A Framework for Evaluating MLS Policies

Local flexibility remains essential, but more consistency across MLSs will help build trust with brokers, agents, and consumers.
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Special Series MLS

It’s 2021. If you operate an MLS organization, or if you’re a REALTOR® who’s involved in oversight of your MLS, there’s never been a more complex time to make decisions about the MLS’s future.

In this five-part series on MLS planning for 2021, we look at questions that all MLSs should be discussing as the year unfolds. The theme is affirmative transparency: earning trust by shining sunlight on the MLS’s pro-competitive and pro-consumer practices.

Part 5 of 5: Regulating MLSs

The first four segments of this series analyzed current trends and our role in supporting participant and consumer access to MLS benefits.

This segment will focus on when and how we as an industry make decisions to implement mandatory policies for MLSs through the National Association of REALTORS®.

Policy: National Versus Local 

Many MLS issues can be solved locally. At other times, variation creates consumer confusion and organizational chaos.

The push and pull between local differentiation and competition versus national consistency and certainty are perpetual. Mandatory national policies are sometimes shunned by local association leadership as infringing upon autonomy and unique local situations. But consistent policies are sometimes needed to keep the industry as a whole moving toward a more transparent, trustworthy partnership with agents and consumers. A hypothetical consumer experience illustrates how inconsistency damages the MLS’s reputation.

A Consumer’s Experience With MLS Inconsistency

Meet Sally Seller. She’s listing her home with Amy Agent. 

Amy lists Sally’s home in Sunny MLS and Breezy MLS because they cover the same geography. She wants broker participants in both MLSs to see the listing. 

Sally Seller wants to delay showings and internet advertising for a few weeks so she can prepare the home. 

Amy Agent lists the home in both MLSs, but the Coming Soon status in the two systems varies:

  • The property can’t be shown to buyers in Sunny but can in Breezy.
  • Days on market do not accrue in Sunny but do in Breezy.
  • The property is not published to brokers’ IDX websites in Sunny but is in Breezy.

Bobby Buyer sees the listing on a Breezy MLS IDX site and requests a showing. Bobby’s agent is confused as the listing is open to showings in Breezy MLS, even though Sally didn’t want it advertised yet, and Amy couldn’t show it anyway with Sunny MLS’s rules.

The listing moves to active status after painting is finished, at which point Bonnie Buyer finds it on Sunny MLS’s website. The site shows that the listing has been on the market for one day. Bonnie prepares for a bidding war. But Bonnie’s agent is a subscriber to Breezy MLS and says the listing is actually 23 days on market. 

  • Bobby is frustrated that a property advertised as available for showings on one MLS is actually unavailable for viewing.
  • Bonnie is confused by the inconsistency and feels lied to. 
  • Sally is disappointed because her agent couldn’t follow her requests for consistent advertising and showing communications due to disjointed rules.
  • Amy is perplexed because both potential buyers and her client have been let down, and it looks like her fault.

“Can’t we all just do this the same way?” agents ask. Local real estate leaders look directly at one another and say, “It’s different here.”

Yet for both consumers and professional customers (agents and brokers), MLSs need to continually improve the experience. National policy is sometimes the answer.

National Mandatory Policy Growth

It’s important to establish that the current growth of national mandatory policies is a direct response to business issues that are harming the professional and consumer experience in the marketplace. The appropriate breadth of national mandates may be up for debate, but the need for some level of consistency is largely unchallenged.

National policies have provided the mechanisms necessary for many advancements in the industry. They have created the motivation for progress where the local will has not: 

  • Sold listing information availability
  • Virtual office website access
  • Mandatory cooperation rules
  • Consistency in participants’ sharing of listings
  • Standardization of information across markets

Yet there’s still clearly a need for some discretion when local situations are truly unique and call for market-by-market idiosyncrasies. All real estate is local, even if 90 percent of it is the same. By acknowledging and accepting these competing ideas, we can agree on a systematic framework that will allow industry leaders to initiate potential industrywide policy mandates with a shared understanding of their likely impacts.

Constructing a Framework to Analyze Policy Impact

NAR’s MLS Technology and Emerging Issues Advisory Board regularly considers policy changes that have broad industry impact. Its members include brokers and MLS leaders. This group is tasked with deciding where local uniqueness ends and the overwhelming need for global consistency begins.

