What Are the Industry Implications of MLS Sales Like REcolorado?

The recent unmasking of REcolorado’s buyer—Joseph E. Burks, president of Equity Title of Colorado, who owns a company called Mazl LLC that will take control of the MLS—has brought up much conversation on what impact it will have on the MLS industry.

While RISMedia’s investigation of the MLS’ sale uncovered multiple issues and what could be conflicts of interest, the bigger conversation occuring in the industry is how this sale could set a precedent for others, and whether that is a good idea or not.

Broker Karen Frisone, a past Denver Metro Association of REALTORS® (DMAR) director, told RISMedia previously that her worry when it comes to the REcolorado sale is that the buyer is interested in acquiring the MLS’ data.

Many others in the industry have agreed with this worry, including Marilyn Wilson, managing partner of the MLS consulting firm WAV Group, who said that MLS data needs to be better cared for.

“Just like today, the data rights of homeowners and the brokers that contribute listing content need to be protected. If anything, data privacy protections should be enhanced, not diminished,” she explained. “Again, the new entity needs to understand the nuances of data protections for consumers, GDPR (General Data Protection Regulation) and all data security protocols in place. They also need to understand how data distribution works and enhances protections against data scraping and other nefarious actions. The data agreements and MLS EULA (End User License Agreement) agreements need to be reviewed by broker counsel to ensure data is being protected as they require.”

Wilson continued, “Brokers will need to be diligent, however, to ensure private entities are not buying MLSs simply to monetize the data in ways brokers are not comfortable with. Or brokers need to ensure they are getting compensated appropriately for the data they are contributing. Programs like REdistribute and Partner InfoNet already exist and can be expanded as needed by brokers.”

Industry commentator Rob Hahn also discussed the MLS sale and the matter of data protection on his Industry Relations podcast, encouraging brokers to look into the Participant Data Access Policy, which the Real Estate Standards Organization (RESO) stated “is a set of rules that allow an MLS’s real estate brokers to access a data feed including their individual brokerage’s entire data set.”

Hahn allegedly spoke to REcolorado board members shortly before they were removed from their positions. When asked via text message whether or not this meeting happened, Hahn replied, “lol. That report. Wasn’t it (RISMedia) that reported that?”

Hahn also pointed out on his podcast that associations owning MLSs may soon be a thing of the past due to the legal shifts happening post-NAR settlement.

“Association power has come because they own the MLS, and the DOJ is coming to smash that (step one has already happened—MLS removing offers of compensation). If you believe that, you’re better off selling (the MLS) today. I haven’t seen that associations really care about the community; all associations care about is keeping numbers up.”

Wilson agreed with this sentiment as well, saying that she “can see a scenario where associations are afraid of the costs of future lawsuits and may want to divest themselves of the risk.

“The DOJ has said for several years they want to ‘un-tie’ real estate,” she continued. “That could mean they want to un-tie the requirement for licensees to join an association in order to get access to MLSs.”

There has also been some worry among industry professionals surrounding the staff of the MLS, especially since the REcolorado board of directors were removed from their positions following South Metro Denver REALTOR® Association (SMDRA) and DMAR saying they violated their obligations to confidentiality.

Wilson said that “there is a lot of domain expertise with the staff of REcolorado and many other MLS organizations” that should be kept in place.

“The staff of these MLS organizations should remain intact as needed and then add outside expertise to ensure MLS organizations understand their role as a strong service and customer-centric technology provider,” she continued. “Privately owned MLSs must ensure they do not bring an entire new staff who does not appreciate the disruption caused by changing out entire tech stacks.”

When asked what she thinks will be the immediate and long-term effects on REcolorado following its acquisition, Wilson said that Colorado brokers “will need to know more about the owner and what their intentions for the organization are before anyone can answer this important question.”

Hahn also brought up the concern about the new leadership and what their intentions are, saying that “private equity guys…can increase your membership dues 4x and services drop down to zero.”

SMDRA and DMAR’s FAQs on the MLS sale claim that their priority is “to ensure that all members retain full access to MLS data and functionality that is critical to their business. MAZL has shared its commitment to providing a broker-centric platform and assurance that the company will continue to operate as a Multiple Listing Service, maintaining its core mission of delivering exceptional data, tools and resources to REALTORS® and licensees.”

The FAQs also state that the Letter of Intent stipulates dues will either remain the same or be capped at a minimum annual increase.

Wilson also pointed out that brokers do have a choice of MLSs if they are unhappy with the new state of REcolorado after the sale, but there is a limiting factor that needs to be changed.

“Today, if a broker wants to operate in the Denver market, they pretty much HAVE to belong to the local MLS if they want history and access to fellow brokers’ data. If there was a central repository of historical data available for all markets, then brokers could simply choose the MLS of their choice for front end services, technologies, training and support,” explained Wilson. “I believe the industry would support brokers better if all MLSs collaborated on a central database that would give brokers more flexibility to expand their MLS business relationships affordably.”

Wilson concluded by stating that she believes “every association and MLS needs to take a close look at their value proposition and significantly dial up their effectiveness at defining and effectively driving home the significant value in advocacy, education, networking, professional development, technology, support and service they deliver.”

“Bottom line, the industry has been pretty comfortable and possibly too comfortable. Agents get their license, join a brokerage, join an association and join an MLS as a matter of course,” she said. “It’s time for every entity not to assume that new customers are going to be coming their way every day. Just like all other businesses, associations and MLSs are going to have to earn their customers. The value proposition for both organizations is there—time to focus on driving it home.”

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