A Tech View on Consolidation

by David Gumpper on March 19, 2018

Consolidation of Associations and/or Multiple Listing Systems (MLS) at any level has its pros and cons. Consolidation can tip the scale in the way that it improves the business, the industry and most importantly, how it impacts all the stakeholders. This of course includes the consumer who is at the top of pyramid!

Before we get into the consolidation, my views are from over 14 years as an IT Leader in a Brokerage. I have experienced the outcomes of several MLS’s provider changes and consolidation of Associations and MLS’s.

The Beginning

Starting at my new position in a brokerage, I had to learn the pitfalls of working with real estate technology. It was very difficult to understand the complexities associated with pulling listing information from 5 Associations in a three-county area, each with their own MLS Provider. Luckily for me, I only had 4 data feeds and vendor to collect it all into one file to process for the website and other systems using information. HaHa! It also meant I had to deal with 5 different IDX rules which were very inconsistent between the 5 Associations.

As you can imagine, the extent of this challenge required significant support on both the Brokerages IT team and the vendor. Removing duplicate properties and normalizing the offices and Agents information, meant hours on the phone and in front of a computer. We spent hours programming fixes and reviewing changes on a weekly basis.

Picture the processes required to correct a simple data dictionary change by one of the Associations or worse yet, a complex change such as switching MLS Providers. These changes usually began with little to no notice to the Brokerage or the IDX vendor.

Oh, I almost forgot to mention the trials and tribulations with the vendor. First was the cost. A significant portion of the IT budget was in IDX aggregation. Additionally, technical issues would always arise such as data feed corruption or transport failure that would last for days.

Additional costs from the vendor! Whenever an Association implemented a change in the data dictionary, there was always a risk analysis to determine if the cost to make the change was absolutely necessary, or could we get by without the update.

Taking Control

After a few years of managing this nightmare, a decision was made to bring the IDX data collection in-house. Taking more control of the process reduced the potential failure points in processing and had a significant cost saving to the Brokerage.

Benefits of taking control were having direct communication with the Associations and their MLS Providers, instituting a level of priority to resolve problems, and reducing operational expenses to provide listing information to the Brokerage system’s and tools. All of these points could now be addressed and rectified quickly and reasonably with the Brokerage’s IT Team.

But, even taking control of the listing data feed has its complications. Just to name a few, the building of a de-duplication property tool and rules engine was extensive and always had to be adjusted to resolve the one-off scenarios. A significant amount of time was spent on the phone talking to people at the 5 Associations and 4 MLS Providers just to stay current and keep ahead of the IDX data aggregation game.

Finally, Consolidation

There are several types of consolidation I have experienced; each with their own set of pros and cons.

Associations Consolidating under a Regional MLS Organization and one MLS Provider

Pros on this type of consolidation are how effective it becomes when dealing with the data processing, cost savings associated with a single data feed, and support and maintenance of the back office. One data feed with one set of IDX rules from all the Associations.

Hallelujah!

The cost savings in processing, people, and technology with this type of consolidation was significant. Tallying a whopping 42% cost reduction in IDX processing which includes labor for support, the processing time, and change management costs every time an Association decided to make a data dictionary modification.

As a result of a single data feed, there was an organic de-duplication of data at the MLS level and a removal of multiple failure points in our processes to support multiple data feeds. The simplicity to implement a single set of rules for IDX display, and gain understanding of what Agents could and could not do as part of the overall MLS Rules & Regulations, became apparent and easy to manage.

Communication was another large benefit. The ability to communicate with a single person versus 9 minimized the amount of time to discuss changes and resolve issues with the data feed. Additionally, the MLS became a great partner to “stay in tune” with the MLS roadmap.

As a member of a Regional MLS, adoption of standards like the Real Estate Standards Organization’s (RESO.org) Data Dictionary occurs more quickly as the MLS has more resources to support and implement such industry initiatives and NAR’s MLS Policy IDX mandates.

A side benefit of consolidation to a Regional MLS is the simplicity for Associations to consolidate their services. More on this later in the article.

Some cons are that you are now a member of a Regional MLS. There are more people who have a say and may influence technology decisions, IDX rules, and roadmap of the MLS. They may not always have the same vision as you or the Brokerage’s business practices. It is imperative that someone from the Brokerage is actively engaged at the Association and/or MLS level to correspond strategic directives to you and the leadership team.

Bottom line, a Brokerage cannot be a passive bystander and must be involved in its Associations and MLS’s.

Association Consolidation

My experience with Association consolidation began when two Associations who were both members of a one Regional MLS decided to merge. Because the Associations were members of the Regional MLS, the merger was more simplified than a merger of Associations belonging to different MLS’s or MLS Providers.

Great news! The merger did not have a single impact to the back office. The MLS and Association handled the modifications of any data, and only required the Brokerage to download the data for its back office.

On the business side, the consolidation seemed to bring Brokerages, Agents, and Staff together. There wasn’t this demarcation or geographic barrier to separate the groups. Anecdotally, the result of this has improved the ability for the Agents to better assist our customers in buying and selling real estate.

I am sure there are small minority of people in these Associations who wished it could go back to “the way it was”. My view was there has been very little negative consequences from the merger of the Associations. Side note: The merger and transition by the leadership of the Associations were conducted in a very positive and professional manner. There was a significant amount of communication of the plan to all stakeholders prior to merger.

Conclusion

My experiences with consolidation has been one of a positive benefit. Tipping the scales towards improved business practices and delivering a better service to our customers. By far and large, the biggest technological benefit of consolidation is the significant cost savings Brokerages and Vendors. Savings in time, people and processes are a huge benefit to all!

Where is the Negativity?

Whenever I hear people say consolidation or mergers cannot occur because of ‘local nuances’ in a market, I wonder under what biases these local nuances are perceived.

Why?

Technology doesn’t have biases, only actualities. Whatever local nuances are encountered in property information, technology has the ability to easily overcome these barriers.

Decisions to not merge or consolidate should only be made from sound business justifications. In IT, technology can solve any problem encountered by the business. What is required to justify consolidation is measuring the Return on Investment (ROI) with an eye towards how the consolidation benefits the real estate consumer.

It is my opinion; the benefits of consolidation tip the scale to a more efficient and effective method of delivering an exceptional experience to our customers. At the end of the day, this should be the objective for everyone in the real estate industry.

If you have questions about the good or bad of consolidations, the WAV Group can help. We have been one of the leaders in the industry who can guide you through a review of your strategic plan and outline the best approach which fits your organization and members. Call us and schedule a time to talk!

{ 1 comment… read it below or add one }

Kevin McQueen March 21, 2018 at 6:57 am

David, thank you for sharing your experience with the world we work and play in every day. I have association/MLS clients who say, “consolidation should be driven by the brokers” and I wholeheartedly agree. One of the challenges is that brokers are competitors in the cooperative space of MLS and they don’t easily come together to speak with a unified voice. That has been changing over the past 5 years with major investments in broker-driven investments like Upstream and the Broker Public Portal. Brokers are more involved than ever in RESO. We need more case studies that shine a light on the delight that occurs when brokers gain access to a single data feed for IDX and back-office. Keep up the good work David. I expect great things from you and WAV.
– Kevin McQueen

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