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REALTOR® ASSOCIATION EXECUTIVE
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| Now You're Speaking My E-Language Industry players join forces on a standard for Internet data exchange that promises major advances in real estate technology. By Allan Shapiro In November, the NAR Board of Directors passed a resolution approving the adoption of an electronic data exchange standard called RETS (Real Estate Transaction Standard), subject to a “proof of concept” through a working pilot installation. The scope and implications of this new technology may have a far-reaching impact on the entire industry, including REALTOR® associations and boards. Real estate is still a local business, but real estate information, propelled by the Internet, has gone global. From e-mail to virtual home tours to the electronic transaction, REALTORS® are adopting tools and techniques to help them profit from the ease and speed of electronic communications. Those who embrace the new technology will be able to get the right information to the right people at the right time in the right way. Those who haven't yet adapted to technology, experts predict, have precious little time to catch up before the ever accelerating electronic age gets beyond their reach. At the same time that REALTORS® move to become masters of technology and managers of the electronic transaction, REALTOR® associations are taking a hard look at how they manage their own electronic information. Traditionally, associations have entangled property descriptions in a maze of local variations, from custom input sheets to unique report formats. And virtually all major MLS vendors have built closed systems using proprietary technology. The Internet, on the other hand, is characterized by its open flow of communication. And as the Internet inevitably assumes an increasingly important role in the entire real estate transaction--from putting the property on the market to settling the sales contract--those long-standing industry practices become obstacles. NAR realized that those obstacles must be overcome if REALTORS® are to manage the e-transaction. But finding solutions will require that REALTORS® and their associations move beyond the territorial thinking that spawned the current crazy quilt of local MLS systems. To that end, in late 1998, NAR appointed a leadership task force to explore whether there was support for the concept of a real estate technology standard among association executives, MLS operators, brokers, and technology vendors. The task force “discovered a shared sense of urgency that the REALTOR® community had to move--and quickly--to solidify its leadership position in the electronic real estate transaction,” says Dale Stinton, NAR chief financial officer and chief information officer. “There's a growing recognition that becoming managers of the e-transaction will require REALTORS® to do more than stake a claim.” Establishing the working group that created RETS has been an important step toward that goal. Defining RETS RETS is essentially a guideline for developing software that allows diverse computers to conduct a myriad of real estate-related communications. The standard is not software itself, and it doesn't get installed on any computer. Rather, RETS is a set of rules for software developers to create programs that will work together with other programs created using the same rules. Using software written with RETS specifications, a computer that houses a real estate database will be able to exchange information with other computers that enter or retrieve the data. The host computer could be an MLS server and the other a broker's in-house system, or the broker's system could be acting as the host for a salesperson's presentation package. The data exchanged could be MLS listings, flat or 360-degree photographs, video or audio clips, loan documents from or to a mortgage broker, or any other type of computer file. In fact, although the initial focus of RETS has been on the MLS data, the same principles could be applied to communicating any sort of real estate information throughout the industry. RETS was conceived to be compatible with the great majority of current industry practices. An MLS that adopts RETS generally will not need to change its listing form or the way properties are described on the local system and most likely will be able to upload as well as download information. RETS is also designed to handle present security procedures such as passwords and business rules such as required or restricted fields. Wide adoption of the standard would bring a range of benefits to the real estate industry. Topping the list is the standard's ability to facilitate data exchange between MLS hosts and internal broker systems and create a platform for the development of electronic commerce. In the MLS environment, it will enable desktop software programs from various vendors to work with one another's host computers, giving members a greater choice of technology tools. Over the long term, it promises to improve the price-to-performance ratio of MLS systems and to encourage a greater array of software in the market. Why would MLS system vendors be willing to give up their local market monopolies on software? Essentially because MLS technology providers know that more open designs are essential for their survival in an Internet environment. Establishing standard data exchange procedures will eliminate the need for software developers to build and maintain myriad custom interfaces and allow them to focus on product improvements. A widely adopted protocol will also become more reliable as it is continuously refined across a variety of environments, improving performance. Moreover, if all MLS software was RETS compliant, MLS vendors would have a larger market because they could sell access software to any REALTOR®, even if the local data resided on another company's MLS host. Preparing for future technology At the same time that RETS is compatible with current MLS systems, it looks to the future by including an emerging Internet language called XML. This language is a model for creating real estate-specific electronic documents. Its key characteristic is that it makes information self-describing; that is, it sends “tags” with the data to tell the receiving computer what the information is, how it relates to other information, and what to do with it. The technology has begun to show up in a growing number of server products from big names, such as Microsoft, Sun-Netscape, Novell, Compaq, and Lotus. Because XML definitions must be developed for the unique needs of each industry, NAR is acting quickly to assure its leading role in the effort. In fact, the real estate industry is far from alone in its pursuit of standard data language. There are