Directors for the California Association of Realtors on Saturday approved the creation of a statewide real estate data-sharing effort that local Realtor associations could choose to use as a statewide multiple listing system.
“It gives us the opportunity to get all of the data throughout the state into one database and then allow associations and MLSs to decide whether they want to use it as their MLS database or use it just as the aggregation portion,” said Gary Thomas, a real estate broker who is a former president of the state Realtor group and leads an MLS Working Group that was appointed in 2005 to study MLS issues and develop a vision for the state’s system of MLSs.
The MLS Working Group had proposed three options for consideration by the association’s board, including an option to pursue a database that preserves the existing network of MLSs in the state and an option to create a unified MLS that serves Realtors throughout the state. The selected option has been dubbed a hybrid of these other two options.
Ed Krafchow, president of Prudential California Realty and a longtime advocate of MLS consolidation in the real estate industry, said he worries that the board’s decision will not go far enough to truly streamline the MLS industry in the state.
There are about 70 MLSs throughout California, most of them operated by local Realtor associations, and Krafchow said he believes that there is an “overcapacity” of local Realtor groups and local MLSs in the state.
Some associations have become dependent on the fees that their MLSs charge to subscribers, Krafchow said, “and that needs to cease. I’m concerned about the continuation or even development of over-capacity on the associations’ side. I want MLSs to be supportive of consolidation … not just data-sharing because I don’t think that’s the answer.”
Krafchow has supported a Northern California MLS consolidation effort, the Northern California Real Estate Exchange, or NCREX, that has already joined two MLSs.
The motion that California Association of Realtors directors approved on Saturday provides that a mutual benefit nonprofit corporation will be established to oversee the development and operations of the database and statewide MLS system.
Also, directors voted to establish: an MLS rules working group … to recommend statewide rules to be used in either model; an MLS statewide governance working group to recommend a specific governance structure; an MLS standards subcommittee group to … recommend data standards; and an association executives working group to recommend the most efficient and member-oriented approach on which services should be retained at the local level, Thomas reported.
Those groups will report back to the association’s directors in January for review and approval of their recommendations, he said.
Decision makers haven’t determined yet whether the California Association of Realtors or an outside entity would operate the statewide database and MLS system, Thomas said.
The association’s MLS committee met last week and recommended that the board further study statewide MLS issues and delay its vote until January. Thomas said, “They wanted us to continue to study it and come back in January with a detailed business plan.” The board vote “gives us a clear direction” in moving forward with the statewide plan, he added.
Employees for Clareity, a real estate consulting group, had prepared a report that asked association officials to support existing data-sharing and consolidation efforts in the state while pursuing standardized statewide MLS rules, regulations, enforcement and data standards. The group noted that several efforts are already under way in California. But employees clashed with association officials at the MLS meeting last week — association officials confiscated copies of the report and said the consulting company was not authorized to hand it out.
Krafchow said he supports some of the statements outlined in the Clareity paper. “I certainly want a thorough process that develops around supporting the current initiatives of consolidation,” he said.
Michael Straight, a former president for the Nevada County Association of Realtors in California who is an organizer for the Rural Alliance, a group of small MLSs in the state, said he was surprised to learn that the state Realtor group is moving ahead with the statewide initiative.
“It’s interesting — the politics going on,” Straight said.
He noted that there are several different systems taking shape in the state, including consolidation plans and data-sharing networks.
“We’re basically still gathering information and I don’t think there is enough information out there. We’re not making any decisions or picking any sides. I don’t think you can unless you have enough information to make an intelligent decision,” he said.
Straight also questioned the role of existing data-sharing efforts in the state once the California Association of Realtors-approved plan moves forward.
The California MLSAlliance is one of the data-sharing efforts that has gained substantial momentum within the state. That group announced last month that there are a dozen MLSs, which represent about 180,000 brokers and agents in Northern California and Southern California, participating in the MLSAlliance network.
James Harrison, president and CEO for NCREX, said he questions whether the statewide effort will compete with existing industry entities.
“I’m used to running an MLS business. I would have thought that we, as MLS executives, would be in some sort of collaboration with the state as they worked toward pulling this venture together. The only way I can look at it is as a competitive venture, really,” he said.
“The regional MLSs are highly competitive with each other, and I think the customer benefits. We are developing and providing services as quickly as we can.”
And while the NCREX MLS consolidation plan hasn’t been as quick as he had hoped, Harrison said, “We’re still highly cooperative with each other and still talking. I think that existing regional MLSs will continue to collaborate together.”
He said the MLSAlliance system, of which NCREX is a participant, is “much more cost-effective than trying to build the same utility from scratch,” adding that he had hoped the Realtor group would focus on using its resources “to support what was already evolving in the marketplace.”
Thomas said that the statewide initiative is intended to build upon other efforts in the state. “We would want to utilize what’s been started by (several groups) — and look to all of those to get it put together as rapidly as possible.” He added, “There are lots of decisions to be made between now and when it’s implemented.”
Fees for the statewide aggregated real estate database and MLS would be paid by members of local associations that choose to participate in the statewide efforts, Thomas said.
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