- An MLS policy that allows Realtor-affiliated MLSs to force all associates in a broker's office to subscribe to the MLS will be discussed at NAR's legislative meetings this month.
Real estate broker-owner Jim Weix received an unexpected letter a year ago from his multiple listing service: If he did not pay subscriber fees for 12 of his 27 agents by August 1, 2016, his firm’s MLS service would be suspended.
MLS services are not free, and no MLS is obligated to provide its services to anyone who fails to pay the subscriber fees. But what if agents don’t want the service at all? Should they be forced to pay anyway?
That question will go before a National Association of Realtors (NAR) MLS committee at the 1.2 million-member trade group’s midyear conference this month.
At issue will be an NAR MLS policy that allows Realtor-affiliated MLSs to require that all of the licensed salespersons affiliated with a broker’s office subscribe to the MLS — if a broker is a member of the MLS and the physical location of that broker’s office lies within the boundaries of the MLS’s territorial jurisdiction. MLSs’ territorial jurisdictions are not fixed, unlike the jurisdictions of local Realtor associations.
The policy is a “local option,” meaning that NAR does not mandate that it be adopted, but allows local MLSs to adopt it in their marketplace.
According to Weix, the policy hurts agent recruiting and retention and props up small MLSs that would otherwise consider consolidating with their neighbors. On the other hand, some MLSs may be worried about agents having access to the MLS through their broker without paying for it.
720 businesses with local needs
NAR’s Multiple Listing Issues and Policies Committee will consider the implications of keeping, eliminating or changing the policy — MLS Policy Statement 7.42 — both for different MLSs and for the industry as a whole, according to Rick Harris, a real estate broker and the committee’s 2016 chair.
“When you have 720 individual businesses across the country who were formed to meet local needs … each of those MLSs is going to approach this issue differently,” he told Inman in an interview.
“Does the policy out there adequately serve the Realtor MLSs around the country? That’s what our charge is. NAR is not in the position of dictating how you compete for your service.”
No specific change to the policy has been put forward for consideration by the committee. “Before we just put a policy out there, what we really need to find out [is] ‘Is this a solution that’s needed and if it’s needed, what’s the best solution?'” Harris said.
The policy and an ‘inconclusive’ survey of MLSs
The part of MLS Policy Statement 7.42 that is up for review reads as follows:
“MLS may, as a matter of local determination, require that each of a firm’s offices located within the jurisdiction of the association(s) that own and operate the MLS or that are parties to a multi-association or regional MLS service agreement participate in the MLS if any office of that firm participates in that MLS.”
The policy was first adopted in 2002 to address assessment of MLS fees for participants (brokers) with multiple office locations, according to NAR spokeswoman Sara Wiskerchen.
At this month’s MLS policy committee meeting, “[t]here will likely be a general discussion about whether the approach set forth in that policy statement continues to be in the best interest of brokers and agents given the changes in the real estate industry in the past 15 years since its original adoption,” she told Inman via email.
Last year, NAR’s MLS Technology and Emerging Issues Advisory Board, which makes recommendations to the MLIP Committee, developed a survey to try to understand the issue. The survey was open for three weeks in November, distributed to all of the members of the Council of Multiple Listing Services (CMLS), and received 70 responses, according to Wiskerchen.
NAR declined to share the survey questions or findings with Inman and said it had no plans to distribute survey results to the public or NAR members.
Wiskerchen did share that the survey’s results were “inconclusive,” meaning that there “were no clear patterns on methods of assessing of MLS fees so the Advisory Board was cautious not to draw any conclusions from the data.”
She also said the survey showed “support for a broader discussion” to reevaluate “how MLSs provide services to brokers and agents in light of emerging technology and evolving business needs.”
Harris elaborated on some of the survey results, noting that there was no clear pattern in how MLSs chose to implement this particular policy or how many MLSs implement it at all.
