A new white paper released today from The Council of Multiple Listing Services ahead of the June 5 government workshop on competition in real estate, argues that the real estate industry does not need any government intervention to help get listing data distributed widely and that the nature of multiple listing services (MLS) inherently breeds competition.

A new white paper released today from real estate industry group the Council of Multiple Listing Services (CMLS) ahead of the June 5 government workshop on competition in real estate, argues that the industry does not need any government intervention to help get property listings data distributed widely to potential customers and others and says that the nature of multiple listing services (MLS) inherently breeds competition.

MLSs — there are currently 630 in the country according to data from real estate data firm T3 Sixty — are the longstanding organizations into which real estate agents share their clients’ property data and which make that data available for display by brokerages, home search websites, and other places (they originally started in the late 1800s as word-of-mouth and paper ledgers). The CMLS white paper says that they are a rare instance in the business world were cooperation boosts competition.

“Real estate brokers who participate in MLS agree to provide their listing information to the MLS in exchange for the ability to see other participants’ listings,” the report says.

“Furthermore, with each listing the participating broker offers to any other participating broker a commission if that cooperating broker is the procuring cause of a sale of the subject property. As a hub of thousands of offers to enter such unilateral contracts, the MLS ensures cooperating brokers are paid.”

The report comes at an especially critical time for the real estate industry and for MLSs in particular: the U.S. government is openly evaluating how competitive America’s real estate industry is right now.

Why? Because this year marks the expiration of a 10-year-old consent decree reached between the U.S. Department of Justice and the National Association of Realtors trade group back in 2008, which sets rules for Realtor-owned MLSs.

That decree came into place after the Justice Department sued NAR for antitrust over policies NAR enacted that allowed Realtor-0wned MLSs to impose separate restrictions for internet-based real estate companies without brick-and-mortar offices, such as allowing brokers to opt-out of having listings data displayed on such websites (More recently, NAR says it will continue to follow the spirit of the consent decree after it expires.)

At present, most MLSs require subscriptions for agents, brokers, appraisers to access their data. Some competition experts, namely the think tank Information Technology & Innovation Foundation (ITIF) and its prolific vice president Daniel Castro, believe that listings data should be more freely available online outside of MLSs, perhaps even in a fully nationalized database. ITIF has also said that MLSs should potentially be investigated by the government for antitrust.

But CMLS, being an industry group made up of MLSs, feels differently — not surprisingly. CMLS likes things just fine the way they are. Due to rules governing MLSs in terms of both data quality and timeliness, participating brokerages and other data recipients are able to be confident that the listing data is accurate, which is good news for all parties involved, the new CMLS white paper argues. MLSs are also critical conduits, offering many different ways to access that data for brokers, appraisers, consumers and other users.

Consumers benefit significantly from the current MLS system, in addition to members of the real estate industry, according to the paper.

“Consumers have greater access to listing content and more ways of receiving it than ever before,” the report reads. “MLSs facilitate those ways of receiving listing content. Every MLS in the country has at least two, and most have dozens, of access points for consumers to find listing data.”

Among those access points are: broker websites that use Internet Data Exchange (IDX) standards to integrate listings, virtual office websites (VOWS) that host listings such as Compass or Redfin, consumer-facing MLS sites, as well as third-party display websites such as Zillow or realtor.com (Zillow has previously funded the ITIF think tank). That listing data is valuable intellectual property for the industry, so the paper doesn’t advocate for access to it to become fully open. 

The paper further argues that leaving distributive control of the listing data in the hands of sellers and brokers is pro-competitive.

“Requiring that sellers and listing brokers make distribution decisions maintains or increases the number of independent economic decision-makers in the market,” the report says. “Eroding seller and listing broker decision-making authority decreases broker and seller choice and increases consolidated decision-making power, which could harm brokers and their customers.”

Regulators should keep their hands off the industry’s methods of data distribution, the paper argues. Government regulations like the consent decree between the National Association of Realtors (NAR) and Department of Justice that determined NAR would not discriminate against VOWs has done as much to stifle innovation as it has to create competition, according to CMLS.

Instead, the government should be looking at other areas to help the industry, by considering making public access to state property tax records more accessible, as well as addressing barriers to technological innovation, such as the repeal of net neutrality, the trade group said.

Email Patrick Kearns

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