Enabling an Ecosystem of Innovation for Real Estate

by Marilyn Wilson on April 23, 2015

The MLS technology model has been relatively flat-footed for some time now. Many MLSs offer one MLS system, one Public Records system and other services like showing appointment software, document management, and they call it a day.

In Part IV of his blog series last Thursday, Bob Bemis outlined a vision of a brand new way for MLS platforms to operate. A new program called AMP™ or Advanced Multi-List Platform™ that would leverage RPR is a very interesting and even scary concept to some. In its simplest definition, AMP would be the “back end” of an MLS. It would provide the database that all listings, solds and other real estate information are fed into and stored in right now. In today’s model, the database of listing information is inextricably linked to the rest of the MLS system in most markets. In this approach, the database would be separated from the agent-facing portion of an MLS system, where functionality like add/edit, CMA, reports, and prospecting live.

As Bob Bemis highlighted in his series of articles, there are many weaknesses with this traditional MLS model. The three largest, in my view:

  1. It does not consider the needs for brokers to differentiate themselves from one another.
  2. It creates cost and duplication of effort for an industry that already suffers from tight margins and a lack of technology adeptness.
  3. It does not allow agents and brokers any choice in the tools offered by the MLS and in many cases forces agents to pay for tools they don’t want, don’t need, and don’t use.

How long have these problems existed? For as long as I can remember. When I first began consulting in the real estate industry more than 10 years ago, I remember my then business partner, Mike Audet, talk about the need for a “plug n’ play” MLS. He had several blog posts and white papers published back then that talked about the need to de-couple every module within an MLS system to allow each organization to pick their own custom collection of tools that would best serve the needs of their organization. Unfortunately, at that time there was no appetite from MLS technology providers to try this practical but revolutionary approach.

Bob mentions in his article that some progressive MLS leaders today are trying to push the envelope, asking fundamental questions about smart ways to re-invent the MLS. One of those leaders is Timathy Dain, CEO of SIRMLS. I had the honor of working with Tim and his organization nearly 3 years ago, to help them think about completely new ways of defining the role and structure of the MLS organization. This work was being done before any of the latest industry initiatives like Broker Public Portal, Upstream and others had even been contemplated. After hearing the news about AMP, I had the pleasure of interviewing Tim to better understand what drove him to ask for such a revolutionary approach to the MLS technology model:

“In 2013 our future scenario planning led us to several conclusions that helped build our road map for the next five years. From the creative writing of you (Marilyn Wilson), Rob Hahn, and one other consultant we reached several conclusions. First, a small MLS is better-off mobile. Second, the portals are not going to vanish, therefore seek partnerships that enhance member services. Third, data is universal and an MLS database alone cannot provide the full property picture. We understood that if we could separate the MLS database from the core functionality like search, CMA, hot sheets etc. we could get closer to a simpler definition of an MLS organization. We wanted to go back to basics, placing the bulk of our energy on creating the most accurate and rich database we could for our members. We also wanted to partner with those that had access to data sets other than just MLS listing information. We could see the trend toward big data and wanted to find a way to help put our REALTORS® back at the center of the transaction by arming them with all kinds of information related to listings like public records, schools, neighborhood information and demographics that we could comingle with MLS data in any application.

“More importantly, we wanted all of these data sets to be seamlessly connected so they could learn more from one another in a single property record system (eliminate duplication), and help our members deliver the most up to date and comprehensive information available so they could use that information to educate their clients.”

Tim goes on to say, “By doing this we thought we could achieve two important goals. We could help our REALTORS® have the best data available and at the same time reduce the size of our own database by working with someone who could reduce or even eliminate our costs of database hosting and maintenance. Bottomline…. we wanted to help our subscribers have smarter information and more freedom to use it in their native environment than anyone else. We felt the old/current MLS system model was not addressing that important need for a single, universal data repository.”

So how well does AMP match the vision you had outlined way back in 2013?

Tim told us that from what he’s seen so far, AMP is a really close match to his organization’s vision. He told us that AMP is NOT an MLS organization or even a full MLS system – it is simply the national database that can fuel development of a whole bunch of interesting modules and functionality that can help REALTORS® be smarter and more well-prepared than anyone else. Tim also strongly underlined the need for AMP to adopt the RESO Data Standards as they become available to help facilitate industry-wide plug n’ play opportunities.

Tim told us that the key to success for RPR is to take this idea beyond just a vision and do the heavy lifting to make it really easy for current MLS technology providers as well as innovative upstarts to be able to easily connect to their system. This may require a re-thinking of the business models and how agents will experience their MLS system in the future.

