Where Real Estate Gets Its Dirt

Seven Big Wishes: The Vendor Edition

CMLS is just around the corner and it promises to be the most attended in it’s 53 year history. Rob Hahn recently posted “Seven Big Questions ‘The MLS Edition'”, I’m going to riff off that and give my 7 wishes from Real Estate Vendors. Some of these I’ve experienced first hand, some I’ve heard from others. I don’t want the list to sound whiny, and like everything on this site, please take it with a little tongue in cheek (just a little).

1. I want standards. I want to be able to write a killer real estate app and release it everywhere at once. Yes, I know there are “chicken and egg” type issues, and it’s difficult. But, it’s 2010 people, let’s make this happen!

2. I want MLS providers to make decisions quicker. The Internet moves faster than one board meeting a month. How many times have you heard, “Our board meets next week but the agenda is already full, and next months is also full, but I might be able to squeeze you in the following month…maybe”? Lame.

3. Let me compete. For a number of reasons, many MLS providers put up huge walls or policies designed to keep new products from entering in the market. Give your members a choice.

4. Stop the shake down. One MLS provider requires me to pay $1,500 a month to release a CMA app in their market, at another MLS it’s $1,000 a month, at another it’s $600.00 per quarter and at another its $0.00. WTF? As a technology solution provider, I’m pretty well aware of the “costs” of providing data. Instead of making me pay you protection money….

5. ..Let’s be partners. I would much rather do a revenue share where you and I both gain based on performance rather than paying you a “tribute” each month.

6. Let me make a living. You complain about customer service but forget you drilled your vendor so far down on price that you made it impossible for them to perform.

7. I want to advertise (in your magazine, newsletter, or website), sponsor (your event, blog) , and attend trade shows. But, make it worth my while. Don’t just put me in a booth in the middle of nowhere, put my logo on a sign, and expect me to be happy. Be creative! And, don’t charge me an arm and a leg. The longer I’m around, the more money I will have to spend. We need each other, price accordingly.

Did I miss your wish? Let me hear them or your comments.

  1. WOW!!!! I love it Greg……it covers all sides. If everyone would stop and consider how partnerships and working together might just make them more money and is always better for the end user …..we could save our wishes for more personal things. eh?

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  3. Here are my 2 cents’ worth of response.

    1. I want standards – Couldn’t agree with you more. Having true data standards will be the best thing for all of us – MLSs, vendors, etc. We all need to get behind the recent RESO efforts spearheaded by the COVE group to get standard names and standard data defs defined for everyone.

    2. I want MLS providers to make decisions quicker – Good luck with that one. As long as MLSs are owned and governed as they are today you will be faced with this decision making process. Until such time that boards of directors at MLSs can allow their staff to make the decsions necessary to move things along you will continue to have the monthly meetings where operational decisons are made. Boards need to focus on strategic planning and financial oversight and leave the day-to-day running of the MLS up to the professionals.

    That being said, this may not be possible in the majority of MLSs throughout the country because they are relatively small – less than 500 members – so they won’t have the resources that are necessary to do what I am describing.

    3. Let me compete – Not sure how many MLSs prevent 3rd party products from entering their market place. I know we are always looking at new products and services that might enhance or add to our exisitng offerings. We DO want them to be as integrated as possible so that to the user it looks like it is all one system – forcing them to go to several different platforms and conduct several different logons and repeat a search is not going to promoite use of new products. With the popularity of single signon taking off a lot of this is taken care of – but you still need the ability to easily pass data back and forth – that’s where standards and integration come in.

    4. Stop the shake down – In this case I couldn’t agree with you less. Where is it written that MLS Content should be free to anyone in order for them to use the content as raw materials in the building of a new business. MLSs, brokers and agents spend a lot of money getting listings, posting and hosting and every Greg, Dale and Andy thinks they are somehow entitled to it. There is value in that content. How many CMAs can you sell without it?

    5. ..Let’s be partners – This is a way to allegedly counteract the above request. The problem here is that there is very limited revenue to be shared in order for MLSs and vendors to be partners. There are two problems I see – if you limit your products to just a handful in order to maximize revenue and possible profits for that one product then you are in danger of missing or eliminating other products that might be of value (this would counter your request in number 3 above). Or if you open it up to a myriad of products then no one has the ability to make any money because the revenue is spread too thin across too many products. So somehow a happy medium must be found.

    The other issue here is that your market is not every MLS member out there. As you well know from yur years in the business the number of subsscribers with discretionary income to spend on new products is very small – probably in the 5-10% range. So the market is actually very small and the price of the product is critical to its success. The rule of thumb I always tell vendors is that the cost of the product needs to be under $100, and your cost of sale will be about $200 – not sure how to make money on that formula without a site license that everyone in the MLS pays for.

