RESO CEO Sam DeBord asks the latest in artificial intelligence, OpenAI’s ChatGPT, what it thinks about compensation in the MLS. Here’s what you should know.

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This post was republished with permission from the author.

Real estate commissions are in the news. Legal challenges have created some uncertainty around the future shape, or even mere existence, of an offer of commission sharing from a listing agent to a buyer’s agent in an MLS. This has caused some to question the existential value of an MLS without a compensation component.

Since we’re talking headlines we’re going to ask the latest in artificial intelligence, OpenAI’s ChatGPT, what it thinks about compensation in the MLS. But let’s lay a little bit of foundation first.

I wrote a series on MLS issues for NAR a while back, and the questions remain the same:

Competitive pressures and your MLS

“Cooperation and compensation” have long been touted as the C&C pillars of MLS. But what if cooperation, consistency and compliance were all that were required to create the end goal: an efficient and transparent marketplace for participants and consumers?

If a mandate to offer compensation were not present in the MLS, how would the marketplace react? Consumers still, and increasingly, ask for professionals to guide their transactions. Market forces have already created a vast range of compensation options in our MLSs today. This issue may not be the bogeyman it’s made out to be.”

So let’s ask ChatGPT if it understands what the value of an MLS is. Then let’s ask whether its value is terminally diminished without compensation offers. (Emphasis in answers is mine. This is standalone ChatGPT, not Plus or Bing/Sydney.)

Query: What is the value of an MLS in real estate?

Answer: The multiple listing service (MLS) is a network that connects real estate agents and brokers, allowing them to share information on property listings and compensation for sales. The MLS serves as a central repository of real estate information, providing agents with access to up-to-date and accurate data on homes for sale, including photographs and videos [2].

The value of an MLS in real estate lies in its ability to streamline the home buying and selling process. By providing a single source of comprehensive information, the MLS makes it easier for buyers to find homes that meet their criteria, and for sellers to market their properties to a broad audience of potential buyers. This increases the efficiency of the real estate market, leading to faster transactions and more accurate pricing of homes [3].

Furthermore, the MLS allows real estate agents to offer a wider range of services to their clients, including access to market data, pricing trends, and property history. This enables agents to provide more informed advice to buyers and sellers, helping them make better decisions about buying and selling homes [1].

Additionally, the MLS provides a level of standardization across the real estate industry, ensuring that all agents have access to the same information and are able to offer the same level of service to their clients. This helps to maintain the integrity of the real estate market, ensuring that all transactions are conducted fairly and transparently [5].

In summary, the MLS is a valuable tool in the real estate industry, providing agents and brokers with access to a comprehensive database of property listings, market data, and pricing trends. This increases the efficiency of the real estate market, facilitates faster transactions, and allows agents to provide more informed advice to their clients.

Wow: this is a pretty fantastic explanation. We’ve all seen some wild AI conversations, but this answer oozes nuance and organization of complexity. Maybe it got lucky. It didn’t cover every relevant detail and it overstated some. But we have to give it credit for a strong synopsis.

What ChatGPT got right about MLS

ChatGPT correctly identified more positive outputs and outcomes of MLS than an average observer would:

  • Efficiency
  • Speed
  • Integrity
  • Standardization
  • Fairness
  • Transparency
  • Broader services
  • Data accuracy
  • More information
  • More informed advice
  • More accurate pricing
  • Better decisions

What ChatGPT didn’t get wrong about MLS

ChatGPT avoided the most common mistakes that people make when trying to describe an MLS. An MLS is not:

  • A database
  • A website
  • A network for commission payments
  • A Realtor association

While those things can be a part of an MLS, none of them are mandatory components, nor do they describe the foundation of an MLS. As opposed to saying the MLS is a database, which one of its sources did (and many industry vets who should know better do), the AI correctly described the MLS as a network “providing access to a comprehensive database of property listings.” The separation of organization from features is clear in the explanation.