This group has put forward significant policies that have been adopted by NAR’s board of directors in recent years, including:

  • Clear Cooperation
  • Participant Data Access
  • MLS of Choice

At a recent advisory board meeting, NAR General Counsel Katie Johnson suggested that the group consider defining criteria that would help establish when mandatory national policy is necessary and when local flexibility suffices.

Here’s an approach to that suggestion, a simple framework through which issues should be vetted before national policy proposals are considered:

Are any of these core components of MLS critically damaged or is their progress significantly limited, without a new national mandatory policy?

  1. Cooperation
  2. Accuracy of data
  3. Transparency

The need for at least one “yes” answer could provide a staging gate for ideas before they’re debated as mandatory policy proposals. They may not be the only criteria for analysis, but they provide significant clarity.

In a recent conversation with Rebecca Jensen, CEO of Midwest Real Estate Data and chair of the Real Estate Standards Organization, we agreed that this kind of analysis would be helpful for both MLSs and the advisory board as they deliberate on industry trends and potential policy changes.

Understanding where we start the conversation will create a stronger foundation for it. Do we start our default thinking with mandated consistency—or do we start with local flexibility until one of these core components of MLS appears to be at risk?

Potential Criteria for Initial Policy Impact Analysis Report

The “why” for an objective framework is clear. Mandatory national policy creates new workloads for local, state, and national associations; it requires retraining for agents; and it invites legal scrutiny. Yet it’s still critically important in the right instances.

The “how” we get to this more objective analysis framework is open for discussion. It may be that if any of the three core components we’ve described appear to be at risk, a policy proposal should be created. The MLS Standards Workgroup might tackle policy issues from a different angle, with an eye on minimum standard for service.

We could also create a more in-depth set of questions that the NAR advisory board should ask once it has established that a core component of MLS is threatened. These questions could help establish how a potential policy proposal is prioritized.

MLS Concern Established, Questions to Ask for Prioritization

Addressing these questions could help the advisory board, and the committees who subsequently review their work, see the analysis that was made before a policy proposal comes forward for committee and board of directors consideration.

Does this policy proposal improve consumer access to the following?

  • Listing information
    • Digital access
    • In-person access
  • Showings
    • Efficiency and timeliness
    • Consistent pro-competitive treatment of broker representatives
    • Guided by a real estate professional

Does this policy improve the consumer experience in working with professionals?

  • Efficiency of interactions
  • Consumer impression of the MLS marketplace
  • Consumer impression of real estate professional

Does this policy create a more consistent broker participant experience?

  • Listing information access
    • Participant-only, IDX, VOW, and potentially NOW (an early-stage proposal to streamline all of brokers’ MLS data needs into one cohesive policy).
    • Availability of addresses and other data currently in question
  • Showings
    • Coming soon
    • Lockboxes
  • Technology capabilities
    • RESO standards compliance
    • Efficient MLS procedures and practices

Does this policy preserve local MLS flexibility?

  • Encouraging MLS innovation and competition
  • Enhancing local efforts to grow participation
  • Supporting local consumer demands

Does this policy improve the competitive marketplace?

  • Avoiding regulatory scrutiny
  • “Yes and,” policy when possible
  • Business-model agnostic

Does this policy enhance REALTOR® organizations?

  • Strengthens professional standards
  • Encourages membership
  • Incentivizes MLS participation

Simply writing down the answers to these questions would help establish the priority and viability of new national policy proposals. It might help the postmortem analysis to also assign a simple scoring model for each question. 

There seems to be momentum behind building this framework within the REALTOR® community. The involvement and input of MLS staff and association members who care about the future of MLS will be essential.

All Eyes on MLS

The government, consumers, industry insiders, and well-financed newcomers are focused on the MLS. So there’s no better time to look from the outside in and see the MLS how they see it. 

There’s a very bright story for the MLS to tell, and affirmatively seeking transparency to tell that story to consumers can kickstart the process.

“I don’t think it can be overstated that the MLS is perhaps the greatest fair housing tool available in the real estate industry, and that’s for brokerages as well as consumers,” says NAR’s Johnson. “As long as it continues to provide accuracy, cooperation, and transparency in the real estate industry, it will provide the most access to real property for all people.”

It’s fitting that the Council of MLS’s timely consumer-focused communications campaign begins with this single tenet: Consumers don’t understand the MLS. Yet the professionals who are "In The Know" can seize that opportunity to transparently educate consumers on what we do and why it benefits them.

We have work to do, my friends, so let’s get started. Here’s to a brighter 2021.