What Is The Future Of The MLS ?

For consumers, the publishing of MLS data has provided a fast and easy way to get information. But the information is not as complete as they are led to believe. And for businesses, the net has changed the usefulness of MLS membership.

The original purpose of MLS membership was to provide an easy way for real estate offices to communicate with each other about what is for sale. Companies were responsible for, and in charge of, the advertising that their exclusive listings participated in. Now, MLSs all over the country, allow their listings and data to be published and viewed by anyone, anywhere without care. While this gives properties exposure, and sales get made because of it, the activity can actually hurt companies, the real estate business in general, and buyers can miss good deals.

How does this affect buyers? For the most part, buyers are content with the selection of properties available to view. They are looking online for as long as two months before going to meet an agent at a property. They are starting to think they know the market as well as a full time agent. But, as with all hobbyists, they are actually missing a lot (no pun intended). MLS only shows MLS info. There are many companies who are not members of MLS. Many private company websites have non-MLS listings that are called "pocket" listings in the business. These listings can be better buys than MLS listings. Maybe they are not exclusive to the company, or they could be priced so well that the broker knows they will find a buyer easily. Either way, these types of listings can't be found on the downloaders.

Further, MLS downloaders are mostly a source for active listings. In order to really know if a property is a good value, you have to know the sales, the new builds, the renovations, the foreclosures, the mortgages, the fsbos, the condition relative to each property, and such. Looking only at what is active is what new agents do. When a new agent has their "Ahh Ha" awakening, they approach real estate listing and sales with a different understanding. Buyers are learning the same lesson, but they sometimes get their "Ah Ha" too late and miss a good property.

How does this affect agents and companies? Well, to start with the companies are losing sales. If a lead from one of their exclusive listings is not paid for from the downloaders, the lead is given to someone else who did pay. This requirement to pay for the leads that their supposedly exclusive listings are generating is a change of operation and an intrusion to the existing budgets of business owners. Of course the usual comment is "half a sale is better than no sale". But there are few business that could survive if their incomes were cut in half. Most of the sites that just download and publish MLS data aren't actually selling property. They are only selling leads. They have lots of money behind them. With their cash, they pay to have their sites show highest in the search engine results. They then use the traffic that the MLS data is generating for them, to charge very large fees to the agents and companies that have provided the data. They even charge higher fees to agents that list and sell the most property. Many agents and companies are starting to consider this a form of robbery or extorsion. The fees are for the leads that free MLS data is producing on the downloaders sites. The leads go to the agents that buy the leads, who are usually not the listing agent or company, and who may be new or inexperienced in that market. Some agents who purchase leads just pass them on as referals to the listing agents, for a part of the closing commission. They lead buyer does nothing and yet gets paid - a sort of arbitrage for real estate leads.

Because the downloaders' cash insures that average size companies can't compete with them for search engine result position, the listing agencies have another option. They can "opt-out" of having their listings downloaded. As this occurs more and more, the usefulness of the downloader sites decreases. This may diminish exposure in the short run, but it can insure a greater, and far less expensively, receipt of the traffic the listings are producing.

And not to worry. Today, company websites can be found more easily than in the past, because of "grass roots" sites like REindex.com . On sites like this, all listing companies in a given town are provided a free link to their websites whether they are MLS members or not. This provides buyers with more complete listing information and provides the listing company direct taffic to their own listings. Sites like REindex allow real estate companies to work at selling real estate rather than "optomizing" their web pages for search engine results, or spending thousands to legitimately get the traffic their listings are producing.

Most Sellers think they need to have their property advertised. But almost all agents know that 99% of buyers do not buy the house they first ask about. It is the agent that learns taste and needs, and then shows them the properties that fit those needs and tastes that causes the sale - not an ad. It is the agents that use their knowledge of the sales, the new builds, the renovations, the foreclosures, the mortgages, the fsbos, the condition relative to each property, to find a property for a buyer. Ads are to appease sellers and to start conversations with buyers.

So what is the future of MLS? Can agents and companies take on huge fees for the leads the downloaders want them to pay? Will buyers be content with a limited knowledge of the market? Or will the internet become the "new MLS" by using sites like REindex.com that have both MLS and non-MLS information? The dot coms had their day. Maybe the downloaders' time is ending.

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