The AI listed sharing of compensation information as one feature of an MLS, but it didn’t imply that this was a critical part of the cooperative. In fact, it focused almost all of its attention on other facets of the MLS.

So what would ChatGPT say if we pinned it down more specifically on compensation?

Query: Does an MLS still have value if there is no commission compensation agreement involved?

Answer: Yes, an MLS still has value even if there is no commission compensation agreement involved. The MLS, or multiple listing service, is essentially an agreement among real estate agents to list each other’s properties through a cooperative service [1]. The MLS provides a centralized database of properties for sale, allowing real estate agents to quickly and easily access information on available properties and share information with potential buyers. This can be a valuable tool for buyers and sellers even if no commission compensation agreement is involved.

Commission compensation agreements are typically outlined in the buyer-agent or seller-agent agreement. These agreements specify the terms of the agent’s commission, the duration of the contract, and other details related to the transaction [2]. However, the MLS itself is a separate entity from these agreements and can still provide value to agents, buyers, and sellers even if no commission is involved.

Additionally, the value of the MLS is not limited to commission compensation agreements. The MLS provides a centralized database of properties for sale, making it easier for agents to find properties that meet their clients’ needs and preferences. It can also provide valuable market data and insights, helping buyers and sellers make informed decisions about pricing and negotiating offers [3].

In summary, an MLS can still have value even if there is no commission compensation agreement involved. The MLS provides a centralized database of properties for sale, market data, and insights that can be useful to agents, buyers, and sellers regardless of commission agreements.

It’s clear that ChatGPT has been reading some quality content from some thoughtful authors (to be clear, my articles are not in that list). Human leadership should be this good at giving an MLS’s value proposition elevator pitch.

Cooperation, compensation, consistency and compliance

An MLS’s value comes from many components of the organization, but the buck stops at compliance. Agreements, activities, information and services all require compliance with a set of predefined rules.

This is the essence of the broker cooperative: not just a place to help other brokers market and sell their listings, but an organization of rules and consequences to guide the actions of its members creating consistency and cooperation.

Compliance makes the MLS

Consistency in information, services and participant experience is directly reliant upon this conformance. In the way that a nation of laws and enforcement allows for an orderly society, an MLS of rules and compliance makes the marketplace work.

MLS rules are valuable and many. Few are related to compensation:

  • Listing input and updates
  • Signs, advertising, and open houses
  • Forms and disclosures
  • Distribution and marketing
  • Interacting with cooperating brokers, clients, and customers
  • Showing and submitting offers
  • Electronic keys and keyboxes
  • Compensation
  • Earnest money disputes
  • Closing listings and transactions
  • Solicitation of listings
  • Licenses and usage of MLS data
  • Penalties and fines

Which Cs really matter to the MLS?

The MLS, found mostly only in North America, is the envy of the world. Fostering an environment that entices competing companies to accept business practice rules and their associated compliance measures is not a small lift.

Real Estate Standards Organization Map of MLSs and Certifications –

The tradeoff, though, is a better consumer and professional marketplace. The benefits are widely understood, but most countries lack unifying forces like strong Realtor associations to motivate a critical mass of brokers into MLSs. Submitting to rules compliance is a sign that brokerage companies trust in the organizers and the benefits of the marketplace.

Putting the Cs in their place

Cooperation and compensation are important parts of the real estate business. But the idea that they are inextricably tied to one another in the MLS structure, or that the marketplace would not value an MLS without a compensation feature, is short-sighted.

If compensation details were handled directly between brokerages (a scenario that would bring unfortunate inefficiency to the consumer and professional parties involved), the MLS would still be immensely attractive to brokers seeking comprehensive information and consistent experiences. Consumers would still benefit greatly from the organized marketplace. Compliance, ensuring cooperation, provides a healthy, strong foundation for MLSs no matter the current winds of change.

Sam DeBord is CEO of Real Estate Standards Organization (RESO). He has served as the National Association of Realtors­ President’s Liaison for MLS and Data Management, President of Seattle King County Realtors, and Managing Broker for Coldwell Banker Danforth. 

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