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. This four-part series looks at how the event will forever change the real estate industry. (
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. This four-part series looks at how the event will forever change the real estate industry. (See Part 1: Listings on the Web: From radical idea to ubiquity and Part 2: Online listings attract horde of innovators.)
In early 2003, real estate brokers who advertised their home listings in The Real Estate Book print publication noticed that those listings were appearing on the RealEstate.com Web site and that the broker’s name oftentimes had been stripped from the data. That misuse of listings data is one of the risks realty brokers cite in having MLS information online.
The MLS has been freed from the shelves of real estate offices and there’s no turning back. The event has created a real estate marketing explosion, and also a quagmire for an industry that for 100 years held that listing data under lock and key. Brokers and agents, while hesitantly embracing change, are still trying to figure out ways to reduce the impact of listings on the Internet and instead use it to their advantage.
By now, most brokers have faced the fact that online listings are central to attracting prospective clients to their businesses. Some companies such as Weichert Realtors have even started to use online listings in more aggressive business plans. But there is still some resistance to creating a ubiquitous listings free-for-all on the Web because the possibility of losing control over the data is too important. Brokers have an interest in protecting the data and the MLS they helped create, and view the MLS as a business operation, not a public information system.
Dirk Knudsen, broker/owner of RE/MAX Metro in Beaverton, Ore., sums it up well. He believes that online access to for-sale listings is beneficial to home sellers, buyers and sales agents. However, he takes issue with listings being used in ways that cut out the broker or return no perceived advantage to the brokerage business.
“Putting the data online should be a good thing for any broker, provided that the broker is given a place at the table,” Knudsen said.
Brokers used to have a guaranteed spot in the value chain when it came to prospective buyers who wanted to look at available homes because buyers were forced to visit the realty office where the listings sat in a three-ring MLS book. With the Internet, buyers can search hundreds of thousands of homes without ever contacting an agent–and when they do contact an agent, it’s not guaranteed that they’ll contact the brokerage that listed the home.
From a listing broker’s standpoint, losing visibility with the consumer is a risk when unleashing for-sale listings on the Web. That’s why the data that appeared on RealEstate.com without the listing broker’s name and contact information about a year and a half ago struck a chord with brokers, according to Knudsen.
“On the one hand, I want (the listing) everywhere, I want everyone to be able to see it,” he said. “On the other hand, I want to be there…If I’m not there, then there’s no perceived benefit.”
Knudsen believes that having no data means a company has no role in the value chain. He sees online listings channels fragmenting in the future as more brokers realize this and hold their listings closer.
The visibility threat may be what’s prompting some brokers to pressure their local MLSs to shut down their public listings Web sites. A group of brokers in Chicago this summer demanded the Multiple Listing Service of Northern Illinois turn off ChicagoMetroRealEstate.com, which enabled consumers to browse for-sale listings on neutral ground. Some brokers felt the Web site directly competed with their own sites. A similar situation is unfolding in Cincinnati.
Robert Atkinson, VP of the Progressive Policy Institute and co-author of “Modernizing Home Buying,” said real estate agents are what’s keeping what he calls the “e-transformation” of the MLS from happening on a grand scale. But he says it’s a rational response to a new market condition, although it’s not in the best interest of consumers.
“(Agents) want an MLS that preserves their role as information brokers because a more transparent MLS would empower consumers, automate and bring more self-service to the process of buying a home, thereby enabling and driving reduced commissions,” Atkinson said.
In his view, the biggest risk to brokers and agents in giving consumers unlimited listings access online is the price reduction in their services.
Worries over commission pressure are indeed at play in the online information age. Bruce Benham, chief operating officer of RE/MAX International, noted the appearance of third-party referral companies as one downside to unleashing listings to the Web. The consumer-agent matchmakers that aren’t brokerages themselves stand in the middle of transactions and collect referral fees, he said.
“It just puts more pressure on the commission structure we have, which already has pressure on it,” Benham said.
Benham doesn’t think online listings will greatly impact the cooperative aspect of commissions-when the buy and sell side agree on a percentage split. But he does see more hands reaching out for a portion of the commission by way of the third-party aggregators.
The next step for online listings is for the industry to create a broker reciprocity service at the national level so companies with national market share like RE/MAX could, for example, display the aggregated listings of all the MLSs on their corporate Web site. In that scenario, consumers would find a convenient spot on the Web to search a comprehensive list of homes. Benham sees that as a win for buyers, sellers and agents.
“By being able to say (the home) is on five national sites the day I put in on the MLS-that to me is a positive thing to say,” he said.
However, not everyone agrees on the value in having national listings sites. Sam Valenti, a retired agent of 34 years in St. Charles, Mo., said the notion of a national MLS open to the public “sounds good to the public, however, there is a value migration that takes place from the people doing the work-the Realtors-to the public. And the Realtors are not compensated for that value. In short, they’re being asked to work for nothing.”
Valenti believes the Internet is just one tool in the grand marketing scheme, not the main focus.
Still others praise what the availability of listings online has enabled them to do in their real estate careers. Steve Glisan, a Realtor with RE/MAX Properties in Colorado Springs, Colo., said he’s been able to take on much more business more efficiently than he previously could’ve imagined because of consumers finding him by looking at listings online.
To Glisan, the only risk is giving away too much information for nothing in return. He believes asking for the prospective client’s e-mail address is a reasonable exchange for the listing information.
“The MLS is not a public information system,” Glisan said. It’s a business entity that was created and is operated by working real estate professionals. “Even directory assistance costs me a buck,” he said. The Internet ultimately is a business tool.
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