NRT-owned Coldwell Banker’s decision last week to pull the listings of 10 of its Chicago-area offices from Multiple Listing Service of Northern Illinois marks yet another instance of a big broker’s preference for a private, broker-owned MLS instead of an association-owned MLS.
Broker-owned MLSs are not an unheard of phenomenon. Other markets such as Boston and Atlanta operate with broker-owned MLSs.
The Coldwell Banker offices will now post listings exclusively with MAP MLS, a smaller broker-owned operation based in nearby Palatine, Ill.
A large real estate broker pulling its for-sale listings from the largest MLS in its region continues the debate over whether such choices threaten to crack the fundamentals of a single MLS realty market.
Darcy Dougherty, CEO of the Chicago Association of Realtors, is concerned that if the trend continues, regional market data the MLS collects would be less accurate. That data is used to analyze the area’s real estate market, create comparative market analyses and calculate brokers’ market share.
“When you start splintering the database, it lessens the ability to be effective,” she said.
Dougherty believes there’s more value in one common database of information. She noted it takes “tremendous market share” to successfully pull out of an MLS that’s used by all the brokers in a region in favor of another system.
While competition is the norm for most enterprises, the MLS systems make real estate a uniquely cooperative marketplace. What’s more, a single MLS in one region creates a more efficient market than one in which regional listings are spread across multiple systems.
More than one MLS means realty agents have to search multiple databases to find homes for buyers. Agents have to pay to join each MLS, and they have to research data from each database to create a comparative market analysis.
Coldwell Banker’s decision to pull listings from MLSNI also changes how brokers in the region do business with one another. The unilateral broker compensation agreement that exists among transactions within MLSNI doesn’t apply to deals that cross two MLSs. Brokers who do business with those Coldwell Banker offices but don’t belong to MAP will need to draft new compensation agreements.
Gregg Larson, CEO of Clareity Consulting, doesn’t believe brokers nationwide will follow the Chicago Coldwell Banker’s lead on a grand scale. However, he noted a possible long-term trend could be the emergence of more broker-owned MLSs. Only a limited number of local real estate markets around the country currently have the option of a second MLS.
“Brokers can’t pull listings out and put them nowhere because consumers wouldn’t list with them and the agents would revolt,” he said.
Data control is at the center of the controversy surrounding Coldwell Banker’s decision to part ways with MLSNI. A broker-owned MLS is not subject to National Association of Realtor policies that dictate how brokers display listings information on one another’s Web sites.
In 2002, Doug Ayers, president and COO of the Coldwell Banker Residential Brokerage company operating in Chicago, Milwaukee, northwest Indiana and southern Michigan, announced the company had decided not to participate in Internet data exchange (IDX) services that allow brokers to display each other’s listings on their Web sites.
“Large brokers are getting more paranoid about where data is going. That trend may not be pro-consumer, but brokers may not care,” Larson said.
Coldwell Banker’s move could be a wake-up call for association-owned MLSs around the country to listen to their big broker members.
“It’s kind of natural. You see brokers that have grown into mega-brokers and doubled or tripled in size over the past 10 years. As they end up with significant market share in a single MLS market, they’ll ask for and receive a little more control,” he said.
No one at Coldwell Banker’s head office in Chicago returned phone calls seeking comment.
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