Realtors and MLS Systems Are Still Valuable Despite Calls For Their Demise

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Sure, Zillow and Trulia are popular portals for consumers to shop for homes, and there are a lot of fantastic luxury properties marketed as hip pockets, but does that spell the end for MLS systems everywhere?
Sure, Zillow and Trulia are popular portals for consumers to shop for homes, and there are a lot of fantastic luxury properties marketed as hip pockets on select sites, but does that spell the end for MLS systems everywhere?

Inman contributor Creed Smith wrote a column published on the real estate news site suggesting that the system real estate agents use to access listing information, the Multiple Listing Service, was on the way out. It ignited a heated debate among Inman staffers and commenters, earning a reply from Inman managing editor Matt Carter. 

If the real estate industry were invented today, there would be no NAR (National Association of Realtors) or MLS (multiple listing service), and perhaps no franchises — there might not even be real estate brokers.

The MLS was built for three reasons:

  1. To place all information on homes for sale and sold homes into a central location for brokers.
  2. To create a percentage of sale price payment agreement between brokers.
  3.  To elevate NAR and the MLS companies to almost godlike status with monopoly power.

The marketplace now demands a system built on their desires, not those of NAR. How would you build a system for selling and buying homes based on market desires with today’s technology and market dynamics? You would offer an open-source international database (website … portal).

You can read Smith’s full-length piece on his Demon of Marketing website, but we wanted to get the perspective of local brokers and Realtors on the cutting edge of real estate here in North Texas as to whether we should be writing a eulogy for the MLS system.

“If you have ever worked commercial real estate where there is really no main MLS, you would know where the problems lie. If you have no main source to search for listings, there are then too many places to look, and many homes would be lost to the average agent,” Dallas City Center Realtors director Kevin Caskey said. “We are seeing that with the hip pocket or ‘coming soon’ market, where everyone is wanting to start a Facebook page or a site for those specific type of listings. But it will soon be spread too thin and no one will know where to look, so they will go back to our basic MLS system again once the market slows down.”

Likewise, Caskey thinks that professional associations that license and censure real estate professionals, such as MetroTex Association of Realtors, National Association of Realtors, and others are vital to maintain ethical standards.”I cannot imagine our industry without these organizations, but I am one of the many agents that utilizes their resources to be on the cutting edge of the industry,” he said. “There are too many individual or small brokers that do business without any education or direction, and they would be awful to work with if they didn’t have these groups for support.”

Broker Clay Stapp agrees that MLS organizations have been important for buyers, sellers, and real estate professionals, but their size, influence, and structure may change in the future.

“While it irritates me to have someone write such a narrow-minded and short-sighted article, I do think that things are going to change with the MLSs over the next few years. They are just too far behind in terms of technology and Realtors are tired of it,” Stapp said. “It is pretty sad actually, hence the reason Zillow and Trulia are popular places for consumers to begin their home search. There will probably be some sort of consolidation of the 812 MLS’s that currently exist today. Hopefully, the ones with the best technology will win out over the rest. HAR [Houston Association of Realtors] seems to be leading Texas right now.”

Stapp has recently launched a social network for real estate professionals called Hip Pocket. The network is one of the first of its kind, allowing a space for Realtors to connect to market and share information. It’s not unlike The Unlisted, which is also a site that hosts hip pocket listings, but is less about social networking, and more about shopping properties to a more exclusive pool of potential buyers.

“I don’t see MLS going away any time soon. It still houses the most reliable information which Realtors and our clients depend on. Disclosure is still important for keeping up with true values as a whole. However, there will always be a need for sharing non-MLS or pre-MLS properties. Whether market conditions are good or bad, particular clients will continue to request that their home not be put into MLS,” said Daylon Pereira, co-founder of The Unlisted. “The Unlisted works alongside MLS, and not as an alternative. The photos which are uploaded to The Unlisted are the same resolution as MLS for easy transition once an agent takes the listing active. We are even working on a feature that will soon allow a user to create a predetermined date which a property will go into MLS so that it automatically deactivates on The Unlisted.”

These aren’t accessible to the general public, but they aren’t meant to replace the MLS system entirely. And besides: Zillow and Trulia both draw listings from MLS systems across the nation, so the information is already out there for homebuyers in many markets.

Smith asks: If homebuyers aren’t using Realtors for the vast majority of home searches, what is the purpose of an agent?

“I don’t think the general public realizes that we only begin to earn our money once the property is found,” Caskey said. “Our skills kick in dring the initial negotiations, and even more so when it comes to getting through the repair issues. For instance, I know that most ‘For Sale by Owner’ deals fall apart during the negotiation processes because no one knows what the heck they are doing.”

Clients also benefit from the market expertise of a seasoned Realtor who knows how to navigate closings, has a pool of talent and resources from which to draw, and can help a homebuyer save time and money.

“Sure, I can file my own taxes if I want to, just like anyone else who has the time. I can dredge through the tax documents and waste a week of my life, or I can use an online program like TurboTax. I might save a few hundred bucks — hell, maybe a thousand or two. But, my time is worth more than that. Much, much more. Plus, there is always a nagging thought in my head for the rest of the year asking if I missed a big deduction or worse, I over paid Uncle Sam,” Stapp explained. “Or I can go to my CPA and quickly give her the information she needs and she can prepare my taxes for me. Not only do I save a ton of time, I don’t have to worry about it because I know she is great at her job and knows what she is doing — and thank you Holly Nicholas.

