Millions of people are clicking on real estate URLs and searching millions of homes on the Internet. The number of Web sites offering direct access to the MLS has proliferated nearly as fast as the number of people searching the Web for houses.

The MLS genie is out of the bottle and there is no turning back.

Millions of people are clicking on real estate URLs and searching millions of homes on the Internet. The number of Web sites offering direct access to the MLS has proliferated nearly as fast as the number of people searching the Web for houses.

The MLS genie is out of the bottle and there is no turning back. The challenge for the industry is to figure out the ultimate consequences of this revolutionary phenomenon, which confronts a business that has stayed much the same for decades.

This four-part series looks at how the event will forever change how real estate is bought and sold, what the innovators are doing to maximize opportunity in having listings access online, and why not everyone is happy about it. (See Part 2: Online listings attract horde of innovators.)

The online home listings movement started out small and simple, as many revolutions do. Technologist Richard Janssen in the early 1990s began to share home listings data with the public through kiosks that were set up at Longs Drugs stores in the San Diego area. Ironically, this is the city where the first MLS was formed 100 years ago when two real estate brokers agreed to show each other’s listings.

Austin was the first market to offer its listings on the Internet, followed by Miami. “We had to establish critical mass before the public wanted to go there. The first-to-market advantage was big on the Web – that’s what we strove to do,” said Saul Klein a consultant for the Realtor Information Network, the genesis of Realtor.com and a former president of the San Diego Association of Realtors.

Around that time a group of real estate professionals were pounding the pavement to promote the concept of a national MLS. Local MLSs resisted that idea. Many other progressive voices in the industry were promoting the publication of the MLS on the Internet.

Then Microsoft announced it was getting into online real estate and wanted to pay MLSs to publish listings on its HomeAdvisor Web site. That only fortified the National Association of Realtors’ commitment to its online venture HomeStore, accelerating the number of MLSs that participated in putting their listings on the Web.

It was the convergence of events that spawned putting the MLS on the Web. It took the Web to free up the MLS, because at the time, it was publicly published nowhere else. The only way to see a home listing was to visit a Realtor.

A national MLS was never formed, but the MLS data is on the Web in many different forms and there is no turning back. The trend has created a real estate marketing explosion and also a quagmire for an industry that for 100 years held listing data to itself.

Ten years ago, “for somebody to think the public should have this information was a pretty foreign thought – and a threatening thought,” said Klein, a pioneer in the effort to share MLS data on a large scale. “It was heresy.” Klein now serves as president and co-founder of Internet Crusade, a real estate education and publishing company.

“Everybody today believes that it’s totally acceptable to display listings on the Internet,” he said. “Public access is a given, and it was not a given 10 years ago – it was a hard sell,” he said.

Though it’s not clear which direction MLSs will go in the future – whether brokers will seek tighter leashes for their listings data or whether the sharing of data will become more widespread and seamless for consumers and Realtors alike – it is clear that the industry is still reeling from this transformation.

Questions are still being raised today about Internet-based home listings, Klein said. What if people without proper authorization take MLS data and misuse it, for example, he said. “On the Internet anybody can take anything. What about security issues? What about the names and phone numbers of people. – stuff that maybe you don’t want anyone to know about?”

Janssen, who served as the CEO for Homestore, the company that operates Realtor.com and other Web sites, said the race was definitely on in those days for putting nationwide home listings online. “The real question was, ‘Who would control it and how fast would it happen?'” he said. Janssen is now employed as CEO for Strategic Data Corp., an online advertising technology company. He was not at HomeStore when the company got into trouble in 2001 because of a series of accounting misdeeds.

If the national association and Homestore (which was then known as InfoTouch) hadn’t launched Realtor.com, he said, “there was a high probability that the listing service would have been dominated by companies like MSN, Yahoo! ,Google, etc. This clearly would have been bad for Realtors and maybe even for consumers.”

Realtor MLSs can automatically list homes on Realtor.com, and many listings are posted on broker sites, too. This “solves one of the largest problems for home shoppers – they need to be able to ‘window shop’ to help educate themselves on what is available, where, and how much (it will cost),” Janssen also said. “Before the Internet this was almost impossible for buyers to really understand and many bought homes feeling uneducated and not in control. The leaders of the (national association) showed early understanding of these facts and pushed to make the MLS listings available to the public.”

Without a service like Realtor.com, the “Realtors and their MLSs might have lost control,” he said, and without this control there may not have been any standards to maintain current and reliable listings data.

But in fact, NAR and Homestore have lost some control. Realtor.com no longer controls the listing database. Years ago, agents and brokers said, “me too – I want listings on my site,” and a host of companies have been spawned to take advantage of the trend.

Klein said that Realtor.com, rather than a truly national MLS, is an aggregator, or advertising vehicle, for MLS data. The association had backed away from earlier plans to consolidate information in a single MLS database. There are about 800 to 1,000 MLSs nationally, either local or regional, that maintain their own databases. While the technology is available to produce a nationwide database, there are barriers such as “local issues, Realtor politics issues, broker politics issues – that make it a large hill for anyone to attempt to climb.”

The California Association of Realtors, for example, has invested in software tools, called “Intelligent Agent,” that are intended to ease data exchange between various MLS systems and allow individual Realtors to “directly collect a wide range of property data information from various sources within a peer-to-peer computing environment,” according to an association description. Such software packages, Klein said, could have the ability to prompt changes in the industry.

The National Association of Realtors has supported the development of another software package, called “Retriever,” that formats current MLS data for display on Web sites while eliminating the need to download entire databases of information.

Maintaining security of MLS data security is very important, Klein said. And that data is “extremely valuable” because it is collected by individuals from across the country who have often invested a lot of time and effort into getting that information, he said.

Klein said he won’t dismiss the possibility that the industry will move closer to a truly national MLS system. “I wouldn’t say it’s not achievable. Eleven years ago if you said all brokers are going to put their listings on the Internet, they’d say, ‘You’re crazy, it’s not going to happen.’ “

Robin Paul Molloy, a professor in the Syracuse University College of Law, said that if MLSs expand and integrate, it’s important that there remain a competitive number of alternative choices in the marketplace. Otherwise, he said, there is the risk that a group of power brokers may control the information “to consolidate its base to preserve its pricing structure” while snubbing competitors.

So far that has not happened. Listings now appear on thousands of Web sites. And attempts to reign it in are going nowhere.

***

Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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