The MLS is in crisis, say many large brokers, agents and industry observers. The cooperative organization plays an essential role in the U.S. housing market, matching buyers and sellers through the assistance of a Realtor. But cooperation has been replaced by acrimony, litigation and an uneasy migration to the Internet. Plus, it is expensive to administer, is inefficient to operate, and is being politicized by the brokers and agents who depend on it to run smoothly.

Three factors are contributing to the crisis of the MLS: Real estate is becoming less local and more regional for many brokerage operations; the Internet has unleashed home listings data to the public; and the debate over who owns the listings data continues to create conflict within MLS organizations.

Real estate has always been a local business, but today it increasingly is becoming regional, national and even global, creating hurdles for MLSs that operate within local geographic boundaries. Many brokerage companies operate in several regions and agents today find themselves crossing into several market regions. In some areas, Realtors and brokers belong to as many as seven MLSs, making it difficult for them to search a comprehensive database of homes for sale.

Some brokers and agents believe the solution is a centralized, statewide or national MLS organization to help them better connect them to their markets. Currently, there is no such thing as a statewide or national MLS. There are some 800 MLSs serving local and regional markets across the U.S. Of course, current technology is available that would allow a national MLS. But political fiefdoms make that goal as far-fetched as politicians reaching agreement on tough policy issues like abortion, capital punishment and Social Security reform.

The struggle over real estate data ownership and control continues to be a source of problems within MLSs. Some brokers don’t want their listings to appear on other brokers’ Web sites, third-party Web sites or MLS sites that are open to consumers. In the information age, real estate data has a lot of value for brokers and other companies looking to market their services to new homeowners, and disagreement over how the data should be protected and shared has split a lot of MLS members.

The Internet also has created a new problem for MLSs. For-sale listings used to be compiled by MLSs and distributed in three-ring binders to members. Consumers had to visit real estate offices to browse available listings. Today, listings are out of the genie bottle and all over the Web, changing some aspects of the MLS’s role in the marketplace.

In this three-part series, we look at some of the underlying problems causing concern for MLS members, what’s working and what’s not working and the upcoming merger of two distinct MLS models in Chicago.

In Part 1, “What’s wrong with the MLS,” we spoke to experts who cited aspects of the organizations that need change. Governance, standardization of data and cooperation are all points of serious concern to people involved at all levels. Sources also comment on the operating structure of MLSs, with some saying that most will continue to be owned and operated by Realtor associations and others predicting that different ownership models will emerge.

In Part 2, “Chicago case study for MLS reform,” to be published Thursday, we caught up the folks at the Multiple Listing Service of Northern Illinois to get an update on the merger with MAP, a smaller broker-owned MLS serving much of the same market. The industry is watching to see how this merger plays out and how an MLS that is owned by brokers and Realtor associations will fare in today’s housing market.

In Part 3, “Nirvana: Centralized MLS,” to be published Friday, we asked real estate agents to identify problem areas they have with the MLS. Most cited the need for a centralized database or entity at the state level, which would make it easier for them when crossing into neighboring local markets.


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