Walt Baczkowski, CEO of the San Francisco Association of REALTORS® also saw the opportunity for an AMP-like product several years ago. The first thing that Walt asked me to share with our readers….”AMP™ is NOT a National MLS. If you think that’s what it is you should stop reading immediately!”   Why is he so adamant about that? Because he believes that de-coupling the MLS database from the agent-facing features has the potential to re-invent the way MLSs look at their role in the industry, making them indispensable to their subscribers for years to come.

So when asked what inspired SFAR’s interest in AMP here’s what we heard:

“When I arrived at SFAR, nothing had been done to our MLS system configuration in about five years. We tried to start making changes to it only to have the vendor contact us and say they had to hold off on the changes as they were working on another project. We also quickly realized that we were overpaying for a lot of services. SFAR was paying for all of our members to use services that were actually only being used by a handful of subscribers.”

Walt quickly began to question why SFAR was paying for several services that his members were not taking advantage of, not aware of or not interested in. What was his conclusion? “The MLS approach to technology is backwards. The MLS pays for technologies that members don’t use instead of allowing them to proactively choose the menu of technologies that work best for their individual business needs. “

Walt brought forth a simple analogy to illustrate his point. “My house is wired with electricity so that I can plug in whatever appliances, lamps and electronics I would like to. Nobody forces me to buy a lamp if I would prefer a neon light. Why are we “forcing” members to use the suite of technologies that we have chosen for them? Why not just give them the equivalent of an “electrical outlet” and let them plug in their technologies that work best for their business?”

Walt’s investigation led him to the same conclusion that Tim’s did. He said, “Why don’t we just build a robust database that brokers and agents can plug in to any number of technologies?   Why not separate all of the features of an MLS system from the database and then let each broker decide what features are best for his or her agents? In this scenario in theory every broker could choose their own branded listing input, prospecting, CMA and reporting to give each company a way to differentiate their core tools from other brokers.

Walt says, “What if SFAR could offer its members not just a few, but a myriad of “database-connected” technologies that could easily be connected to SFAR’s information in minutes? This would, of course, require training for brokers and agents, but could open up all kinds of ways to tap into the greatest minds in Silicon Valley to build exciting, targeted solutions for REALTORS®. Since we’re located right next some of the best technology minds in the world, this is a VERY exciting proposition for us.”

Now let’s look at another benefit that Walt suggested too. If MLSs weren’t required to offer many under-utilized services they might be able to re-deploy the monies. They could reduce the cost of service or pour the newfound savings into amazing training programs or incredible levels of customer service to help each REALTOR® be more successful.

From what I understand AMP certainly provides a lot of food for thought as RPR begins to work with some thought leaders at SIRMLS, SFAR, and others.

I would love to hear your feedback on this exciting idea.

Disclosure: WAV Group has provided research services for RPR in the past.

{ 7 comments… read them below or add one }

Rick Fioretti April 23, 2015 at 4:48 am

Thanks for the article. One of the reasons the MLS/Boards are asked to provide applications is to lower individual costs for members with a site type license. I like the idea presented but do wonder if brokerages would value membership in a board less if these discounted products were not offered. It may become a competition for who has this master data feed for the lowest price. It may be attractive to the business models based on the lowest overhead for the buck but not really as much for the full service model companies. We move closer and closer to big data being all we talk about. Control at the brokerage and agent level seem to be drifting further away. The work RESO is doing should help the plug and play aspect so do we really need one more giant company managing our data?

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Jonathan Bednarsh April 23, 2015 at 6:11 am

Marilyn – as you know, the technology model advocated by Bob, Tim, Walt and others has been widely adopted in many other industries with great success. We’re at an exciting bend in the road today in real estate when leaders from all “sides” (MLS, broker, tech, etc) are demanding easy, open access to the information needed to help consumers & professionals buy, sell & rent easier, faster and more effectively.

Emerging and proposed data access platforms will reduce the costs for all parties to develop innovative products and services. As you point out Marilyn, these savings can be redirected to more productive uses.

Hopefully there will be a number of options out there to help this model take off in our industry. The RPR initiative sounds promising. Zillow is obviously making a big play in this area as well. Of course we’re very busy at Onboard preparing for the launch of our Simplicity platform which builds advanced, modern data access over a property-centric database with public records and MLS listings layered with dozens of related types of local information. I’m sure there will be more. But clearly folks like Tim and Walt will have choices to see their vision fulfilled, and I believe that will happen much sooner than later.

