Blog a Clareity award for being the best blog on MLS issues. Gregg also said he thought blogging was the most over-hyped technology for 2007.
Over on AgentGenius, Mariana Wagner has a post called A National MLS Will NOT Work And Here Are Three Reasons Why . . .” I commented on Mariana’s post but included only one link for fear of getting caught by Akismet if I included more, and so I’ll also post some additional thoughts and links here to try to expand the conversation.
Further to Mariana’s point that “A National MLS is a HUGE pile of mess to throw under one umbrella with one ringmaster”, check out my post Good Standards Break Monopolies, Not Make Them. To summarize, you don’t need a national MLS to gain the benefits of standards, like RETS, and, in fact, an effective standard will foster competition instead of limit it.
To further Mariana’s point that a national MLS isn’t necessary because her “MLS rocks”, check out my post Are Competitive MLSs Possible or Desireable? To summarize, competition among MLSs can be encouraged by a national repository with right of mutual download, but tricky questions about IDX and other “terms of use” would remain. This is where expanding the conversation as Mariana is doing becomes so valuable. These are not easy issues and yet they are being debated, and that debate can produce effective solutions. If the issues are not debated here in the blogosphere, in the open, then they will be debated in the back rooms at NAR or wherever and the “solutions” very well may be what you don’t want. For example, the NAR clearly is pursuing a “Gateway” and spending REALTOR money to do so. Yet, there remains very little information available regarding the actual plans. Hmmmm.
Finally, to further Mariana’s point that “If Real Estate is Local, why should the MLS be National?”, check out my posts Raging Regionals, Regionals, Part II, and, more recently, Why RETS?. To summarize, real inefficiencies (pain) are being experienced as a result of brokerages growing across multiple MLS service areas. The question is how to solve these problems while preserving competition and the benefits of the local MLS Mariana extols. I believe the solution lies in data standards but there is much more required. Nothing less than the constitution — the very fabric — of MLSs is at stake here.
I’ve suggested before that the future of MLS is now, and so I’m very excited to see these issues being discussed out in the open. We need more participants for broad and intensive debate. Perhaps a track on these issues can be developed for REbarcamp. As I said in Is there or could there be a TED for real estate?
A few or several days of “broad and intensive debate“, with the best minds in the industry, about the interconnectedness of competition and cooperation in real estate, including offers of compensation, data sharing, data quality, data ownership, syndication, consumer engagement, MLS competition, consolidation, lead generation, and so much more. As Chris Anderson says in his video below, what’s exciting for him is how mind-blowing it is to see how interconnected so many issues are. Those interconnections are where learning occurs.
Maybe the interconnections can occur here, on blogs, if we get enough participants in the discussion. To that end, thanks, Mariana, for your post!
