Editor’s note: 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 But cooperation has been replaced by acrimony, litigation and an uneasy migration to the Internet. In this three-part series, we look at some underlying problems causing concern for MLS members, what’s working and what’s not working.

Editor’s note: 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 But cooperation has been replaced by acrimony, litigation and an uneasy migration to the Internet. In this three-part series, we look at some underlying problems causing concern for MLS members, what’s working and what’s not working. (See Part 1: What’s wrong with the MLS and Part 3: Nirvana: Centralized MLS.) 

As two formerly dueling multiple listing services in Chicago move toward a merger, the outcome may hold clues as to the future of MLSs around the country.

“It’s still moving forward. Nothing has been finalized, but we’re making progress,” said Brad Tertell, vice president and general manager of the Multiple Listing Service of Northern Illinois. The goal is to have the changes made by year’s end, he said.

Tertell’s 40,000-member, Realtor association-owned MLS is on track toward a merger with MAP, a smaller, broker-owned rival, creating a whole new entity that would combine the two. The result could become the nation’s largest broker-owned, not-for-profit multiple listing service.

The housing market depends on a smooth, functioning MLS that effectively compiles home listings data and redistributes it back to its real estate agent and broker members. But the struggles over politics, listings control and regionalization have made the future of the MLS uncertain. Observers now wonder whether the future MLS will be public or privately owned, consolidated or broken into even more local entities.

The hybrid MLS model that Chicago is pursuing – that of a broker-owned and Realtor association-owned model – is a possible example of what the MLS of the future may look like.

“I think hybrid models will emerge where brokers have ownership and associations have ownership,” Andy Woolley, director of MLS services for eNeighborhoods, told Inman News.

“If MLSNI and MAP merge, it’s conceivable that would be a hybrid because the MAP MLS is currently broker-owned and MLSNI is association-owned,” Woolley said.

According to Tertell, the current plan is that “it will be a shared ownership between the associations and the brokers, and it will be broker-controlled.

“The common stock would be the current shareholders’, and the preferred stock would be the brokers,'” Tertell explained. “The current shareholders are the boards of Realtors of the current MLSNI. That’s the proposal on the table.”

MLSNI’s Tertell has worked as part of a task force that was created to facilitate consolidation talks. The task force also includes MAP Chief Executive Bud Fogel and real estate consultant Steve Murray.

“We’ve had discussions that range from ownership, control, data use issues, all sorts of things,” Tertell said.

According to a source close to the deal, the next phase of the merger is critical to its success. In order to move the deal significantly closer to fruition, Realtor associations must sign a letter of intent endorsing the details of the merger, the source said.

This could potentially save their members millions of dollars annually because it would reduce fees and redundancies of systems, sources said. The 10 Realtor associations in the greater Chicago area are currently meeting to vote on whether to sign the letter of intent.

Tertell said the changes should not have any effect on consumers “whatsoever,” nor should the move have any impact for the agent on the street.

“We’re changing ownership and control. The general operation is not going to change a lot,” Tertell said. “The goal is to make it as seamless as possible.”

“After going through a lot of different scenarios, it was basically decided that MLSNI would be the surviving corporation, so we would need to alter our bylaws in accordance with what we’re going to agree on,” Tertell said. “The final decision will be up to the shareholders, not the board of directors.

“I think we’re really close to coming up with a plan that’s going to work,” the general manager said.

This March, in an act of good faith, three of the largest brokerage companies in Chicagoland that last year pulled all the listings from their Northshore offices out of MLSNI, decided to put them back.

“We wanted to take away anything that might have been a distraction. It was really a good faith gesture on our part to really endorse a positive movement,” Stephen Baird, CEO of Baird & Warner, told Inman News in March. His company was one of the brokerage companies that moved listings from MLSNI to MAP because of disagreements over data licensing issues with former management.

The other two brokerage companies were Coldwell Banker Residential Brokerage and Koenig & Strey, which also moved their Northshore listings back to MLSNI in March, sources said.

Baird and others have said they feel the move toward a consolidated MLS is a win for Chicagoland Realtors and brokers.

The disagreements Baird and other brokers had with MLSNI that led them to pull listings centered on the way former management was handling listings data. Brokers weren’t happy with decisions to invest in a data-licensing company known as REBIG, which was headed by former MLSNI CEO Jay Huffman’s wife Brenda Huffman. MLSNI reportedly lost millions of dollars in REBIG.

In March, Baird told Inman News he and other brokers had been discussing their concerns over the way management was operating MLSNI and the whole issue of reselling listings data for the last 10 years with no progress.

“The use and moving around of data has become a much more important factor in our business,” Baird said. “When it was a closed system, then it wasn’t much of an issue. Today, it’s much more of an issue.”

Jay Huffman in 2004 was replaced as CEO of MLSNI.  The MLS has since terminated all arrangements with REBIG, and the entity has closed its doors, according to Baird. Ending those relationships was a key step to moving consolidation talks forward.

Bud Fogel, CEO of MAP and also involved with the task force, told Inman News in March that he supports the initiative to form a new combined MLS, saying it would end 47 years of duplication by members. Nearly all of MAP’s 16,000 members are also members of MLSNI, which means they’ve had to double their data input for listings, among other things.

***

Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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