Ever since Craig Cheatham put the MLS industry on double super secret probation there has been much speculation about what The Realty Alliance’s grand plan is and how they will go about implementing it.
Well, I’ve spoken to over a dozen individuals and believe I have connected all the dots at this point.
I must qualify this by saying these are still rumors – the “word on the street”, so to speak, but I’m confident I have all the major details worked out.
What the plan?
Basically the plan is to create a database upstream of the MLS providers. This will be a national broker database, not any sort of regional, “lets try it and see if it works” sort of thing.
Brokers will put their listings in this database first, then decide where those listings go, who to share them with, an under what terms. So if this thing ever gets traction (it won’t in my opinion) brokers could decide to send listings (only some?) to the MLS, or not. They could syndicate, or not. They could share with other brokers, IDX-style, or not. And they would not be subject to any rules regarding monetization of the data.
The key here is brokers want to gain leverage over their MLS providers by creating a national upstream database.
How do they make money?
The idea is to charge brokers up to $2.00 per listing to upload listings to the database. That’s not a joke. $2.00 per listing. Memories of Homestore come to mind. Having done RFPs on many of the large franchisor websites I have a fair understanding of the cost involved in creating (and maintaining) a listing database. So I just wonder if anyone has really done the math of this sort of effort. Nevermind the complexity of getting brokers to implement another listing upload program.
Oy Vey!
What I’m also hearing is that they also hope to repackage this data and sell it to Wall Street. One spin on this is that they may highlight the “Berkshire Hathaway” name when doing this. Who loves Warren Buffet more than Wall Street? Their partner in this effort would be Collateral Analytics. Collateral Analytics has been requesting MLS data on behalf of their broker clients for the last year or so but is running in to problems with some MLS providers as to the nature of how they are using. it. I guess they think by having this data outside the MLS, and stamping Warren Buffet’s name on it, it will be all good. If RPR, CoreLogic and, dare I say, REBIG couldn’t make this happen I very skeptical that these guys could make a dent.
Who wrote the plan?
My sources say the business plan was put together by The WAV Group, most notably Victor Lund. I don’t believe the selling of data to Wall Street was part of the plan put together by WAV Group. But the upstream national broker database and charging brokers up to $2.00 per listing to upload was proposed in the plan put forward by WAV Group. As I said, the plan written by WAV Group hopes to increase brokers’ “leverage” with MLS providers. Phase One would be to create this upstream national broker database. I believe this is the “big initiative” The Realty Alliance voted to proceed with last month.
I believe WAV Group is also responsible for drafting the RFP for this database and facilitating vendor selection. What is puzzling to me is why The WAV group, which has been hawking their strategic MLS planning services pretty hard lately, would venture in to this territory. Gotta eat, I guess.
Who is going to build it?
I haven’t seen a definitive list of vendors, and I doubt any of them would confirm or deny involvement, but I can make an educated guess about two of them.
In all cases I don’t see any clear win for vendors (inside the industry) who choose to cooperate. Seems like kryptonite to me.
1. CoreLogic, always a WAV Group favorite, seems an obvious player. But as one of the biggest providers of MLS software to the industry already committed to share any “Wall Street Revenue” with MLS providers I don’t see the logic here.
2. RED- Real Estate Digital. RED aggregates data for RPR (via LPS), builds broker platforms, and builds and sells public-facing MLS websites (something TRA abhors). Since the broker database is upstream from the MLS they can’t really leverage their MLS data aggregation know-how.
Plus, take a step back. A broker database business model that relies on brokers paying $1 to $2 per listing to operate? Really? I may not be the smartest guy in the room but that idea seems batshit crazy me. What vendor would want to be involved in that quagmire?
And I’m also hearing that not all members of the Realty Alliance are confident in the plan.. And not just a few, but a lot of them. Which is why this stuff is starting to get out.
In Summary
This is a bad deal for brokers and MLS providers. Actually I think it’s worse for brokers because of the time suck and money wasted. The MLS providers will just sit on the sidelines laughing their asses off.
I still think cooler heads will prevail. The members of The Realty Alliance are smart business people. Some might be more ready for change than others. But they have to realize you can’t put the genie back in the bottle. You have to find new ways to win.
As I’ve said in my first post on this subject…
“Stop listening to the consultants you’ve hired. Stop drafting new business plans. Go sell a ton of real estate. You have the MLS community attention. Take advantage of it.
Don’t lose this opportunity.”
Looking forward to catching up with everyone next week. I want to highlight a few events that I’ll be attending/participating in.