    And being partners assumes that the MLS has a sales and marketing department ready to promote your product. Very few MLSs have such a staff, and even if they did then the cost of that staff would tend to eat up all the revenue you plan on sharing with them.

    6. Let me make a living. – You’re absolutely right that a product must be priced properly so that the company can make money or why do it. The problem you face is that MLSs for the most part run on a shoestring budget, and are not in the business of making a profit on the backs of its members, so they are going to negotiate for the best possible price. I could be callous and say that when you negotiate with the MLS that you should not knuckle under to their demands for a price so low that it puts strains on your ability to make a profit – but I won’t say that. And paying more should never be tied with customer service. If the service aspect is not built into the price then you should not offer service but leave it up to the MLS – who in my opinion tend to provide a better level of service than the vendors because each MLS is more focused on its data, its systems and the way buinsess is done in their market.

    7. I want to advertise (in your magazine, newsletter, or website), sponsor (your event, blog) , and attend trade shows. But, make it worth my while – Not sure what can be done about this one. If you have a tech fair with only one vendor I guess that could accommodate your request. But a trade show is about choices and options so I’m not sure the best way to handle this other than buying bigger booth space or a premimum location. I personally am not a fan of trade shows because you can’t really get a good feel for a product with a 5 minute demo on a crowded expo floor.

    I guess my summary would be that you are struggling with the same thing MLSs and vendors have been struggling with for years and years. And with other companies out there offering “free” versions of their products I don’t see any easy way to improve the profitability of vendors who sell individual products to indivdual agents. If we were back in the 70s and 80s when things were relatively new and more expensive you could make an argument for a product to sell for a reasonable monthly fee. But over the years we have gotten the cost of MLS down to such an economic level that it is difficult to justify acquiring a product that is going to cost more than what an MLS is charging for all the services we now provide.

    Sorry for the rant but I just felt compelled to add to your blog.

    Thx for listening.

    Russ Bergeron

  4. Hi Greg,

    As a fellow vendor I think we all have our list of wishes when it comes to our relationships with our MLS clients. Having said that, Russ B. is bang on in his comments from the MLS organization perspective. In reflecting on both points of view, I think that it is apparent that we are all too focused on dividing a very small pie. The only reasonable solution to this is to grow the pie. But how do we do this? We certainly can’t expect growth in the number of REALTORS in the current market. We will have to look at more innovative ways to increase mutual revenues. Unfortunately, when one sits down to examine the possibilities, there seems to be a plethora of restrictions that make innovation difficult. For instance, over half the MLS organizations we work with do not have internal support for public access to listing data. The result is that a significant opportunity to gather pre-mover data at the neighborhood level is left for others outside professional real estate to harvest. And the most galling fact is that they are using MLS data feeds in most cases.

    To give you some idea of the value of this piece of pie we are leaving on the table, I contacted a Sr. V.P. at a Fortune 500 company that wholesales mover data. Within a week he had his people evaluate the national potential for sale of neighborhood pre-mover data. Specifically, he was looking at compiling consumer based, mobile search activity to identify pre-mover interest in local neighborhoods and so on. Combining for sale and rental searches he estimated that his clients would spend $90 million annually for this information. That’s a lot of pie to leave on the table. Would we look at changing our rules for that much new pie? How many other pie increasing opportunities are lurking out there just beyond our current level of engagement?

  5. Ken

    Great points. What you describe has been talked about for many years – repurposing of MLS content. The problems you face are not just the rules, which DO serve a purpose, but the question of who owns the content – seller, buyer, agent, broker, MLS; whose permIssion do you need in order to repurpose the content; and who should be compensated for the content?

    I believe NAR feels that it should be them – see RPR and LPS. And of course we have the CoreLogic alternative.

    And should something like you describe actually occur, it does not open up an avenue of revenue for traditional vendors, just those who “buy” and reuse our content.

    Another concern expressed to me by some brokers is that by ” freeing” up the content we run the risk of allowing a 3rd party to come between the broker and his customer.

    Russ B.

    And by

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  7. Thanks Russ,

    I know you have been at the vortex of many of the conversations around leveraging MLS data for some time now and the many faceted challeges associated with such endeavors. I am interested in your thoughts, however, on the following.

    In the past couple of years we have seen the arrival of new device technologies that provide users with additional ways to access, use and interact with real estate data. The latest mobile devices bring some interesting elements to the party in that they provide more than just access to existing data sets. What I mean is that, as the user uses the device they create new information that can be stored and aggregated for business intelligence purposes. For instance, users of our Kurio system when they are accessing the MLS data set can create new data such as saved property searches, device location, mortgage rate queries, mapping of commute times, neighborhood interest, livability priorities etc. Tracking these device activities in relation to the MLS data allows us to mutually determine pre-mover, pre-transaction interest in specific localities which could be of great help in third party decisioning. So it seems to me that these new device capabilities at least bring new data sets to the table that have value. In doing so, I think they re-open the ongoing discussion because it is no longer just about listing data exclusively.

