A Bold New Proposal for MLS Fees

October 23, 2019

At the recent CMLS 2019 in Salt Lake City, Utah, Rob Hahn and David Charon proposed a bold new view of how they see the MLS and its future.  Frankly, it was a brilliant presentation.  I am a real estate instructor and when I see someone convey a complex idea in very simplistic concepts, it’s a thing of beauty.  Rob Hahn hit the bulls-eye.

 

Let me paraphrase his proposal found HERE:

 

We should look at the collective MLS industry and the output of data from the participants in those MLS’s as an operating system – kind of like Windows 10.  Windows makes your computer run.  It is not the tool – it is a platform to make the rudimentary functions of the computer work.

 

When we get a computer, we add programs for productivity on top of the operating system.  Programs like Word, PowerPoint, and Excel.  These are the things that allow us to get things accomplished.  To review:  Windows 10 is the operating system – and they see the vast data ecosystem of the MLS as the operating system.  Word and Excel are the productivity tools.  They see the Vendors of the real estate industry as the productivity tools.  Things like CloudCMA, Showing Time, Remine, etc. are all the productivity tools that real estate agents can use to get stuff done.

 

A brilliant way to express an idea.  Simple and easy to understand. 

 

To get there from here many things need to happen.  With nearly 800 MLS organizations nationwide, they will need to get on the same page.  To do this, consolidation of smaller MLS's into regional MLS’s makes the most sense.  We need to get rid of those small MLS’s because they throw a stick in the spokes of the machine.  Decision power needs to be concentrated so we can dispense with those that howl at the moon.  Harsh, but true. 

 

An alternative is for these smaller MLS’s to adopt RESO standards.  RESO, is an organization that promotes the adoption of standard data definitions so outside programmers who want to use the data in their programs can get the data in a uniform package from MLS to MLS, and Vendor to Vendor.  RESO certification is not cheap for an MLS, but in the long run it is better.  Better for the Vendors for sure.  It’s expensive – but a small price to pay for the MLS.

 

Once we get consolidation or standardization, the MLS’s nationwide must agree to allow Vendors to have access to these databases.  As Rob Hahn proposes – not just the listing information for marketing purposes, but the BUYER information, sold data, financing data, and history of the listed homes.  Everything we have as an industry needs to be shared with these Vendors.

 

The next phase would be to determine just how these Vendors would pay for this access.  Let’s take a newer process like Trestle.  Trestle is the “interface engine” provided by CoreLogic to send data to Vendors from the MLS’s.  Before Trestle, MLS geeks had to set up every single data interface individually for each vendor.  With Trestle, set it once and forget it. 

 

Who Pays for Trestle?

MLS’s individually can charge anything they want, but usually set a tiered pricing structure for access to the data using Trestle.  For illustration purposes only, let’s say you are a Vendor who provides a CRM to 3 users.   Most likely you are on the low end of the tier structure and will pay $100/month for access up to 5 users.  Again, these tier costs are set by each MLS.  If you are a Vendor with 8 Users, you likely will pay $150 for access for up to 10 users, and so on…  If you are a mega vendor, and have 800 users, you are most likely paying the top tier pricing amount, let’s just say $1,000 per month for over 100 users. 

If you look at such a pricing structure, bigger is better.  As a Vendor, your access charges to the data go down on a per user basis the larger you become.  Bigger IS better.

 

The magic in this idea with uniform standards and centralized control is the MLS data begins to act like an operating system, and the Vendors who use this data now get ease of access so they can create Whiz Bang tools for the agents to use (buy).  Most agents will agree that Zillow.com, Realtor.com, and other Mega Vendors would be much better off with easier and cheaper access to the data the agents create and pay for.  After all, Zillow and Realtor.com have the best interest of the agent and broker in mind.  Always have, always will.  The consumer too…

 

I happen to own a larger brokerage in my area.  I am a member of 6 MLS’s.  If anyone would benefit from regionalization of MLS’s, it would be me and my affiliates.  So, here is my bold proposal on MLS fees.

 

Proposal:

The MLS needs to create a tiered structure for monthly User fees.  Bigger IS better. 

 

How it is today…

Each month, I get a bill for my 100 affiliates from my local MLS.  The brokerage pays $100, and I pay $25 per month for each user.  I pay this bill of $2,600 on behalf of the entire brokerage at the beginning of each month, and then collect the $25 from each agent individually.  If they don’t pay – I am the collection agency.  Great position for me, agreed?

 

Proposed Tier Structure for MLS Fees:

  • A brokerage with up to 5 affiliates should pay $100/month.

  • A brokerage with more than 5 but less than 10 pays $200/month.

  • A brokerage with more than 10 but less than 20 pays $300/month.

  • A brokerage with more than 20 affiliates pays $400/month.

  • Bigger IS Better!

Proposed Structure for Vendors:

  • Vendors pay access fees to the data at $25 per agent user

  • Vendors pay access fees to the data at $100 per broker

  • When Vendor access fees collected exceed the costs paid by the users, the USERS can get dividend checks.  This makes the access fees the Vendors pay a profit center to the MLS, and the users that create and maintain it use it for FREE.

This BOLD PROPOSAL turns the tables.   It looks on Rob Hahn’s and David Charon's proposal in complete reverse.  Users who create and maintain the data get cheaper access to it and get paid by the Vendors that want to use it.  The “operating system” can be opened to anyone who wants to pay to use it – and if they abuse it, they get turned off.  It is not an open source operating system, it is a privately owned and maintained operating system.   Like Windows -  not like Linux.   (for those of you scratching your head about Linux – my point is made)

 

If tiered structure and licensing fees are good for Vendors, they should be good for participants too. 

 

DISCLAIMER:  For all you attorneys out there, I am NOT proposing a fixed cost or promoting collusion – I am merely proposing a bold new structure with generic fees to illustrate the concept.

 

Hopefully as you read this you found the sarcasm intentionally stated throughout.  For some reason, our industry seeks to find a single solution for everyone.  There isn’t one.  This is a capitalist profession, not a profession rooted in socialism.  Every area is diverse and rich with traditions and customs.  Force feeding a template on this industry of fiefdoms does nothing more than encourage more fiefdoms.  We are a profession that howls at the moon and we go our own way.  Freedom, capitalism, survival of the fittest are associated with our industry.  Conformity, universal adoption, centralized decision making, these words sound more like Socialism. 

 

Lastly – many of you who read this will critique the fact that I have not mentioned the consumer.  If you read any industry rag you will find an overwhelming narrative that Zillow, Realtor, and all the other mega Vendors are the only ones that care about the consumer.  It is said so often even WE believe it.  On the contrary – I reject that notion entirely.  There is no agent or broker in this industry that isn’t 100% in tune to their customer’s experience.  They know better than Zillow or Realtor.com or anyone else for that matter a bad customer experience is the death of their future business. 

 

So there it is, a bold new proposal for MLS fees for the users.  Let’s see if this proposal can penetrate all the “Group Think” that currently exists in our industry and get some traction.

 

I appreciate your comments in advance!

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