“Some MLSs do, some don’t. Some do when they’re a regional MLS and some don’t. Some do when they’re a wholly-owned local MLS and some don’t. It didn’t get us to a conclusion about whether that was more likely or less likely,” Harris said.
The survey results reinforced the idea of taking “a more methodical approach to make sure we [understand] the issues really well before a policy is put forward,” he added.
‘MLS of Choice’
Weix, broker-owner of The Real Estate Company, Inc. in Stuart, Florida, knows what he wants to happen at NAR’s midyear conference: He wants the policy eliminated, gone, kaput.
“Although this territorial jurisdiction policy may have made sense back in the days of MLS books, today it promotes restraint of trade, causes unnecessary expenses to brokers and agents, and hinders the recruitment of new agents,” Weix told Inman via email.
Instead he’d like to see an “MLS of Choice” policy akin to NAR’s Board of Choice policy, adopted in 1994. Before then, Realtors were required to join the local association in whose jurisdiction their office was located.
After Board of Choice, Realtors were allowed to “choose the board to which they want to belong on the basis of the factors they decide are most important rather than being limited by office location or jurisdictional boundaries” so long as their broker is also a member.
Weix would like to replace “board” with “MLS” and have that be the policy.
“[The current policy] means that little MLSs can force agents to join their MLS, even if there are better MLSs in the same area. This ‘artificial life support system’ allows primarily small MLSs, which are often within the coverage area of large MLSs, to exist,” Weix told Inman via email.
“In most cases, these small MLSs are more expensive. They are also often less effective, due to the low number of participants. Even if these small MLSs do data sharing with the larger MLSs, the data sharing is often quite poor.”
Weix is speaking from his own experience as a member of the Realtor Association of Martin County MLS, which has about 900 members, and the Realtors Association of the Palm Beaches MLS (BeachesMLS), which has more than 15,000 members.
BeachesMLS covers Martin County as well as neighboring Palm Beach and St. Lucie counties, so the boundaries of the two MLSs overlap. According to Weix, RAMC MLS charges agents $349 in annual dues while the larger BeachesMLS charges $198.
“My office is located in Martin County, and is therefore governed by RAMC MLS’s territorial jurisdiction. This rule greatly affected my ability to recruit new agents because most had no need for the RAMC MLS,” Weix said.
Great lengths for a workaround?
For now, Weix has gotten around the rule by forming an “address-only” branch office in St. Lucie County at a cost of $40 a month. The agents in his firm that don’t want to join RAMC MLS are under the rubric of that office, which is outside of RAMC MLS’s jurisdiction. Those agents belong to BeachesMLS.
He finds the need to set up such an arrangement “kind of silly,” but also necessary under the current policy.
RAMC declined to comment on whether Weix’s arrangement satisfied its MLS policy or on why the MLS decided to change its enforcement of the policy last May. Previously, starting around 2010, Weix had dealt with the policy by opening a “branch office” within his main office for agents that didn’t want to join RAMC MLS.
“Once I found a way around it, I went from nine agents to 27 because now I could offer my agents ‘MLS of Choice,'” Weix said in an interview.
“Then Martin County suddenly decided last year that they would strictly enforce this MLS jurisdiction rule.”
Some of his agents voted to drop out of RAMC MLS completely, but some wanted to stay, so he opened the “address-only” office. “That way I didn’t lose any agents,” he said.
He estimates that the current “archaic and outdated” MLS jurisdiction policy is affecting thousands of agents nationwide, given that many — if not most — MLSs have overlapping jurisdictions.
Weix noted that after Board of Choice was put in place, some smaller associations suffered a membership drop, but those that operated an MLS could force agents to join for added revenue.
“This MLS jurisdiction [policy] is welfare for small associations. Once you cut the welfare off, everybody will have to go out and got a job,” he said.
If the policy were eliminated and agents were no longer forced to join, that would incentivize smaller MLSs to merge, furthering a recent regionalization trend among MLSs, according to Weix.
“More and more MLSs are merging because the larger you are, the lower your cost per month per user is,” he said.
