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Op/Ed

If brokers don’t push for MLSs to consolidate, business will suffer, as will consumers

If you belong to one, six, or 20 MLSs, it is time to take action. Today, we explain the common objections from MLSs, and business benefits of brokers pushing for change. Without brokers asserting this change must come, it never will.

home buyers

Whether you are someone that belongs to two MLSs, seven MLSs, 29 MLSs, or know someone who is, you may understand how truly problematic this challenge is. Is it really feasible for the broker to sit on several MLS boards of directors and participate in all their committees – and still run the brokerage?

Is it reasonable for the broker to have to manage all those data license agreements and download data from multiple MLSs to bring together for their website, app, and back-office systems? Not really.

How about markets where the data is split between multiple MLSs (and agents have to belong to multiple MLSs) learn to use multiple MLS systems, and run multiple prospecting searches for a single client just to make sure they’re seeing all their options? Or brokers and agents having to deal with different MLS rules and inconsistent compliance departments – that may even conflict with one another – for the same listing? That’s just crazy.

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MLS “data shares” are only the beginning

We’ve all heard about MLS “data shares,” which solve some, but not all of those problems. And some brokers are working on a project called Upstream, but that doesn’t solve all of those problems either and is a long way from completion.

While the aforementioned initiatives have merit, to really solve these problems, brokers need to take a more active hand in MLS consolidation or, as it’s sometimes called, MLS regionalization.

The goal of this article is to explain the benefits of MLS consolidation so brokers in leadership positions can better articulate them, then look at why the consolidations aren’t happening, and finally explain what brokers can do about it.

A strong business case for MLS consolidation

First, let’s articulate the potential benefits of MLS consolidation:

1. Reduction of arbitrary information barriers
a. Reduce need for multiple memberships
b. Reduce number of data feeds for participants’ use
c. Provide more comprehensive / accurate statistics
d. Provide wider listing exposure for sellers

2. Reduce number of systems some users need to learn

3. Improve MLS rule and data accuracy compliance
a. Providing uniform rules and enforcement

4. Provide efficiency for governance involvement

5. Improvement in scope of MLS products and services

6. Associations can focus more on association functions

7. Reduction in cost (balanced against improvement in scope)

That’s a lot of potential benefits – for brokers and agents, as well as for associations and MLSs themselves to stay strong and relevant. There’s a clear business case for MLS consolidation.

Most common excuses for MLSs not consolidating

Next, let’s look at the most common excuses for MLSs not consolidating, which as CTO at Clareity Consulting, I hear when facilitating MLS consolidation meetings:

  • “3 years to retirement … They’ll take US over when I DIE!”
  • “But next year I was going to be MLS president”.
  • “But what will 25-year loyal employee Mary do if we eliminate the redundancy?”
  • “What if we lose MLS revenue to the association?”
  • “My MLS is worth a lot! Why would I give that away?”
  • “What about our association’s IDENTITY?”
  • “Their members benefit more than ours.”

It’s amazing, but I hear these excuses all the time!

What I like to do is relate these to the association or MLS mission statement. These organizations do not exist in order to provide jobs to leaders and staff. They don’t exist to provide volunteerism resume padding for agents.

While associations need money, they need to charge association dues as needed to fulfill that role and let MLS be a separate business. The “us versus them” attitude some associations and MLSs have about their neighbors is likewise not serving member needs. Again, it all goes back to the organization mission, which should be about providing benefits to the members.

One final fear that is totally unfounded

There’s one more objection that people use to try to put off MLS consolidation that bears special attention: “If we consolidate, their agents will come to our market and sell homes they know nothing about.”

All I can say is that, in the history of MLS consolidation, other than anecdotally, that fear has never played out.

There are answers to all of the consolidation objections – and compromises that can be made to address them if needed. For example, associations can still get revenue from MLS by providing value as MLS service centers, and often existing staff can be re-deployed to a regional MLS. This is the kind of thinking that can reduce the strength of the objections to MLS consolidation.

Some MLS boundaries hurt the industry

Still, sometimes leadership is focused on parochial interests, and acts in a manner contrary to the organizational mission. Bluntly, if the leadership is acting against the mission, it’s time for new leadership.

I understand that there is a fiduciary responsibility that leadership, including board members, have to their organizations. However, plenty of associations and MLSs have shut down or merged in the last few years, because it was clearly the right thing to do for their brokers and agents. This has been a good starting point for erasing the arbitrary MLS boundaries that are hurting our industry.

It takes a long time, so brokers must push

You should be aware that MLS consolidation is usually a several year-long project, given the business and legal complexity of merging organizations, as well as the nature of MLS software contracts, which sometimes have multi-year terms. I’m involved with several consolidation efforts right now, and they take patience – but if brokers want this to happen, they need to start the efforts now.

Brokers in positions of power with associations and MLSs, formal or otherwise, need to work together to demand MLS consolidation. Brokers have been successful in these efforts before, forcing the issue to form regional MLSs around the country, but there are still hundreds of markets where it makes sense for MLSs to consolidate and brokers need to take responsibility for driving the process to completion…

Sitting back and blaming “them” for not consolidating is not a good strategy for change.

#MLSconsolidation

Written By

Matt Cohen has been with Clareity Consulting for over 17 years, consulting for many of the real estate industry’s top Associations, MLSs, franchises, large brokerages and technology companies. Many clients look to Matt for help with system selection and negotiation. Technology providers look to Matt for assistance with product planning, software design, quality assurance, usability, and information security assessments. Matt has spoken at many industry events, has been published as an author in Stefan Swanepoel’s “Trends” report and many other publications, and has been honored by Inman News, being listed as one of the 100 Most Influential Real Estate Leaders.

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