Brewing tensions between some of the country’s biggest brokers and the nation’s 900-odd multiple listing services (MLSs) may create a schism that could shake up the entire real estate industry.
As real estate portals like Zillow and Trulia have become more and more popular with consumers (and Wall Street investors), the rest of the real estate industry is scrambling to think up new ways to keep consumers coming to their own sites.
The increasing competition is causing divisions among various factions within the industry: In 2011, a policy change that would have allowed large franchisors like Century 21 or Re/Max to show home listings from every MLS their franchisees belonged to was passed by the National Association of Realtors (NAR) – and then reversed six months later when several large brokers threatened to revolt.
Earlier this year, NAR agreed to another change which would allow MLSs, the majority of which are run by local Realtor associations, to create public-facing consumer search sites using member dues. That decision was condemned by The Realty Alliance (TRA) and the Leading Real Estate Companies of the World, two coalitions of large independent brokers, who worried that their own dues would now be being used to fund a potent competitor for buyer’s eyeballs.
Earlier this month, Craig Cheatham, CEO of The Realty Alliance, served a warning to MLS executives gathered at the annual conference of the Council of MLSs (CMLS): Big brokers are now so fed up with the MLSs they belong to that they’re seriously thinking about alternatives.
Cheatham told the MLS executives they “had 10 days” to mend fences before The Realty Alliance’s board met in Boston. The meeting concluded Oct. 9, and TRA has yet to announce any definitive plans. But though the group has said they want to continue to work with MLS leaders, it has also hinted that they are exploring a technological solution that would enable large brokerages to voluntarily share listings among themselves.
“[T]he industry now has options that are feasible today that were not realistic a short time ago. If local and national policy/practices don’t change in support of the industry they are to serve, brokers will have no choice but to exercise those options. That’s not a threat, it’s a business reality. Decisions this fall will be about launching ‘phase one,’” the group wrote on its official Facebook page. Cheatham has said the group has signed non-disclosure agreements with technology vendors, and that the group “is not acting alone.”
Options Unclear
Exactly what options the group is considering remain unclear. In his remarks, Cheatham emphasized that the TRA members believe the MLS’s role should be limited to facilitating deals between industry participants. Some industry observers have speculated that the group could opt to create a private exchange restricted to large brokerages which would do precisely that, while at the same time refusing to allow their listings to be displayed on the websites of other MLS members or perhaps even withdrawing from their local MLSs entirely. Since a few large brokers tend to control the majority of the listings in each market, such a move could leave many mom-and-pop brokerages or buyer-focused agents out in the cold.
If TRA opts to create some form of private network, “I won’t be naive enough to say it won’t affect us, because it would affect every MLS across the country, in some manner shape or form,” said Kathy Condon, CEO of MLS PIN said.
William Raveis Real Estate is the only TRA member with offices in Massachusetts, but it is a growing force in the state, opening its 32nd Massachusetts office in Milton last month. According to Condon, it is second in marketshare in MLS PIN’s coverage area, and it also has several offices in the Cape and Islands MLS’s coverage area and one in Western Massachusetts which falls under the Berkshire County Board of Realtors and Multiple Listing Service.
Bill Raveis, founder of William Raveis Real Estate, declined to discuss the TRA’s specific plans or whether Raveis would participate in a private exchange if one was created. But he told Banker and Tradesman that he was in agreement with the concerns aired by Cheatham.
“We’ve been at this for 40 years. The purpose of a multiple listing service is to exchange information between real estate brokers and real estate sales associates. That’s their charter. For them to go leap into competing against brokers with public websites, that’s an uncharted spot for them. Anything that an MLS would do that competes with a real estate company, I’m not in favor of,” Raveis said.
Both Berkshire County and Cape and Islands MLS already have public search sites in some form, and MLS PIN is currently considering the notion, according to Condon.
“Are we are going to have a presentation on [MLS public search sites] at our annual shareholders meeting? Yes. Did I invite non shareholders to come and hear the presentation? Absolutely,” said Condon.
Both Condon and Sandy Carroll, the CEO of the Berkshire MLS, said they had reached out to broker members and would be reviewing the concerns brought up by The Realty Alliance in their presentation. (A 46-item list of TRA member’s grievances was published by real estate firm Clareity Consulting on its blog.)
“Our board of directors have taken steps to ensure our brokers have access and control over the data, tools and services, without restriction, so our MLS isn’t in conflict with the main issues in the list. We are very broker-centric so we haven’t had grumblings that we haven’t been able to address,” said Carroll.
“I think what they’re looking for is the opportunity to have some engagement with some of the larger MLSs to see if we can make them happy,” said Condon.
But whether mere reassurances and discussion would be enough to win back big broker’s trust remains in doubt.
“You look at some of these public websites, like Zillow or Trulia which have made a billion-dollar IPO on the back of our content, you think, well, why can’t The Realty Alliance do some sort of big national system? The brokers are already paying for the overhead,” said Raveis.
Email: csullivan@thewarrengroup.com
