AUSTIN — Lauren Hansen concluded this year’s Council of Multiple Listing Services (CMLS) conference by urging her fellow MLS execs to “be the change” they want to see in the real estate industry.
She led by example. Before the day was out, she announced on stage that her MLS, Northern Colorado-based Information and Real Estate Services (IRES) signed a memorandum of understanding (MOU) to merge with its neighbor to the south, Denver area-based REcolorado.
“So, mic drop,” she said, prompting applause from attendees. Hansen is CEO of IRES and president of CMLS.
Later she told Inman, “[The merger] is responding to what brokers want and need — expanded data access and broader marketing footprint.”
The MLSs are Colorado’s largest. REcolorado has about 20,000 agent, broker and appraiser subscribers and IRES has about 6,000. Both operate in the state’s Front Range region. In identical blog posts, the MLSs said they had “successfully negotiated the terms and conditions of a merger” with the help of facilitator Chris Osborn of Foster Pepper PLLC.
“This is a very exciting time for us because at REcolorado we’d like to create a statewide MLS” and this is a big step toward that goal, REcolorado Board Chair James Wanzeck told Inman. (A statewide MLS may turn out to be a hard sell, considering REcolorado’s neighbor to the south declined to join merger talks.)
An MOU (memorandum of understanding), which is a formal, but nonbinding agreement, generally signals that a binding contract is forthcoming. The merger documents still need to be drafted, Osborn told Inman. The MLSs have set an “aggressive” deadline of November 1 for a signed commitment to merge.
The road to consolidation in MLS land is often slow, bumpy and infused with politics. This announcement marks the next step forward for what has been a thorny journey toward merging that began at the start of 2017. After IRES rejected REcolorado’s surprise multimillion-dollar buyout offer in January, REcolorado cut off a data share between the two MLSs.
The unrest prompted 20-plus large brokerages in the state to put pressure on a deal, while a third-party — T3 MLS — was called in to mediate. The MLSs signed a letter of intent to merge in June, which appeared to signal a thawing in months-long tension.
What’s to come? The MLSs’ MOU includes an outline for next steps, including the formation of a new company, and a “sketchbook” for how ownership and governance will work, Hansen said. “It’s not an acquisition,” she added, and more specifics still need to be hammered out.
“We have an amazing opportunity. We intend to discover and recognize the best of both companies (IRES and RECO) and create something better. This applies to our cultures, systems, services and more. Not to mention, that ‘something better’ will make whatever transition lies ahead easier,” Hansen said.
Each MLS’s association shareholders will also have to get “on board,” Wanzeck said. He declined to offer further specifics.
Throughout the event, speakers emphasized that “the MLS moment” to proactively tackle longstanding issues in the industry had arrived — a message attendees seemed to enthusiastically embrace.
One solution often mentioned was MLS consolidation, with several industry leaders predicting that there would be far fewer MLSs in coming years.
There are some 700 MLSs in the U.S. Consolidation proponents say more mergers could mean several benefits for agents and brokers on the ground, including better services, reduced fees and increased efficiencies.
Staying “sharply focused on the best interests of members” has led the merger talks thus far, according to REcolorado spokeswoman Deborah Shipley.
“It’s been great to work with IRES leaders. Communications have been open, productive, honest. We couldn’t be more pleased,” she said.