

Challenging the MLS Monopoly - RyanMcGreal
http://quandyfactory.com/blog/31/challenging_the_mls_monopoly

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dpcan
I hate to tell you this, but it has NOTHING to do with technology or even
individual agents. The closed MLS has everything to do with politics. Period.

The biggest brokers in an area will monopolize 60%+ of all the data in a
single MLS. When they have control over the listings, they have control over
the MLS. If they threaten to leave an MLS, the MLS is worthless, and one
company wins.

So, the MLS compromises. It does the bidding of the biggest listing offices
and everyone else suffers.

I speak from first hand experience as a vendor in multiple markets. An open
mls would be mind blowing and wonderful, bit it's not a matter of setting up a
nice website, it's a matter of beating through the bureaucracy.

~~~
yellowbkpk
Seems like the same political problems that are in place with Ticketmaster.
Perhaps if someone figure out how to beat through this bureaucracy they can
figure that one out, too.

And make lots of money.

~~~
steveklabnik
There's actually a startup that's local to me that's fighting that fight.

What's interesting is that they haven't tried to go after big names at
first... it's surely more of a long tail kind of thing. They started off only
doing small, local venues, but they're doing so well that they're naturally
starting to pick up bigger and bigger ones.

I'll be excited to see Ticketmaster go. I don't know of anynone who enjoys
dealing with them.

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makecheck
I've seen the effects of this monopoly even before the Internet age, and this
is a pretty accurate article. The data on the MLS is not rocket science, it
could be trivially reimplemented in a lot better ways than it has been.

In defense of real estate agents, however, they aren't necessarily willing
participants in this fiasco. For instance, a city's real estate board can
charge agents fees (and really, really, _really_ ridiculous fees) for access
to the service. And there's no choice: it's the only way to be a realtor.
Agents suck it up like just another cost of doing business, but the reality is
that the real estate boards are acting extremely unethically.

~~~
timr
_"And there's no choice: it's the only way to be a realtor."_

Important nitpick: Realtor is a registered trademark of the National
Association of Realtors. Not all real estate agents are Realtors. It's yet
another racket in the industry.

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mlapeter
As a real estate agent, I agree with the author's point, especially about the
technology. I not only pay hundreds of dollars per year, but technologically
they still can't even keep up with basic advancements such as making the mls
work in firefox or safari. The problem, as far as I can tell, is not from
individual agents trying to protect their racket, but from our regional and
national associations and their somewhat opaque partnerships with private
businesses.

For example, our national association doesn't even own Realtor.com; they made
an apparently permanent agreement with a private company which charges us
additional fees for "enhanced" listings.

The other problem is that the MLS's are all controlled regionally, and it's
not so much about the technology as it is about the bureaucracy. While the
author makes an excellent point, many are currently attempting it but it's not
easy. Companies such as Redfin seem to be slowly getting there. As an agent,
I'd be the first to support a free, nationwide MLS, but I don't know if it's
something that can be solved by technology alone.

~~~
dasil003
As someone who worked for an agency supplying a few hundred realtors across 6
different MLSes with web development, I can also testify to the _utter_
technical incompetence of at least one of the major suppliers (who shall
remain unnamed) of back-ends for hundreds of MLSes.

I noticed a bug in our CSV import one day and I discovered that they were
quoting, but not escaping quotes _in any way_. Thereby making it possible for
any realtor to inject whatever the data they wanted for anyone else's listings
either before or after theirs (depending on how the data importers resolved
conflicts).

This was a _huge_ security hole affecting probably hundreds of thousands of
listings nationwide, and you know what their developer support said to me?
They actually sent me a suggested workaround tailored to the particular
instance of corrupted data that I had encountered. When I explained to them
the ramifications of this to their business they simply ignored me.

