MLS – The New Internet Cop?

Here is an article I wrote on the findings and recommendations of a NAR Work Group that addressed REALTORS use of the Internet and the interplay betweent the REALTOR Code of Ethics and MLS Rules and Regs:

MLS Law and Business (pdf)

42 thoughts on “MLS – The New Internet Cop?

  1. Well Russ, you certainly don’t pick the easy stuff, LOL.

    Now everyone go to and click on Homes. See that great big monstrous Banner Ad that says “Search the Northwest MLS”. Big as life there and against the RULES! In fact I’m told that OUR new rule came into being because of THAT ad and now we can’t and they can. Joke on us.

    Now in the last round of RULES governing its members, none of us are allowed to say “search the mls” on anything. So our own powers that be tied our hands behind our backs, while the rest of the world can say Search the MLS all they want. This allows them to beat us at our own game. The legitimate real estate companies can’t do that which the “bottom feeder” sites can do.

    So more rules for us, we get tied up and they win.

    Russ, isn’t this just more of that? More rules and more rules for us until the Zillows and Redfins and techies who ignore the rules win and win again? What good is it to tie up the members when you can’t tie up the competition?

    I’m almost with Robbie now. Hey Robbie, let’s you and I start a Redfin. Just kidding…we both know we’d kill each other and I like your wife too much for that. LOL

  2. …ok now Ardell, I’m feeling like getting a real estate license just not to be called all those nasty names above..:) This exactly what I was saying – all those third party compnies just will get stronger and realtors will end up buying services/advertisement from them.

  3. Ardell,

    As most of you know, our local MLS (NWMLS) is not a REALTOR-owned MLS so these proposed rules would not apply to NWMLS members. However, most MLSs in the country ARE owned by REALTOR Associations. This Report and its conclusions indicate what, I believe, is the disconnect between NAR and its member associations that run MLSs. Now I have to give the Work Group some credit for not ignoring the “elephant in the room” because one of its conclusions was:

    “That the value of โ€œMLS

  4. I already know a bunch of agents suing other agents for “stealing” stuff off their website, like a map. As if they own the rights to showing people where Aurora is LOL. Agents can be pretty petty about “proprietary” issues and are not good at sharing. Has anyone ever done a study on how many agents were ONLY children ๐Ÿ™‚

  5. Well, the mustang has already left the garage (I’d say the horse left the barn, but that analogy feels so last century). Once the data is out there, you can’t get it back.

    I can understand if this was a hot topic in 96 or 97, but they are now just now figuring out they don’t want this? Sorry guys, you can’t uninvent the web. If there was a way, I’m sure Microsoft would’ve done so in 94 or 95.

    Besides, the techies aren’t going to break the laws. You can’t break a law that hasn’t been written yet. By the time it becomes MLS law, it won’t matter because the techies would’ve changed the game or be able to afford all the lawyers they need to fight them.

    I’m glad I have a ringside seat to this fight. It should be fun to watch.

  6. Great article Russ,

    I have to agree with everyone here for the most part.

    Ardell- Your right not only do the current techies not follow the rules, the next generation of kids coming through have never been with out the internet and it’s unlimited wealth of data. I am pretty sure that each generation of kids coming into the work force will care less and less about these rules and regulations in terms of data sharing.
    If you told my little sister that Mattel is closing down because it is afraid of trademark infringers using the data against them, she would look at you like you were crazy!

    Robbie- agreed…. its out. spiders, framing, linking, off shoring, ….
    by the time anyone figures out whats going on… its already too late and that’s for us techies no less some stuffy old rule maker.

    Now I have a reeeeeal novel idea. Instead of being so concerned about not share data, why don’t Realtors (myself included) spend some of that 60 billion on creating more user friendly MLS’s. If they were able to do this it would single handedly crush the new upstarts like zillow, redfin, and every other company who is building slick consumer friendly interfaces.

    Why then are these companies spending so much time and money not afraid of this? Because the MLS’s bicker and squabble over petty rules and don’t see the clear writing on the wall.

