The Right and Wrong of Broker Data

by Victor Lund on May 7, 2014

DataThere is a lot of confusion about real estate listing data today. I believe that the confusion is the cause of agitation that pits technology companies, consumers, real estate agents, pundits, MLSs, Franchises, and Associations of REALTORS against one another. For many, there is a belief that the listing data is free and access should be provided to all. The reality is that the listing data is legally bound to the real estate listing broker who is the custodian and responsible party for that data.

Being a custodian, or the responsible party has nearly boundless latitude and altitude. Today’s real estate broker can do pretty much whatever they want with their data, subject to state and federal laws. The actions or permissions for data use are measured by the individual broker’s choices of privacy and values. The data is their asset, and how they treat that asset is their choice. What is really great about America is that in any given market, there is wide stratification of broker data management values. If anything, I would suggest that the pendulum is leaning toward uncontrolled and highly permissive use rather than tightly managed restricted use.

An emerging trend in real estate is an growing attitude among the nation’s leading MLSs that the data belongs to the broker. There are two well-structured categories of data.

The first category is MLS services that allow participants and subscribers the right to share listing data for certain purposes. Those purposes fall into three categories – MLS purposes accessed in the MLS system; IDX services for consumer display of another firms listing; and VOW services for virtual office client servicing.

The second well-structured category is supporting the broker with the management of the data they own and control. Effectively, in this second category the MLS provides the firm with their data in a clean and updated format via a data feed or API to use as they wish.

For the good of the people

Sometimes, a Realtor Association, MLS, Franchise, technology company or other entity will endeavor to make an argument that broker data should be allowed to be used for a purpose leveraging the age old American notion that it is for the Greater Good of all. In today’s news I read an article about Turkey blocking YouTube and Twitter for the good of the public. Although there is a part of me that agrees with Turkey, most of me believes that censorship in Turkey, or worse yet China, is really for the good of the government rather than the people. The difference here is that Realtor Associations, MLSs, Franchises, technology companies, and other entities are dealing with the business asset of a licensed real estate broker. When you make decisions that impact the use of a broker’s data, you are effectively doing the same thing as infringing on a person’s property rights. The irony here is that the National Association of REALTORS is the world’s greatest champion of property rights. And the truth of the matter is that there is no circumstance that I am aware of whereby a real estate broker cannot opt out of any use of their data.

The Power of the Opt Out

If any broker is unhappy with any use of their data, they can opt out. Often, you can opt out on a listing-by-listing basis. There is little reason why any broker should complain about what anyone is doing with their data when they have this level of control over their data use. The brokers who understand this have learned to use the opt-out as a strategy for managing their strategic business objectives that enable them to leverage their data as an asset. Largely speaking, the more listings a firm has, the greater effort they exercise in leveraging their control. There is a myth that large brokers are upset with MLSs. That myth is false. Large brokers are upset with some MLSs who do not recognize their right to opt-out, or make it difficult to opt-out.

The Opt-Out Fail

Sometimes a firm will opt out only to find that their opt out has not been honored. In one case, a brokerage that opted out of listing syndication at the MLS learned that the MLS provided a data feed to an Realtor® Association shareholder of the MLS for the purpose of a consumer facing website. The vendor for the consumer site was Point2. A feature of the Point2 Association website is syndication to portals with a link back to the Association website. So, this broker who opted out of listing syndication found that the MLS was distributing their data to a third party (the Association and their vendor Point2) without the broker’s permission. Moreover, the Association in turn was syndicating the data to Zillow, Trulia, and many other sites without their consent.

In another case, a firm opted out of Realtors Property Resource or RPR. However, the MLS subsequently entered into a data share with another MLS who provided the firm’s data to RPR without the broker’s consent.

In another case, an MLS licensed data directly to Trulia without the broker’s consent and told them that the only way to opt out of the feed to Trulia was to opt out of IDX!

In another case, a broker opted a celebrity’s listing out of IDX at the client’s request and submitted the correct paperwork. The MLS published the listing to their consumer facing website anyway. When the broker asked that the listing be removed, the broker was told that the MLS is not subject to the IDX opt out policy and refused to remove the listing from their public site.

These things really happen. When I share these stories with our MLS clients, they shake their head in disbelief.

Opt Out Politics

We always tell our broker clients to be quiet about their data management choices and opt-out choices. Typically, only the MLS will know when they opt out and nobody is the wiser. When you make a big deal of opting out – the firm typically stirs a hornet’s nest. Do you think that anyone would notice a few dozen or even a few hundred listings missing from a payload of a few hundred thousand or even 4 million listings? When a firm opts out of something, their competitors circle their agents like recruiting sharks. Moreover, portals have been known to send letters to sellers telling them that their broker is not advertising their listing on their portal. If they would have simply have kept their opt-out choices quiet, nobody would notice.

Brokers are the custodians and owners of their data, and they can do what ever they want with it within the boundaries of Federal Law, State Law, and MLS rules and regulations. Their choices should be upheld by their MLS and they usually are. But most importantly, a broker’s choice should be held confidential. It is not the role of the MLS to publicize a broker’s data management practices to anyone. If you want to improve MLS policy – the rules and regulations committee should consider adding a confidentiality agreement.

{ 3 comments… read them below or add one }

Steve Cook May 7, 2014 at 11:37 am

Hi Victor,

Great article.

Many of your readers may not remember how close we came to losing broker control of listings when the Department of Justice sued NAR in September 2005 to prevent brokers from controlling the distribution and display of their listings online. The suit ignited a multi-year PR and legal battle that resulted in migration of broker control to the Internet, as you described.
In those days, however, the future of broker control was certainly in doubt. Without broker control, it’s unlikely that the MLSs that make possible the best system of real estate data in the world would have survived long in the online world we know today.

I wonder what the DoJ crusaders of yesteryear think of our competitive environment nine years later. It’s hard to tell the difference between the brokerages that they once called “outmoded business models” who operate some of the most sophisticated sites in e-commerce while many of the “Internet-based business models” they championed have been busy opening offices and hiring agents.

Take care,

Steve

Reply

Victor Lund May 7, 2014 at 1:42 pm

You are not exactly correct. The Department of Justice sued NAR to prevent MLSs from discriminating, not brokers. Nothing really has changed, but the Department of Real Estate and Bureau of Real Estate is stepping up their efforts to stomp on paper brokers. They have been contacting real estate licensees and asking questions about how often they speak to their broker, how often they speak to the office manager, how is the broker monitoring their communications with clients, how does their brokerage review their file, etc.

Trust me, even traditional brokers get heart burn with this type of inquisition. Government agencies make the MLS look like a saint.

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George Percel May 12, 2014 at 10:30 am

Great article Victor. Thank you for shedding light on a very touchy subject.
I believe that Brokers are looking for ways to take control of this run-away train. However, we are also the ones who came up with the great concept of wider distribution, more eyeballs the faster the listing will sell. I think this is hokum.
Yes the consumer may start their search by viewing a property on Ziillow or Trulia or Realtor.com, or one of the other 900+ sites. Nonetheless, consumer traffic to the listing Broker has not increased proportionally. As the stats indicate many buyers identify the property on line, but then retain a local, yes local, Realtor to help them through the transaction. That local Realtor will then go to the MLS and find the true information about the listing.
The national portals are becoming the 3rd real estate business model. When they more competently start selling leads back to the Brokers, then the Brokers will react more intelligently to the dilemma of how to market most effectively and efficiently their listing.
I would like to see this conversation continue.
Thank you.

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