Where Does Upstream Fit In?
Feb. 4, 2016
As the drumbeats of AMP and Upstream move closer to the industry’s center stage, discussions regarding the future of the Multiple Listing Service (MLS) become louder and wary. (Read the extensive analysis and proposed “Implementation Roadmap” for Upstream detailed in Chapter #1 of the 2016 Swanepoel Trends Report – released on 2/1/16 and available at retrends.com).
Will the MLS become extinct and what is the likelihood that a national system will eclipse the existing local structure?
Real estate is being disrupted from multiple directions – as it should – and the MLS is simply another “old paradigm” structure caught in the crosshairs of innovation. The Multiple Listing Service (MLS) is one of the most enduring symbols of the traditional residential real estate industry and it has remained dependably steadfast in its mission and functionality over the past century.
Changes Worth Mentioning
This is not to suggest that the MLS has not begrudgingly bowed to changes throughout its history, for indeed it has. While its basic function and mission has remained the same, its delivery system has, over the past half a century, transitioned on a number of occasions. Looking back over history, each of these transitions has occurred amidst great strain and conflict. The introduction of the MLS book, the introduction of the “dumb” terminal, the arrival of the automated MLS system, the discontinuance of the MLS book, facilitating the broker’s ability to show all listings and most recently the provision of listing information directly to consumers through “public facing websites” have each required memorable “battles”, years of advocacy and legions of advocates to secure.
The initial mission of the MLS was to facilitate cooperation and create a system wherein cooperating brokers could be “compensated” for their sales. The “secret war” that has existed throughout MLS history and continues in force today is largely about local market protectionism. Since its creation many MLS stewards have fought this war to protect and preserve local markets. Weapons used have included the decision of who could play, the rules under which people could play and what wasn’t proper play behavior.
Interestingly enough the same market changes and digital disruption that is now challenging and threatening the MLS Sector has already brought immense change and transition to the rest of the industry, and local has in most cases, already given way to national. Expanded public and corporate ownership of real estate brokerages has given rise to new mega firms for whom the term “market” is measured by multiple states. Fears regarding new regulatory initiatives, CFPB investigations and anxieties regarding the future of the independent contractor status have further contributed to industry’s transition. Caught amidst these forces many MLS operations even find themselves in battles with neighboring MLSs over data sharing options and even state REALTOR® associations who seek to expand their power and influence through the create of “statewide” MLS operations.
Fueling aforesaid are consumers going from being weak and playing a very minor participative role in the transaction to becoming a dominant contributor to the transaction?
Now two big “plays” – called AMP (Advanced Multi-List Platform) and Upstream – both being developed by NAR wholly owned subsidiary RPR (REALTOR® Property Resource) – are positioning themselves to be at the center of this shift.
AMP leverages the power of RPR’s nationwide parcel-centric database and allows MLSs and vendors to create new services through APPs which are much easier and less expensive than creating new MLS systems. AMP’s objective is to become a universal MLS “back end.” To date while a number of MLSs have signed up for AMP many others are following their legacy of non-action and restraint.
The Upstream project was conceived and launched by a coalition of brokerages, networks and national franchises. Upstream will create a single data entry and collection platform (designed and operated by RPR) that will ensure both data quality and accessibility. It will save brokerages time, effort and expense while allowing them to more easily manage listing information.
The outcome of this tug of war is at present unclear.
One of the most amazing dynamics of the MLS struggle is that despite having formed a number of MLS “centric” organizations, despite having spawned a number of “national leaders,” despite having millions of dollars of resources, and despite having strong vendor relationships with a number of large powerful MLS vendors the “MLS sector” has not created a plan for its own salvation.
The previous year saw sixty-eight (68) MLS mergers and/or consolidation resulting in the total number of MLS operations dropping to 749.
Yet no MLS organization that we are aware of has announced a “next generation MLS” or a “new MLS value proposition. Instead it seems most are willing to simply ride out the storm hoping the new wave of innovation will simply roll on by. If history is a barometer, it might just do that, but we don’t think so. Here is why.
Economies of scale most certainly have huge value but merging doesn’t change dated and bigger doesn’t fix broken. You still have to innovate as well.
The MLS on many levels – software, pricing, transparency, etc. – needs an overhaul. This revamp requires a whole new approach to real estate data aggregation and distribution and at this stage AMP and Upstream are the most applicable proposition to achieve that.
MLS is not going away, not today and not tomorrow. Some manner of MLS will continue long into the future as large regional entities. MLS will however never be the same in a post AMP/Upstream world.
The Swanepoel T3 Group
The Swanepoel T3 Group provides CEOs, business leaders, association and MLS executives, brokers and high performance teams the knowledge, best practices and support to reshape their businesses.
We are the publishers of the annual Swanepoel Trends Report, the SP200, and the T3 Tech Guide and hosts of the T3 Summit, T3 Experts and T3 Fellows programs.
T3Sixty, our management-consulting arm, has a team of professionals to help you define the likely disruptors, identify the challenges, locate the right opportunities, and create the best road map to success.
EDITOR IN CHIEF
Thomas Mitchell, Karen Herrera
Rob Hahn, Jack Miller, Bernice Ross
Matt Cohen, Leslie Ebersole, Jared Conaway, Sam DeBord