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Michael Audet April 23, 2015 at 6:36 am

Hey Marilyn, great post and a good overview of the AMP model. Living in the broker/agent side of things now with Real Estate Webmasters I have some new or at least validated perceptions on this whole topic. As you said, many moons ago, I envisioned the decoupling of MLS at key points. One point that was not mentioned in the post, at least not in detail, is how you capture the data. Even if you use AMP the data still has to come from somewhere. Today that is the MLS vendor. I still believe we need a vendor neutral listing entry/management system. Ideally this system would allow brokers to originate all of the data at their end so they have it on their own systems and can then push it wherever they wish, the AMP, the MLS system, a data warehouse, etc. The problem we face today with MLS vendors is the fact that they hold all the keys to the data origination. If we could put origination in the hands of those who actually own the data we would eliminate a number of other problems that exist because organizations that don’t actually engage in Real Estate hold data for ransom from the real estate professionals that originate the data. With an accessible/open single database things would change. Living on the broker/agent side of the fence as I do today I can see huge innovation occurring as a whole new wave of vendors compete with tools that access and use this data from a single source. MLS is here to stay, I hope, but we need to pull our heads out of the idea that MLS is just technology. MLS is not the MLS system. MLS is a vehicle for cooperation, to buy and sell real estate and having worked all over the world I can confidently say we have the best system in the world. But’s it’s the cooperation, not the technology that makes it so. We need to stop making technology and third party control of data the roadblock. On a final note, the one thing I would be cautious about with AMP is just transferring that control to a different 3rd party. Control needs to be with the Brokers, they are the business. If that can be done with a model like AMP, great, but ideally I would rather see a big data warehouse like the new Broker system as that tool.

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Douglas W. Kenny April 23, 2015 at 7:27 am

While I have a great deal of respect for you, Tim and Bob, the train you riding has already left the station.
Consider:
The cost to an MLS for mls software and public record data is already below $120 per year for most users. Really, this is not the problem.

Cafeteria style pricing sounds great, but will it benefit everyone? I doubt it.
Consider: Half of all agents don’t participate in a single transaction during a calendar year. Provide them with cafeteria style packaging and their bill drops to what, $30/yr? What does the markup need to be for the MLS to make money at that rate?

State boards and even NAR are dealing with strategic plans that consider the loss of some or (gasp) all MLS revenues. That’s where the train is headed.

The logic behind agents having a nation-wide MLS is irrefutable. The tragedy is that the consumer already has one. It is called Zillow.

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Ronald Gombach April 23, 2015 at 7:53 am

The points (1-3) — third paragraph — indirectly point to one of the main (if not the main) conflict thwarting progress. Sales agents want more business (meaning, ultimately) fewer agents. Brokers/Owners want more agents. Broker principals should be spending their efforts tearing down barriers that enable the sales agents to “make it easier for buyers and sellers to transact business.” While the agent population would dwindle (to the chagrin of NAR and State Associations and MLSs). But innovation will find new roles for those marginal agents anyway. The pie will grow. (I have maintained for years — from experience with my peers (buyers and sellers — not agents) that more folks would purchase more properties more often, if the system weren’t so conflicted and it was made easier for them to engage with real estate professionals — true professionals that is. Many folks are sidelined, wanting to find “expert” help … they just don’t know how or where.

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Bill Tison April 24, 2015 at 8:19 am

I agree with one point of this report. The MLS needs to be the sum total of the real estate information including at least MLS, tax roll, schools, demographics, foreclosure activity, liens, phone directory, house plans, etc. The current antiquated function of linking to non MLS websites increases the workload and pricing.

I don’t agree with the concept of “here is the data, now choose your own program to present the data to your member or the public”. The Realtor needs a core set of programs to conduct business. Many do not have the resources, knowledge or training to keep track of and implement the myriad of programs available to Realtors. For the new member, the task or selecting programs can be daunting. The costs can be staggering!

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Tom Hurdelbrink May 5, 2015 at 6:33 pm

A hot topic here. Good points by a few folks above. I along with many MLS execs have supported the idea of a national listing repository to benefit brokers. Prior initiatives ran into politics or scope expansion that foiled the basic premise. Control of the central data pool is a big issue. Yet, a true partnership could do this. I understand brokers are deeply concerned and looking for help/solutions. My comments may sound self serving and there is a lot of laundry that could be exposed about the pre-launch of RPR. But, if we focus on performance there are enough questions to raise like what is the track record? Was RPR supposed to make $50+M per year in profits? Isn’t the 5-year cost near $120M with revenues recently reported at less than $1M? Did NAR pass a 50% dues increase a few years ago for Gov’t Affairs efforts and then make RPR dues funded, which diverted half of those funds ($20M) per year to RPR, instead? Doesn’t that sound like a total financial miss closer to $200M? Adoption numbers reported at many large MLSs is low like less than 10%. Isn’t NAR now asking its local AORs and MLSs to spend some of their own corporate treasury on national GA funding? Well, it may not just be about the financial debacle because I may be missing a clear strategy. But this does not sound like a successful service or business partner. Great marketers, though. Are these executives going to be better at backend MLS data management or at doing data management for Upstream? Maybe this is not really scope expansion…am I just too AMPed?

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