MLS: Empowered Consumers Drive Industrywide Change

By Guy Read

Brian Larson, whose Internet Data Exchange (IDX) service gave Multi-List Services (MLS) the tools to use Internet web sites, sees current disputes between the Federal Trade Commission and the NAR as being resolved by the end of the year to the benefit of both large and small brokerage firms.

Larson told participants in PAR’s MLS Summit that even though offending policies were withdrawn by most MLS operators, the federal government fears that the alleged anti-competitive practices might be reinstated so it is proceeding with litigation.

Larson said the situation was complicated by the federal government treating IDX and Virtual Office web sites (VOWs) in the same manner. This misperception still exists within the industry which sees IDX as equal to a VOW which equals a virtual brokerage. IDX, which gives permission to advertise others’ listings, is one thing and a brokerage on the web is another, Larson said.

Earlier NAR policy on VOWs provided options for an MLS to restrict Internet listing displays, to which the FTC objected. Many MLS’s have stopped these practices and signed consent decrees but some have not.

Using his personal “crystal ball,” Larson predicted that virtual brokerage should eventually be good for everyone because it gives efficiency to the broker and convenience to a consumer. Legal wrangling, however, will delay this benefit for the next three to four years, he speculated.

Larson sees many MLS’s considering cooperatives, mergers, regional and/or statewide operations, the incentives being unhappiness among brokers who pay multiple participation fees and have multiple data feeds.

Responses to these considerations so far include regional and super-regional operations in the San Francisco Bay area and the state of Maine, reciprocal agreements in California, shared systems in Cincinnati and northern Kentucky and limited cooperatives the form of a Minnesota state coop and Michigan Listings Search.

Gregg Larson, a founder of Clareity Consulting, an international real estate information and Internet consulting firm, reviewed the changing face of real estate and real estate technology. Challenges are growing from start-up Internet services that give automated evaluations, rebated fees to sellers, around-the-clock consumer service centers and other data that appeal to younger homebuyers who want anonymous access to concentrated sources of information.

These “empowered consumers” also post their own ratings of services by real estate agents and their personal reactions to listings they see, which Larson suggested should be responded to rather than ignored.

Internet real estate shoppers spend about six weeks considering a purchase before contacting an agent but make their buying decisions in just over two weeks, Larson said, compared with seven weeks for others.

The long-term success of the industry hinges on meeting consumer needs, not REALTOR® needs, Larson said.  Database listings will become a commodity, he predicted, putting further pressure on commissions.