    If anyone out there doesn’t believe me… just check out a few of Redfin’s VC backer’s (Sequoia Capital) other “Crazy gambles”

    You might know a few of them: (Yahoo, AOL, Netscape, Paypal, Plaxo, LinkedIN, E-Harmony, etc. etc.)

    These guys take risks, but they are calculating their risks based off of Realtor’s inability to come together and spend the money necessary to squash these upstarts.

    And lets don’t even get me started about the new kid on the playground….Zillow.

  7. Ardell,

    The quote regarding ‘enhancing’ the MLS came from the following key issue addressed by the Work Group:

    “Ensuring โ€œMLS

  8. Ardell, you make a great point. The purpose of the MLS system is to create a marketplace for buyers and sellers, where participation requires payment to MLS members. By creating a marketplace, the MLS facilitates the buying and selling of real estate, thus increasing the number of dollars changing hands. By requiring payment to brokers/agents, the MLS ensures that its members get some of those dollars. The MLS, like any economic actor, is concerned about its well-being. Accordingly, any enhancement or refinement of the system will not stray from its goal of an efficient marketplace that siphons off a percentage to its members.

    Giles, I don’t think the key is creating an alternative MLS with a better interface. Regardless of the interface, buyers and sellers will gravitate to the marketplace that has the greatest number of participants — the bigger the marketplace, the more potential buyers and sellers. Thus, the real challenge is to create an alternative to the MLS on such a scale that it becomes an option for both buyers and sellers. If that alternative also has a great interface, then all the better. But unless you can provide the user with a viable market, the interface is irrelevant as the user won’t want to participate.

    FSBO Law Blog.

  9. Russ — we’re on the same page. A “value proposition” that “transcends through its Members” is a much more eloquent way of saying a “marketplace” that “siphons off a percentage to its members.” (I think, anyway…)


  10. I think what the MLSs are missing is that the data only has value if consumers can use it the way they want to use it. First rule of any business, you gotta make the folks writing the checks happy.

    If they keep it all to themselves, consumers will seek out alternatives(and their data’s value will be dramatically reduced). So when do RedFin & Zillow go public again? ๐Ÿ™‚

  11. Why won’t MLS just limit the feed they distribute publically? I mean, they can identify which data should be publically available, in what amount and just give access to the adjusted feeds. Of course if the new data will be too poor – then it won’t help. But making regulations on the paper doen’t really help much either. By standardizing the data feed will put the business back into the hands of realtors and Redfin and Zillow won’t have anything different but fancy interface presentation where actually private websites will be able to compete with. Of course it only will work if data is not poor than the one the “third parties” (Ardell, not buttom feeders ๐Ÿ˜‰ ) use.

    Does it make sense?

  12. If you get what you wish for, Mr. consumer, I think what WILL happen is no one will have a decent agent to go to. All the techies will take over the industry, and you will have to go find a house with a Microsoft employee who sells houses in his spare time :-).

    Robbie says, “I think what the MLSs are missing is that the data only has value if consumers can use it the way they want to use it.”

    Robbie, what value is it to a real estate company to give data on a website that “consumers can use (it) the way they want to use it”?
    What you propose would result in a seller paying $495 to put the home in the mls and the buyer going directly to the seller to buy it. Total fees paid $495. Total agents in picture 0.

    It’s like a plumber spending money on writing a manual on how to do your own plumbing repairs and giving it to you for free. Why? So you don’t have to call him?

    Please explain Robbie, why the agents and real estate companies should give anything at all. Why shouldn’t they just start their own private sharing mode (which is what mls is supposed to be) and opt out of the whole thing. They clearly CAN put that horse back in the barn.

    Now tell me why they should not do that? From THEIR perspective, not from the consumer’s perspective. MLS is not a “Public Service Announcement” to the world of what is for sale. It is a private announcement to its members, and clearly it needs to get back there for the real estate industry to be profitable without Redfins and Zillows and bottom feeding sites.