dozens, if not hundreds, of XML efforts under way, such as InsWeb for the insurance industry and FinXML for the wholesale banking industry. The Mortgage Bankers Association also has a task force creating an XML definition for the mortgage industry. “Eventually, XML may provide the real estate industry with a universal language for e-commerce that describes properties across MLS systems,” notes NAR President-elect Richard Mendenhall. “But real estate practitioners will go down that path only if the competitive marketplace produces a total XML solution that makes good business sense.” What AEs need to know A number of major MLS technology vendors have committed to support RETS as part of their future systems. But the new standard is far from a done deal. To become a compelling force in the real estate marketplace, it must be widely adopted by MLS operators and real estate practitioners. That will create a significant market for compliant products and build momentum toward a RETS-based platform for e-commerce in real estate. Each MLS will have to make the decision to adopt RETS based on its own situation. Associations will need to evaluate the potential benefits of RETS in their particular circumstances and against both the costs of action and the risks of nonaction. The costs of implementing the standard in an MLS system will depend on many issues such as the age, configuration, and capabilities of the present host computer; the current telecommunications infrastructure; the size and design of the listing database; the uniqueness of the governing business rules; and the contractual relationship between the parties. Even with the technology revolution ahead, many key aspects of proprietary MLS systems may remain the same. RETS allows all access to an MLS system to remain password protected and supports all the security settings and business rules in place today. Because the log-in process identifies the application being used as well as the individual using it, an MLS will be able to allow some compliant client products to access the server while refusing others for whatever technical or business reason it deems appropriate. There's nothing in the proposed new standards that either recommends or obligates a host system to circumvent any current security settings or business rules. RETS is designed to work with most existing MLS technology and to provide a bridge to new types of systems that are expected to be more tightly tied to the Internet. If an MLS host became RETS compliant tomorrow, everyone could and probably would continue to do business as usual. But there would be in place a platform for advances such as new application software and greater integration between the MLS and internal broker systems, from which the MLS members are likely to benefit over time. AEs in a technology leadership role As an AE, you may be asking yourself, Do I need to understand all the technical mumbo jumbo surrounding RETS? The only people who really need to delve into the intricate details of RETS are the software developers, consultants, and computer professionals whose jobs involve technical analysis. Association executives, MLS executives, and brokers probably need to know enough to talk intelligently to their technology partners and to ask for assistance in understanding how the standard can benefit their own operations. Associations should at least inform their members that this initiative is under way as part of the larger shift in real estate practice, and those who are so inclined may want to consider its implications for how they manage their personal business technology. To determine the best way for your association to proceed with RETS, you need to consider your current technology level as well as ways the standard could help your real estate community reach both technical and business goals. For MLS and association executives, that means opening a dialogue with technology partners such as computer staff, consultants, advisers, and vendors. Make sure they have copies of the full detailed RETS (available at www.rets-wg.org) and ask them to evaluate the potential of RETS as a strategic tool. Many of the more technically advanced brokerage companies will also have valuable insights into what the standards can accomplish. AEs should ask their MLS vendor to provide a position statement on RETS and a projected implementation schedule. Even if a price quote would be premature, request a scope analysis to look at some of the factors that will bear on the eventual cost. If it appears the current system might not be a good candidate to implement RETS, ask the vendor whether an alternative solution, such as a parallel system, would be feasible. Along with the technical and cost considerations, defining a business purpose for the standard is a vital step. RETS is enabling technology that will provide the greatest value to those who understand how they want to use it. This is an opportune time to open or expand discussions within your association about the types of benefits that RETS could bring to your real estate community and to the industry at large. At this writing, the task force that developed RETS is working with a large brokerage company and one of the major MLS vendors to implement a test run of the system. This “proof of concept,” which was requested by NAR's Board of Directors, is expected to be completed in the spring. Even as that effort goes forward, a number of technology vendors have announced internal projects relating to the standard. For more information on RETS, and the NAR RETS working group, go to www.rets-wg.org. Allan Shapiro, a consultant based near Washington, D.C., served on NAR's RETS development task force. He was formerly market information manager at GEAC Interealty, an MLS systems provider. What will RETS do? As with any set of standards, RETS brings only the potential for change, not change itself. If it's widely adopted, it could become a foundation on which to build better technology solutions. Here are 10 possible ways the industry could use the new standard: 1. Improve the price-to-performance ratio for property information systems 2. Encourage greater array of new applications for real estate practitioners 3. Permit stronger vendor competition within geographic markets 4. Allow dial-up and Internet information systems to work in parallel during transition periods 5. Simplify data exchange with internal broker systems 6. Allow more profitable integration of the Internet into business 7. Establish framework for the electronic real estate transaction 8. Supply core technology around which industry sectors can collaborate 9. Introduce an accepted process for technological initiatives in the industry 10. Provide a platform for improved service offerings to consumers |
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