Damn I'm glad I got out of that game.

~~~
techiferous
"Hello, this is the front desk."

"Hi, I'm in room 118 and I smell smoke."

"We'll send up some air freshener right away, sir."

------
drp
I handle listing data ingestion and distribution at HotPads.com, so I deal
with some of these problems all the time. There hasn't been a single complete
game changer in this space yet, and with the way things are currently
progessing I think the solution to the MLS problem will come as a combination
of MLSes learning to play nice (we see quite a few distributing their data
across multiple sites) and agents and brokers signing up with distribution
services, listing their properties on more open sites, or handling their own
distribution directly. We have listing feeds with examples of all of these
cases.

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apinstein
We are in the real estate and have been pondering this problem for years.

It is not a technical problem, and there is no technical solution.

It's easy to make a better database, but it isn't useful if it isn't full of
data. And you won't get lots of data because the network effects are too
strong. It has been tried many times.

Besides that, you must realize that MLS's make most of their revenue from MLS
fees; if they didn't run the MLS then they wouldn't have a very big budget,
and many people would lose their jobs. MLS's have strong relationships with
their members (agents and brokers). There is no incentive for anyone close to
the data sources to support such a thing.

To your point about making something "so much better" that they'd use a new
system anyway, read this: [http://www.inman.com/opinion/guest-
perspective/2009/11/10/th...](http://www.inman.com/opinion/guest-
perspective/2009/11/10/the-coming-civil-war-in-real-estate)

------
leelin
The MLS pains are a symptom of the broader question, "do we still need human
realtors?"

Sadly, Foxtons US is dead
([http://www.reuters.com/article/bondsNews/idUSN27422652200709...](http://www.reuters.com/article/bondsNews/idUSN2742265220070927))
and ZipRealty has been around for 7+ years without revolutionizing the
industry. There must be a deeper explanation than "Realtors make 6% a sale for
accessing a database."

My hypothesis is "rational, well-informed market decisions" would ensure few
purchases and sales ever close. With so much on the line (life savings, huge
debt, negotiation anxieties, moving uncertainties), normal people simply can't
handle the stress without some hand-holding.

As a licensed agent, I've personally had plenty of cases where I knew I found
the clients a steal, but I had to spend enormous amounts of energy and time
convincing them take action (and before someone else beats them to it).

------
hop
The National Association of Realtors will and has done everything to protect
the MLS, which they manage and make millions of dollars from. The NAR is the
largest American trade union and 3rd largest lobby

[http://en.wikipedia.org/wiki/National_Association_of_Realtor...](http://en.wikipedia.org/wiki/National_Association_of_Realtors).
<http://www.opensecrets.org/orgs/list.php>

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shawndrost
"Make this extra-easy via functionality that auto-populates MLS when an agent
lists a property on OSLS."

This violates my local MLS' TOS. Pretty much everything violates the MLS TOS.
Did you know that agents can't put their contact info on their MLS listings?

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johnwatson11218
What about the idea of making it easier to sell a house using a "For Sale By
Owner" then let more ppl list their own homes on craigslist or wherever they
want. If I was trying to sell my home I would want it on every single site out
I could get it on. It seems like what would aid this is if there were about 10
standard contracts that everyone agreed to use. You could research it and know
all about the type of contract you were going to use - about like learning a
software license. Then any more give and take is just worked out in the price.

~~~
apinstein
That's exactly what we do... <http://www.neybor.com>.

There are many companies that offer such a service today, and it is starting
to help. Syndication is what will eventually allow the MLS monopoly to be
broken I think...

Five years ago probably 95% of homes found by buyers online were found via MLS
search sites. But syndication has started to shift this number lower and
distribute it among _many_ other sites (trulia, zillow, craigslist, etc etc).

As the % of online shoppers viewing true MLS data drops, brokers will continue
to syndicate their listings to other sites, which will accelerate the shift
away from MLS reliance even further.

After a while, the monopoly will be broken and then you will start to see
radical shifts like you describe where real estate agents are used for their
professional services -- advice, negotiation, paperwork, and expertise, and
NOT as an overpriced access fee to the MLS data.

------
ephermata
I recently heard about the business of teaching people how to form syndicates
to buy "short sale" homes and then flip those homes for a profit. (Short sale
== sell house for less than the loan value.) If you pay $$ to a guru you can
get standardized contracts, hand holding, etc. Example blog post from someone
in this area: <http://cawholesaledeals.com/blog/tag/short-sale-syndication/>

Leaving aside the morality of these gurus...

