I spent much of my time as a real estate agent working for a small real estate office operated by a would-be never-was attorney who never built a large real estate operation, but had a great deal of real estate knowledge. I learned a lot about the real estate business from him through conversation since there was no training program. Training and education I obtained on my own. But whenever I needed to solve a problem or understand a situation I found myself in , he would exhort me to see the whole picture, instead of just a portion of it – a practice that everyone could employ to improve their lives.
The Multiple Listing Service, an integral part of the real estate industry, seems to be the target or a lot of fragmentary conversation. People discuss the MLS and third-party real estate advertisers as if they were the same thing. Discussions about who has the most accurate data, what is best for consumers (read “buyers”), pocket listings (properties listed by agents but not yet submitted to the MLS) and MLS regulations swirl around Facebook with the violence of tornadoes or hurricanes. Many of these discussions seem to have that partial vision, so I hoped that this post might serve to add some clarity. I believe that part of the problem is a lack of understanding about the purpose of the mechanisms involved and part is the result of a bad use of words.
The real estate market is horribly inefficient. There are literally millions of sellers and buyers using hundreds of thousands companies and agents to buy, sell, and rent real property. The MLS was developed to create greater market efficiency for real estate agents through the mutual exchange of information. It made real estate companies and their agents more efficient because all market participants received and acted on relevant market information as soon as it became available.
As the MLS developed as a business tool it went from 3×5 cards on a cork board at weekly luncheons to printed cards and books collecting and sorting the information by area and company, to computer databases shared by its members. But its purpose never changed. In fact, the MLS Policies suggested by NAR, and used by most of the 970 MLSs states, “The purpose of multiple listing is the orderly correlation and dissemination of listing information to participants so they may better serve the buying and selling public.” – seems simple doesn’t it?
With the profusion of public facing web sites fueled by IDX feeds from these MLSs, confusion began to reign among the members of the industry. Now part of the conversation centers around the purpose of the various real estate web sites operated by real estate professionals and others.
There are only two reasons for any public facing real estate website.
To gather consumer information for distribution to real estate professionals –
- Whether the site is operated by a brokerage or a “lead generation” company, or an aggregator who sells advertising on their site to agents and companies, reaching the buyers and sellers or real estate is a core purpose of public facing real estate sites.
- In some instances, the sites gather the information for other associated industries like the mortgage industry want to reach the consumer as early as possible,
To gather consumer attention to generate advertising revenue
The idea that any of these sites are there to benefit the public is just silly. No one enters into a commercial venture without wanting to have it be succesful – which in the world of business means to generate income. I’m not saying that while we are pursuing this primary goal we can’t do a lot of good things, or that we can’t be well motivated, but we should never forget why we go to work and do the things we do there – We do it to earn a living, provide for our families, and keep our business ventures healthy.
The second problem we have is a certain confusion about data accuracy. In the movie Princess Bride, Inigo Montoya says “You keep using that word. I do not think it means what you think it means”. In the great MLS accuracy debate, (which I think is more of a red herring than anything else) people keep using the word “accurate” when they mean “complete”.
Let’s start with two definitions.
Accurate: free from error especially as the result of care <an accurate diagnosis>
Complete: having all necessary parts, elements, or steps <a complete diet>
So we can have four-things a set of data that is both accurate and complete, a set that is accurate but not complete, a set that is complete but not accurate, and we can have data that is neither accurate nor complete. But they are not all the same thing. They are very different.
Data accuracy is a matter of GIGO (Garbage In Garbage Out) – In other words, since all of our property data relies upon agent input (which is subject to inaccuracies) or public records created by huge numbers of municipal employees with varying degrees of accuracy, our entire dataset will probably always be inaccurate to some degree. With a million real estate agents responsible for data input, there are a million opportunities for mis-typing, mis-casting information, making inaccurate measurements, etc, etc. So practically, we are eons away from making our data truly accurate.
There is some issue of data accuracy for third-party sites because of their need to accumulate data that they don’t own or originate. It has resulted in a willingness to accept any data that they can acquire. That leads to additional inaccuracy resulting from duplicate property data from different sources leading to duplication and contradiction. But since they aren’t selling real estate, its more important for them to have lots of data so they can appear to have a dataset valuable to the consumer. In their world, it is more important to be visible than it is to actually be accurate as long as they don’t end up discouraging consumers from visiting their site as a result. After all they are selling consumer information and advertising – not real estate.
Data completeness (which is often referred to erroneously as accuracy) is the second issue.
The MLS, without question, has the most complete dataset available to the real estate industry. Data aggregators like AOL, Zillow, Trulia, Realtor.com are faced with having less than a complete dataset becuase they are trying to compile a national datasetcompiled from the more complete local datasets. Since they don’t have access to all of them, their national dataset is far less accurate that the data feeds sent locally to the MLS members, who get the complete local dataset from the MLS through their IDX feed . Please note that the difference here is created at least partially by the difference between the local dataset and the attempt to create a national dataset.
A second less than complete dataset on public webs sites is created when a real estate company chooses not to advertise some portion of the complete dataset they have received – for example not publishing properties under a certain price point, or not including certain types of homes or certain areas where the company doesn’t choose to do business. But the decision to publish this less than complete dataset is business driven, probably accomplishes what the company wants to accomplish, and is therefore (within reason) accurate as possible, and effective for their business. Is it a good idea or a bad one? That would depend on how you want to run your business. – something which is neither my concern nor the MLS’s.
So can we not confuse IDX feed with what we do with the IDX feed? And not confuse the IDX used by brokers with the feeds furnished to the aggregators? Or confuse the MLS with public facing sites using housing data to attract the attention of consumers – using whatever strategy the owner of the site thinks is most propitious? Or worry about how much of the MLS data we are going to find useful in our daily business? Those are just business choices, and not a function of the system itself.
Whatever your business model , if you are a real estate professional, the MLS is crucial to the facilitation of your business. Public facing web sites, whether operated by you or a third-party, exist as advertising outlets – nothing more or less. If they all disappeared tomorrow, people would still want to gain housing information and we would want to supply. But without the cooperative sharing of data between professionals, the industry would grind to shuddering and painful halt. The exchange of information between professionals is crucial – the exchange of information between the industry and the consumer, not as much. Housing is the ultimate shiny object for consumers, and they will seek that information any way that is available to them from driving around looking for signs to searching any site that promises the information they want. They will be in a number of places depending on the day, the weather, their mood, or the device they are using to reach the data, so reaching them is more about strategies and tactics than it is about creativity.
Ok, now let’s get back to those discussions on Facebook 😉