SAN FRANCISCO – The structure of the Multiple Listing Service is in need of major repair, according to many concerned industry participants. Governance, standardization of data and cooperation are all points of serious concern to people involved at all levels.

Every housing market needs a properly functioning MLS to work and survive. But there are some deeply rooted dysfunctions threatening the MLS future, according to participants in a roundtable discussion here Thursday.

“I can’t see how the industry can exist without the MLS,” said Andy Woolley, director of MLS services for eNeighborhoods.

Woolley opened a discussion Thursday evening during Real Estate Connect 2005 to a packed audience that shared the same concerns: that the current MLS structure is not working and that the industry needs to work on a solution before it crumbles.

“There’s a real issue around the data and a real issue around the business model for the future,” said Ed Krafchow, president of Prudential California Realty. “This is not to say we won’t have an MLS going forward.”

Krafchow said he was speaking for large brokers on the issue and that there are many brokers like him who say the model no longer works for them. As a large broker, Krafchow is a member of 17 MLSs, and he described a rigorous process of downloading all the data feeds from these MLSs each day. “It is a living hell,” he said.

One of Krafchow’s biggest sources of angst is the dissimilarity of policies among all the MLSs. For example, he said, one will say he’s violating a policy with a method that another will applaud him for.

“I think we have to reorganize a disorganized business,” he said.

“Twenty years ago, this was a co-op,” he said. “We all put data in; we shared it and it was proprietary. Now it’s omniscient. We need to decide whether we share data with everyone or share data with no one. We can’t discriminate.”

The real estate business has changed, Krafchow said. Agents today think more globally while the MLS structure is stuck in a more regional way of thinking, and that creates barriers. For example, an agent working in one county may want to show a home to an investor in a different county and they are met with opposition from the Realtor association that controls that MLS and basically told not to come in, he said.

Bud Fogel, CEO of MAP MLS, agreed that more organization is needed to save the functionality of the MLS. MAP is a broker-owned MLS in the Chicago area. Its founding brokers pulled away from the Realtor association-operated MLSs because the political environment was not working for their business structure.

“We felt it was ridiculous to protect the fiefdoms of (association) boards,” he said. “We have a different perspective and view things totally from the broker’s point of view. We do not compete with them – we don’t have a Web site.”

Fogel said that in about a 15-month time period, MAP went from having 5,000 members to 15,000. In addition, MAP is now working with Chicago’s MLSNI (Multiple Listing Service of Northern Illinois) to combine into one broker-owned entity that would dissolve the region’s association-run MLS.

That seems to indicate that many brokers share the same frustrations with the politics that come with Realtor associations.

“I think there’s going to be continued pressure to change the structure of the MLS,” Fogel said.

Brian Chen, the former CEO of Multi-Regional Multiple Listing Service, the second-largest MLS in California, said there’s a real need for standardization of policies, rules and how listings data is described within the MLS. He used the example of how a partial bathroom appears from one MLS to another. One might have it listed as 1.75 bathrooms and the next might say it an entirely different way, and in the end it’s still unclear what that means.

Chen dismissed the notion of a national MLS or that the MLS should disappear entirely.

“I really think that the MLS serves a specific purpose – it serves as a governing body that governs brokers who are competing with each other,” he said. “Without it there is war.”

Addressing possible solutions or starting points to solutions, Krafchow suggested brokers build a consortium and ban together.

Chen said change needs to start within every member’s own mindset.

***

Send tips or a Letter to the Editor to jessica@inman.com or call (510) 658-9252, ext. 133.

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