Still, hundreds of thousands of homeowners sell their own homes each year, using Zillow, Trulia, or perhaps even a flat-fee brokerage to score a web presence, then perhaps placing a sign in the yard. What’s wrong with going the DIY route?

According to the NAR survey in 2013 and 2014, in both years 43 percent of buyers found the home they actually purchased by themselves on the Internet. Another 9 percent found the home they purchased by seeing a yard sign. That’s 52 percent of buyers who did not need the MLS or a broker to find the home they bought.

According to the same NAR surveys, only 33 percent of the time did buyers buy the home the broker found via the MLS.

When you add to our initial 52 percent of buyers finding their own home to the buyers who purchased directly from builders or for-sale-by-owners, the percentage of buyers not needing the MLS is two-thirds of all sales. If homebuyers don’t need the MLS, why would a seller?

That’s an interesting point from Smith. But as Stapp points out, a homeowner who lists their own home has to learn on the job about marketing, photography, staging, negotiation, and contracts. But even if the seller does manage to navigate all of these steps in a way that actually draws in a potential buyer, how are they going to show their home in a secure way? How are they going to protect their property from fraudsters? How are they going to connect with other real estate professionals to ensure that those who tour the property are pre-approved and can actually afford the home? It’s not about what’s wrong with doing it yourself, it’s about what could go wrong.

“The article infers that the only thing a Realtor does is find someone a home by searching through the MLS. Finding a home on MLS is a mere fraction of the job a Realtor does and often times we find off-market homes for our clients instead (hip pocket listings),” Stapp said. “As of March 17, three of my nine closings for 2015 (33 percent of my total production) were off-market deals and I have over $8 million under contract that is all off MLS. From what I hear, 30 to 40 percent of deals trading off MLS is common at brokerages like Briggs Freeman and Dave Perry-Miller these days. So, agents are obviously communicating in other ways to match buyers and sellers.

“There is a reason that 88 percent of transactions still involve a Realtor,” Stapp continued. “Realtors provide value and experience that most people don’t have, and that isn’t going to ever change. It would be extremely difficult to argue that someone who buys or sells five or six homes in their lifetime can do as good of a job as someone who closes five to six transactions per month.”

We’d love to hear your perspective in the comments!

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Joanna England

If Executive Editor Joanna England could house hunt forever, she absolutely would. Instead she covers the North Texas housing market and the economy for While she started out with the Real Estate Center at Texas A&M University, Joanna's work has appeared in The Dallas Morning News as well as several local media outlets. When she's not knitting or hooping, or enjoying White Rock Lake, she's behind the lens of her camera. She lives in East Dallas with her husband, son, and their furry and feathered menagerie.

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  1. Cody Farris says

    I think Kevin and Clay make some great points, especially what Kevin said about the frustration of not having a good central source of information for commercial properties. That’s what the residential landscape could look like if the MLS as we know it went away. I do find fault with a quote from the Inman article, however: “…43 percent of buyers found the home they actually purchased by themselves on the Internet.” Well, not exactly. More needs to be said about “on the Internet”. In all likelihood, it was the listing broker entering the property in the MLS, which ultimately fed to hundreds if not thousands of aggregated sites all over the country, to make it possible for the consumer to find it “on the Internet”. The buyer may have initially found the property on his or her own–through our advertising dollars, by the way–before engaging a Realtor. There is, however, a takeaway here for Realtors: the public is seeing less value in our services, and the big question is why. Part of the problem is inexperienced agents, or previous bad experiences with an agent, or so-called reality shows where all the agent seems to do is open three doors, and Voila!, the buyer chooses a house (often accompanied by the amount of commission in sparkling font splashed across the screen). What a great way to make a living! Or how about this – the agent who drives his or her Bentley to present an offer to another agent, in person, over martinis. Wow, that does look glamorous! Those same programs might also show the agent asking questions like “Where would you put your sofa?” rather than the more difficult questions about contingencies, lender-required repairs, red flags in an offer (if you represent the seller), the “domino” effect of late closings, rate locks expiring, month-end drama, etc. etc. etc. This leads to what I always tell my buyers, who think my job looks fun, and touches on what Kevin said in your piece: Showing the properties is easy… going under contract is where the real work begins. And how about Round 2 of negotiations once the inspection is done? The problem is, the sausage-making that takes place in real estate, the difficult behind-the-scenes work, doesn’t make for sexy television. The public doesn’t see what we bring to the table. So our job is to show them. Give them value and information they can’t find by themselves online. Guide them through the contract, be their advocate, negotiate the best terms, and so much more. Then follow up after the sale and be their go-to resource for all things real estate, or at least all things for which you are qualified to be their resource. We all need to realize that consumers’ expectations are changing and we need to rise to the challenge. The best will survive. As a good friend and fellow Realtor said to me once, theoretically: “I don’t have to have a lawyer when I go to court. I could choose to represent myself…but I’d probably go to jail.” And there’s the rub. I wouldn’t do my taxes without a CPA, wouldn’t try to draft my own will using online self-help forms, and I wouldn’t try to buy or sell a home without someone by my side who has been through it hundreds or even thousands of times. The industry is not going away, but we have to adapt, always exceed the client’s expectations, do things ethically, and always ask for help when we don’t know the answer. I, for one, am not planning on my job going away any time soon. One last thought: It would be interesting to see what Inman’s readership looked like without Realtors.

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