Why I Support MLS in San Francisco

Posted On: March 12, 2016
By: ffdadmin

Off-MLS, of-market, private sales, pocket listings, private listing groups, internet listing groups, and the online marketing of real estate. Somedays, I take Saturday off. Others, apparently, I end up writing really long blog posts… A friend and colleague tagged me in a question on a Facebook group:

Opinions? “Can the SF Association of Realtors lure sellers away from private sales?”

rtMLS and "private sales" in San Francisco

rtMLS and “private sales” in San Francisco

I have an opinion on this, and it happens to be informed by my past experience as a co-chair and chair of the SFAR MLS/Tech committee, my service as a Director for SFAR where I was the 2015 CFO (Treasurer, but with three words) and currently serve as the 2016 President-Elect. Prior to becoming a Realtor in 2002 I worked at Apple (enterprise education technology sales) so the intersection of real estate and technology has long been a personal interest.

The opinions and beliefs expressed in this post are mine and mine alone. I am not speaking on behalf of or for SFAR, Zephyr Real Estate, my team, my dog, my business partner, or anyone else. 

What’s the Background on off-market sales?

Over the past several years, “off-market” sales have become a popular topic in the real estate industry. Why are they happening, what does it mean, who wins and loses? My personal experience with all of these questions dates back a few years ago to an industry conference in Scottsdale.

Several years ago I attended a Clareity MLS conference when the buzz about “off-MLS” deals was just beginning to get loud. I came home, read a blog post, and, uh, actually tried it. Leading to a white-paper about 2013 off-MLS sales in San Francisco [that link is to the request page for the white-paper – if you’d like to see the actual white-paper here is a direct link with no registration required for the online edition].

In short, my look at local data sure seemed to suggest that buyer’s tended to pay less (also meaning that seller’s got less) for non-MLS marketed properties. Great if you are a buyer’s agent, but buyer’s agents aren’t typically the origin of these deals.

What are we talking about?

There’s a lot of confusing lingo out there, and this is how I think about the current landscape:

  • Off-Market: What the hell does off-market mean? If you sell something, by definition you created a market for the property, marketed something to someone (either accidentally or intentionally), and sold it. If you did that without using your MLS, I would say that the best terminology to describe that sale is “off-MLS.”
  • Off-MLS: You sold a home that either you didn’t market in the MLS or wasn’t marketed by the listing agent in an MLS. An off-MLS sale could be marketed via a private listing club, the internet, FSBO, or an another agent in your office or association. Pocket listings and brokerage only are two types of off-MLS listings.
  • MLS-marketed: This once meant it would be shared with other qualified professionals who have agreed to a set of business rules, practices, and cooperative compensation frameworks and are actively doing business in a specific geographic area. Then it came to mean it would be all that plus the internet and everything else. What should it mean to be MLS-marketed? What does it mean?
  • Online-marketed: The options are now immense, varied, and almost infinite. Agents and sellers can choose from syndicators, portals, personal websites, brokerage websites, aggregators, old-school classifieds like the newspaper section and new-school classifieds like Zillow. All of these can act independently of an agent’s MLS or in collaboration, depending upon the seller’s wishes, the property, and back-end MLS data sharing capabilities.
  • Off-Internet/Offline: The MLS is not the internet (duh!). Since the arrival of listings on the internet, the marketing of MLS listings to professionals and the public has generally been considered one and the same. Currently, if you sell something off-internet it was also most likely off-MLS, because most MLS’ are setup by default to syndicate and share listing data via IDX unless a broker, agent, or seller opts-out. In other words, public internet marketing = yes is the default setting for almost all new listings… should it be?

What Can an MLS Really Do?

My simplistic distillation of most MLS rules is that there are two available options for interacting with members around MLS usage: the carrot (incentives that add value to their clients and business and make it easy and desirable to list in the MLS) and the stick (penalties for being a jerk that doesn’t play by the MLS rules). That’s it. You can talk in circles about every kind of regulation designed to encourage transparency and professional cooperation, but at the end of the day you’ve got carrots and sticks.

A quick aside, kind of important but a little obscure: SFAR operates their own MLS for association members. SFAR is unique in having a 1:1 relationship between association and MLS. It is more common for one MLS to serve multiple associations and be owned by a mystifyingly complex consortium of stakeholders, brokerages, etc…

A lot of sticks were discussed. I won’t name any of them, and at the end of the day it was agreed that taking the stick approach was the least desirable for a constellation of reasons. Thus, by process of elimination, new or more or better carrots!

What – really – is an MLS?

The MLS was once – literally – a card catalog of homes for sale. Show me the most sophisticated MLS on the market today and I’ll show you a really sad electronic card catalog for homes.

Any MLS that offers their members nothing more than a really sad electronic card catalog for homes in 2016 is headed for bankruptcy and failure. 

I believe the MLS is and should be a communications network for active, full-time, local real estate professionals who make their living from facilitating the actual purchase and sale of homes with other active, local, full-time professionals. 

Any MLS that is nothing more than an inefficient data conduit for outbound data feeds that are outdated as soon as they are batch processed is headed for failure. Hopefully super soon!

I believe the MLS is a professional-grade data layer that should be available via a native API for active, full-time, local real estate professionals who make their living from facilitating the actual purchase and sale of homes with other active, local, full-time professionals. 

So, why rtMLS…

Time and again, feedback from agents doing off-MLS deals was that it was some combination of:

  • seller desire for privacy
  • agent desire for property prep/cleanup time,
  • difficulty quickly sharing listing info with all members

You might say that’s a big pile of bullshit, and that’s your opinion. My experience in the SF market is that all of the above are legitimate reasons.  My experience is also that unfortunately a few have learned to weave these legitimate reasons into a way of consistently doing business that favors their personal pool of buyers or their brokerage.

Experience also tells me most agents and brokerages in San Francisco love nothing more than to actually bring a listing to the MLS with all it’s attendant pomp, circumstance, and adjective abuse. For Emphasis: That’s my perspective and opinion based on my experiences. I’m not speaking for anybody but me. Your mileage may vary, and I look forward to reading your blog post about your opinion.

Since it  had already been agreed that “whack with the stick” of penalties and rules was the least desired outcome, what carrots could we build that addressed the three general areas of concern around MLS listing?

We chose to white-label a platform that would allow our members to communicate with each other about listings, build groups of agents they want to communicate with (without having to worry about continually updating an agent’s contact info or getting stuck in their spam filter, or writing to them on messenger when they only check twitter, etc…), and quickly share information about properties in a more structured way.

Not only does rtMLS offer a simpler, cleaner, easier structure for sharing, it also moves what is happening with the modern version of a “handshake agreement” over emails and texts into a system that offers binding compensation agreements and frameworks for business practices and dispute resolution. Sounds pretty simple and not particularly important… until you are the one at the closing table being paid zero.

14 years of experience in San Francisco real estate has shown me that everyone wins when informed buyers with a solid and fact-based understanding of the market are matched with sellers that have properly disclosed their home’s property condition and priced it correctly.  And I have yet to see anyone consistently do that better than full-time San Francisco Realtors.

Delivering tools that make this dead simple is a win for everyone – buyers, sellers, agents, brokerages, and our industry’s reputation. That’s why I support rtMLS. It isn’t perfect. But waiting for perfect isn’t an option. My involvement at SFAR tells me that we will continue to embrace new opportunities to euthanize really sad electronic card catalogs without apology. How would you move the MLS forward?