With the publication of the National Association of Realtors Handbook on Multiple Listing Policy in January, the NAR policy has changed to now allow national franchisors to index IDX (Internet Data Exchange) listings on their websites.

While this is a positive development — and one that should be applauded — there are also some problematic elements to this new policy. Primarily, the issue lies with the prohibition by NAR for these franchisors to advertise around these listings.

The logic behind this restriction seems to be that advertising would somehow compromise the integrity of the listings and/or the MLSs themselves.

While on the surface this may seem a valid concern, studies have shown the exact opposite to be true. Consumers actually invest sites with advertising with a greater perceived authority than those without.

It seems that limiting the ability of franchisors to leverage their traffic and data to sell advertising — when the national portals are already doing just this — is anti-competitive. Times are tough all over. Franchisors — and indeed everyone, on down to the individual agent — need to take advantage of every opportunity possible.

Editor’s note: The following is a guest perspective.

By SHIRAZ VARTANIAN

With the publication of the National Association of Realtors Handbook on Multiple Listing Policy in January, the NAR policy has changed to now allow national franchisors to index IDX (Internet Data Exchange) listings on their websites.

While this is a positive development — and one that should be applauded — there are also some problematic elements to this new policy. Primarily, the issue lies with the prohibition by NAR for these franchisors to advertise around these listings.

The logic behind this restriction seems to be that advertising would somehow compromise the integrity of the listings and/or the MLSs themselves.

While on the surface this may seem a valid concern, studies have shown the exact opposite to be true. Consumers actually invest sites with advertising with a greater perceived authority than those without.

It seems that limiting the ability of franchisors to leverage their traffic and data to sell advertising — when the national portals are already doing just this — is anti-competitive. Times are tough all over. Franchisors — and indeed everyone, on down to the individual agent — need to take advantage of every opportunity possible.

The NAR’s policy on advertising around IDX listings eliminates a significant business opportunity for the franchisors (and the rest of the industry) that has been controlled by national real estate portals.

What the NAR’s indexing policy appears to accomplish, more than anything, is ensuring that further innovation from franchisors will be difficult, if not impossible.

Money is being made

For quite some time now, the major national real estate search portals (Realtor.com, Trulia, Zillow, etc.) have been capitalizing upon the listings of individual Realtors, agents and brokers to capture the attention of national advertisers.

In the process, they’ve been pulling in millions of dollars that — in theory, at least — could be going to the brokers and multiple listing services that willingly provide the portals with listings.

Some portals have also sold (and continue to sell) product placement to competing agents and brokers, essentially allowing them to advertise their services in connection with listings they have nothing to do with.

Some portals are making money in connection with an individual’s listings by selling advertising space to national brands, and are also selling advertising around the listings information supplied by competing agents and brokers.

This practice has typically been controversial and is not necessarily appreciated by the industry.

Level the playing field

NAR should simply remove all restrictions against advertising alongside IDX listings. That will allow everyone, from national franchisors to industry organizations to individual brokers and agents, to take advantage of advertising opportunities and generate new sources of revenue.

If the playing field is leveled by NAR, local and regional real estate professionals will actually have a leg up on the national portals.

There’s a tremendous opportunity here. It can be quite revolutionary and could put these sites on par with the national portals for advertising sales opportunities. The only thing standing in the way of this revenue is the industry organization with a mission statement that outlines its role as helping its members become more profitable and successful.

Here’s a very simple and logical way for the NAR to do so. The ball is now in NAR’s court.

Shiraz Vartanian is general manager of Real Estate and Living Media (REALM) at LPS Real Estate Group. He joined LPS Real Estate Group in 2008 and previously served as chief information officer for Realty Information Systems.

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