  13. Answer me this – Why are stock quotes free? Why come I can find terabytes of financial data for free on MSN, Yahoo, etc? How come Merrill Lynch, Morgan Stanely, and Goldman Sachs all have market caps north of $60 billion despite this?

    The answer is simple. If the only thing of value that Merrill & it’s competitors produced was market data, they wouldn’t be worth that much. The value they create is that full service broker can increase & protect a client’s assets better than a client can alone. If a broker can make more money with my money than I can, I’m happy to split the profits with them. I’ll be better off and so are they. Remeber, data does not equal knowledge.

    Similarly, if Mr. Consumer is confident that their services aren’t worth the premium they charge, he’s welcome to open an account at Schwab & other discount brokerages and go it alone. And if he makes a killing or get killed in the market. If he makes a killing, the rewards are his & the IRS’s alone. If he get’s killed, he’ll have no one to blame but himself.

    The value that a real estate agent creates is leveraging their knowledge about a the market to address a client need in a more cost effective manner, than the client can do alone. There will always be people who will pay the premium for the experience and the convenience of having a full service agent. Similarly, there will be people who want to save a buck or ten thousand and go it alone. If a professionally trained agent can’t sell house for more, or buy a house for less, than a client could do alone, what value are they creating for the consumer?

    Why are the MLSes afraid to give consumers the option of paying for service, or not paying for non-service? I think the answer is obvious, everybody wants the 6% gravy train to continue, despite the fact that it cannot.

    RedFin and Zillow aren’t bottom feeders. They are brokers that have as much right to the data as you do. They just believe that they can use technology to lower the price of a transaction for a customer, give them a competitive advantage over traditional brokerages, make some venture capitalists and others wealthy, and still have a profitable business at the end of day. How can you stop RedFin & Zillow, without killing Coldwell Banker, Windermere, John L Scott, etc?

    If the MLS doesn’t give Mr. Consumer what he wants, he’ll just FSBO his house on Craigslist, eBay and anyplace else where there are lots of cheap eyeballs. Eventually, this alternate marketplace, could become viable, and perhaps even dominant. Does the MLS want to become the next newspaper classified advertising? The MLS may control the data, but they don’t control the people who write the checks.

    Sure, the MLS can bottle up the data and prevent Trulia, PropertyShark and non-brokers from getting at current data. Maybe the MLS can take the next step, take all data off the web, require that everybody views all MLS data w/ DRM enabled viewers that show CAPTCHAs instead of computer OCR-able text? Perhaps, they’ll resort back to books, and format the database server’s hard drive?

    The people who write the checks have decided they like the internet and all it does for buyers & sellers. It enables a more efficient marketplace. The MLSs can change to that new reality or they can join the buggy whip & the stock ticker on the scrap heap of history.

  14. WOW! Robbie SPEAKS! Robbie, I see you are a ittle confused about what a “bottom feeder” is and is not. For instance, Redfin has a significant flaw in their business model, but it is not a bottom feeding site. When I say “Redfin, Zillow and bottom feeders”, I separate them that way to show they are three separate and distinct business models. I will ready your full comment and post separately.

    Just wanted to clarify that Redfin is NOT a bottom feeder. We don’t know yet about Zillow, but I think it will be more like a at first and a bottom feeder in a second phase, same as Realtor. com did. But jury’s still out on that one.

  15. Re: NAR & MLS deep linking

    Deep linking is perfectly legal in and of itself. It is merely a technology. How you use the technology is what’s relevant as far as the law goes. What usually is illegal is framing, displaying copyrighted photos (including thumbnails) and copyrighted text. Fair use is the standard defense but make sure your use is noncommercial or educational.
    Factual data is free for everyone as far as copyright law goes.

  16. Robbie, there are not many agents in this Country who understand real estate as it exists today with all of the changes. Don’t feel badly if you don’t know which pigeonhole I am placing all the business models in ๐Ÿ™‚ That’s what’s so great about Rain City from my perspective. I get to see how those outside the industry view those inside it.

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