Wonder if this would be a thin edge of the wedge area to start with
aggregating data on house sales? People are already meeting in person and
swapping information about where are the sales, which ones do they want to
syndicate, so you have less of a bootstrapping problem. You could also provide
ways for people to signal interest in a particular home deal, or provide a
commission to people who bring in data on a home that is later successfully
syndicated/sold even if the reporter isn't in on the deal. Maybe there are
other approaches. Then grow from that segment to more real estate data if the
model proves out.

------
lesterbuck
As other comments have stated, it is so much more than a simple technical
problem. An entire web of "ethics" rules and well-funded politicians presents
a formidable barrier to change. For true blood-boiling outrage, read the very
sharp analysis of how the industry is rigged in this report submitted to the
FTC a few years ago: [http://www.savvybroker.com/Nine-Pillars-Citadel-
aRealEstateC...](http://www.savvybroker.com/Nine-Pillars-Citadel-
aRealEstateCart.pdf)

As technologists, try reading each of the points in this report as network
partitions, and design a solution to route around the information block. There
are various approaches available now to bypass some of these rules.

Alas, they can rewrite the rules, too, as necessary. For example, in Texas
realtors were taking bulk listings from builders and investors for a flat fee
of $150 and putting the data in the MLS, but nothing else. Since this was a
direct attack on the semi-fixed price of 6% commissions, the Texas Association
of Realtors got their politician lackeys to pass a new law, requiring "minimum
professional services" from all Texas real estate license holders. This fixed
price posting still goes on a bit, but not in bulk anymore. Any technical
routing around of the MLS must expect the Borg to counterattack.

The realtor associations even violate their own rules, and/or keep their rules
vague, so when the time comes they slap everyone around by giving them days to
comply or they are cut off from MLS. (That cuts off an entire brokerage when
one agent is out of compliance.) With that kind of career-ending leverage,
they are quite effective in keeping the sharecroppers down on the farm, and
paid up on their dues.

I have never been a realtor, but I did follow a carefully laid out plan to be
licensed and still avoid the Borg, which the realtor association ignored
completely. Feel free to contact me if you want to share stories and ideas.

------
paulhart
I'm curious to know if Ryan has spoken to any of the local (I live in the same
town) agents about the lock-in to see what they think? I don't know a huge
amount about the industry, but it has some interesting dynamics.

There are a handful of major franchises (Re/Max, Century 21, CBRE on the
commercial side) that folks sign on to. Why are such companies so enticing to
agents? Is there a benefit to doing the same thing as every other agent in
your region, or is the barrier to standalone entry to the market too high?

I presume that the franchise groups are heavily wedded to the existing MLS
stuff, even if they have their own separate listing facilities (certainly the
largest Re/Max group here puts all their listings on their own website).

I should talk to one of my neighbours about it, as I have some interesting
ideas :)

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wglb
While I agree with making this information more open, claiming that real
estate agents are getting their percentage from just accessing the database is
wrong. There is a significant element of service that I have experienced that
transcends just having the listing. I have worked with one real estate agent
for multiple houses now and gladly pay a percentage to understand the flavor
neighborhood, the history of the house, getting the transaction done, helping
with the move.

If the information would be free, then I would certainly be ok with paying
less, but there is more to the real estate service than just the data.

I would imagine you are familiar with Zillow?

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javery
What about redfin.com?

~~~
drp
Redfin is great, but it only solves part of this problem. In its current
incarnation it still has to play by many MLS rules and does not open the data
past users of its own site.

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JimmyL
>> Puts private sales on an even footing with brokered sales by legitimizing
non-brokered transations.

If you're trying to get realtors to buy in, why would you make this a goal?
Private sales == less commission for the relators == less profit.

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michael_dorfman
Wow, that's a relief.

I read the headline as meaning "Masters in Library Science", and was expecting
an anti-librarian screed.

~~~
limmeau
And I expected something about a sickness that combines Multiple Sclerosis and
ALS.

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danbmil99
a shit-ass industry populated by incompetent sociopaths.

