Cheap MLS Systems

by Victor Lund on November 1, 2013

Home SearchThe results are in from the annual WAV Group MLS Technology Survey. We will be working on the report in the coming weeks. Last year’s report showed that there were not any MLS software solutions with super high ratings. This year’s survey showed that the ratings have dropped down for every vendor. What can be done about that?

As you may know, WAV Group provides RFP services to MLSs who are facing a contract termination date. It is smart to shop around to see if there are solutions that are better shaped to meet the evolving needs of agents and brokers. The goal is to find a better system at a lower price.

Vendors know this. They do everything they can to operate their business as efficiently as they can so they can meet the Low Price needs. The notion of “Better System” is more about design than function. If the system cannot look great, the vendor focuses on throwing in MLS toys – like a consumer website, IDX, Agent Websites, Virtual Tours, Document Management, or some other tool. They pile on additional applications in the base price of the MLS to sweeten the deal.

The WAV Group survey measures two groups of MLS customers. It measures the attitudes of the staff and the attitudes of the agents. Every vendor in the industry is facing lower ratings by both of these groups. The industry is ripe for change. The pendulum needs to swing away from lower price and more toward better systems.

Change #1 – Reduce Profits. One of the hidden fiefdoms that contaminate our industry is the MLS markup to paying subscribers. It its most pervasive form, the markup happens when the Regional MLS wholesales services to the Association of REALTORS® who retail the service to the subscriber. This often results in the doubling of the service costs so the Association may realize a profit. MLS systems that are wholesaled below $20 per agent per month wind up costing the subscriber more than $40 per agent per month. No doubt, the Association MLS providing training and support adds a cost burden to the core fees. And there are other cost centers like rules enforcement and subscriber management. The markup is not pure profit, but profit is a significant percentage of the fees.

Change #2 – Don’t Switch Systems. Every time an MLS switches systems their satisfaction ratings plummet. This happens even when the new system is light years ahead of the old system in features and performance. The core audiences of MLS subscribers are older. 76% are over 45 years old. Do not move their cheese unless your vendor relationship is crushed. They do not want to learn a new software solution even if it is better. The tax of having to retrain is too high. One of the lowest performing systems in our survey fell down in satisfaction because they had the highest expansion in customer base this year. The survey reflects dissatisfaction with change more than dissatisfaction with the system. It is a survey bias.

Change #3 – Charge more. The top MLS vendor in our survey every year happens to be the system that charges the most. As an industry, we need to acknowledge that good things aren’t cheap and cheap things aren’t good. In truth, if the most expensive vendor had more accounts their price per user would likely go down. My point here is that there is no vendor building a luxury MLS system. More than half of the subscribers to the MLS don’t sell a home in a year. Thankfully they subsidize the cost of the MLS system for productive agents. If the price goes up, some of those agents would break out of the business. There is compounded risks to raising prices, but there are compounded gains too – raising the bar in real estate.

WAV Group will be publishing the 2013 MLS Technology survey in a few weeks. If you are a subscriber to this site, you will be provided with a copy. If you are not a subscriber – you should subscribe. Alternatively, send an email to a WAV Group partner below and we will add you to the distribution list.

This issue is one of many that will be covered in the 2014 WAVinar Series. MLSs and Industry executives that subscribe to the WAVinar Series will benefit from quarterly online meetings to find ways to solve this and many other issues facing the industry today. Call or email Victor@WAVGroup.com for information about registration and pricing of the WAVinar Series.

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