“The MLSs have found they can provide the services for a whole lot less the larger they are. This is part of the reason too you’re starting to see these mergers. You can save so much money by being larger.”
A small MLS responds — somewhat
RAMC MLS declined to respond to specific questions from Inman seeking to confirm Weix’s account, responses to his concerns, or why the MLS adopted this optional policy in the first place.
Janet O’Brien, CEO of RAMC, sent this emailed statement:
“As far as I know, this policy has always been in place and there have been no changes to it. It has never been an issue for our brokers. The Realtor Association of Martin County (RAMC) is a member-driven, member-run organization governed by its member brokers and whose policies are those agreed upon by nearly 180 brokers and 1,000 Realtors.
“Overwhelmingly, the brokers who belong to RAMC have done so in support of a smaller organization that focuses on the needs of the agents engaged in real estate in Martin County.
“RAMC does its best to give their broker members and subscribers excellent value, information and service; while upholding the integrity of the use of the data for members and subscribers who participate in the financial structure of the MLS. The association administration’s job is to enforce those policies.”
Fear of theft
RAMC MLS’s May 2016 letter to Weix hints at why the MLS adopted the policy.
The letter quotes NAR policy director Diane Mosley: “The fact that some licensees do not use the system isn’t determinative of whether all licensees may be charged, it is the fact that they can use the service given their affiliation with the Participant [i.e. the broker].”
Harris of NAR’s MLS committee noted that he’s only heard about this issue from Weix thus far, but that he can see both sides of the issue. He understands that an MLS is constantly dealing with people attempting to steal its data and services.
“I could have one login and give my login to five, 10 or 15 people. You’d get one payment out of 15 people using your services. In the old days I could pass my MLS book around,” he said.
Many MLSs have put verification tools in place to prevent that kind of theft, including identifying specific devices logging into the service by their IP address and setting up a challenge for additional information if a user logs in from a different device, he noted.
“Many NAR policies are designed to allow data to go where you mean it to go and not go where you don’t mean it to go,” Harris said.
His own relatively small MLS, Southern Oregon MLS with 1,200 members, does a “fabulous job” and its territory overlaps with Regional MLS in Portland. Southern Oregon MLS does not enforce the MLS jurisdiction policy. It doesn’t have to because it provides valuable services, according to Harris. “MLSs are responsible to their brokers,” he said.
Need for flexibility
He understands Weix’s concern. “Jim is looking for more flexibility in his marketplace,” he said.
Harris offered this example in an email to Weix and NAR staff:
“I am a large franchise company with offices around the state. My company has offices served by a regional MLS in one part of the state, and has offices served by a different MLS in another part of the state. The territory of the MLSs’ overlap, since each MLS has its own opinion of what ‘natural market area’ means. My company has three offices in areas served by both MLSs.
“Given that both MLSs are Realtor association-owned, does this guidance imply that both MLSs could adopt a rule that forces me to have one of those offices subscribe to the MLS that is owned by an association that controls the jurisdiction where my office is located, even if I already am a subscriber to another that serves the same area, that I like better, and I feel gives me better service? Wouldn’t this kind of rule force me to buy service where I don’t want to?
“We did make [an] Association of Choice ruling a number of years ago that allows me to be a member of any association I choose, regardless of the location of my office. It seems contradictory to force me to buy MLS services from a service I don’t want to simply because one of my other offices in the same jurisdiction buys services from that MLS. There may be very good reasons why, in border areas, when the MLS is the true natural marketplace but the association jurisdiction is not.
“I think this bears discussion.”
He doesn’t think that the process of evaluating the policy will go as fast as Weix would like, however.
In fact, Harris said, “I’m sure that no action will be taken right now.”
“The whole purpose of having people make requests and review them is to try to keep policy current as best we can. Sometimes they want it to go faster than it should, sometimes NAR goes slower than it should,” he added.
Everyone involved is just trying to get it right, he said.