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Revenue, Not MLS, Fading

January 1, 2010

Ever since the word “Internet” became part of our vocabulary, we’ve heard from industry gurus that we need to prepare for life after MLS. According to these experts, our local MLSs will either be gobbled up by Google; become a regional, statewide, or national MLS; or simply be replaced by the Internet. In the past few years, these specialists have produced white papers to explain new concepts like “overlapping market dysfunction,” “listing syndication,” and other buzz phrases. In fact, for nearly 20 years there has been a steady drumbeat warning of the demise of the local MLS, but it hasn’t -happened. Normally I embrace change in our industry, but this time I’m going to swim against the tide and say “bunk” to this MLS crazy talk. There’s little evidence that MLSs are being eliminated by mass-scale technologies like Google or any other sort of national system.

Technology is now available to create a national MLS, but why would we do that? No MLS serves multiple distinct markets, such as Harrisburg, Pa., Chicago, and Seattle, because there’s simply no compelling reason for such a platform to exist. Real -estate is local, and MLS systems reflect what each area considers to be its natural marketplace.

Yes, the MLS landscape is changing, but the shift is being caused by the natural expansion of marketplaces, not a killer new technology. In the past, a large metro area might have had 10 separate MLS systems serving REALTORS® in a 20-mile radius. Today, that seems silly to most of us, and the consolidation of those mini-MLSs into one that covers the entire marketplace reflects that. We are also seeing smaller marketplaces expand and merge with other small marketplaces to a point where a regional system makes sense. In addition, data sharing between MLSs has become common, because it allows the natural marketplace to stay intact while serving some large brokers that cover areas between markets. Indeed, a few small states have created statewide systems, but those states have common markets in which it makes sense to have one comprehensive and collaborative system.

If your association operates a local MLS, you should, however, take no comfort in my attempt to debunk the delusions of a disappearing MLS. If your association depends upon MLS revenue, you have your own delusions to worry about. There is a lot of compelling evidence to suggest that MLS revenues will disappear as natural markets expand, technology becomes cheaper, and brokers use their own front-end products to access listing data. Now is the time to prepare your association for that possibility.

I cannot contemplate a time when members will access an MLS that’s not based on some sort of natural marketplace geography, but I can imagine many situations in which local associations can no longer subsidize their operations with MLS income. Be prepared, be very prepared . . . for life after MLS revenue.

2010 AE Committee Chair Dave Phillips, RCE, CAE, is EVP of the Pennsylvania Association of REALTORS®. Contact him at 800-555-3390, ext. 3012, or dphillips@parealtor.org.