    Now, who owns these new data sets, how can they be monetized and for whose benefit? It seems to me that in the specific case I have set forth that the two contractually related parties (the vendor with the device system and the MLS with the listing catalogue) could agree on a revenue split. I understand that the Broker owns the individual listing and the Agent is acquiring it but they are not legal parties to the contract between the Vendor and the MLS. Once that revenue shareing agreement is in place, perhaps it would make sense for those parties to contract with NAR to act as the wholesaler of the data to appropriate third parties as it would seem that they are better equipped to accomplish this than the local MLS or the Vendor.

    Would this make any sense in your view?

    Ken Galpin, CEO Kurio

  8. Been too busy to respond promptly to some of the comments. I don’t want to respond to Russ’s comments line by line because for the most part I agree with him completely. But I did want to respond to one in particular for the sake for furthering the discussion.

    “Wish” #4: Stop the shakedown, @Russ responds, “MLSs, brokers and agents spend a lot of money getting listings, posting and hosting and every Greg, Dale and Andy thinks they are somehow entitled to it. There is value in that content. How many CMAs can you sell without it?”

    I see a flaw (inconsistency?) here I want to address.

    CMA programs have been around forever. Traditionally you would bring MLS data in to a CMA using the MLS system’s export function. The process goes something like this:

    1. The MLS member logs on to the MLS system.
    2. They do a search on the MLS system to find comps and select them.
    3. The MLS system creates an export file and saves it to the MLS members hard drive.
    4. The MLS member launches their CMA application and imports the MLS “export file” and then creates a CMA.

    Question #1: Under current MLS rules does that CMA vendor need to pay the MLS provider a “data access fee” each month to import this file in to their CMA app?

    In my experience the answer in most cases is “no”.

    The above “export file” method has been around MLS systems for a long, long time. And the problem is it totally SUCKS! The issue is that creating the MLS “export file” on many MLS systems is not very intuitive and many agents have a tough time finding where the MLS system saved the “export file” on their hard drive.

    A better way would be be for the CMA program to simply query the MLS systems database directly (usually through a RETS server) for the comps and bring them over to their CMA program automatically. You eliminate the user having to create an export file and eliminate the need for the user to search for the file to import.

    Simply put, it’s a better way for a MLS member to “access” their data.

    Question #2: Under current MLS rules does that CMA vendor need to pay the MLS provider a “data access fee” using the method described above?

    In my experience a lot of the time the answer is “yes”.

    So by creating a CMA application that is less intuitive and harder to use the vendor is rewarded by not having to pay a MLS access fee, but if a CMA vendor makes it easy for the MLS member to access their data they are penalized and need to pay a fee.

    Confused yet?

    Never mind the fact that in the either scenario the CMA vendor isn’t hosting any MLS data at all. Never mind the fact that the CMA vendor isn’t using data for any “matching” services or creating “derivative” data products. A CMA is professional tool for the MLS member to conduct their everyday business of selling real estate. The CMA vendor is just looking to make their app simple to use.

    And this doesn’t just apply to CMA apps. A app, using the last method described, to create real estate flyers would also need to pay an MLS data access fee to create….a real estate flyer.


    I might be a bit pollyanna about this and since I am a CMA vendor I’m certainly more passionate about it. I’m also sure that I have a few holes in my argument, lets hear them!

  9. Greg,

    Your response to the challenges surrounding innovation in our space is very timely.

    In your particular situation you not only have to deal with the payment for access issue but also try to compete with other vendors who have included CMA creation functionality into MLS software products that the MLS is paying a fee for. And then potentially, to add insult to injury… what happens to your ability to innovate if an internal element like the national association decides it wants to compete with you too and comes out with a CMA product and offers it to your customer in a manner you can’t?

    This summer I had a very interesting conversation with a major Venture Capital company that shall remain nameless at this point. When asked if they would invest in the real estate technology space they said yes but on one condition… if NAR was a partner in the venture. Without NAR as part of the investment syndicate they would pass. Their outside view of our industry was that all new innovation in the space would ultimately be sideswiped by NAR if they were not a partner in the enterprise in some way.

    Now I know that there are those who believe that NAR should be aggessively acting in the interests of its members on as many fronts as possible. But when it comes to competing with the vendor community to build and deliver innovative products there is a very real danger that innovators will abandon the the space if they have to compete with major forces within the industry itself. Forces that hold so many advantages financially, legally, structurally, politically and otherwise. Does the industry want to end up in a situation where it is dependant competely on internal initiatives for innovation in the space? What incentive will there be for any innovation at that point? (I know I am positing a worst case scenario and there is always someone out there that thinks they can make a buck selling to this industry… at least until their money runs out :-).

    Look around at other industries and see how their internal organizations are engaged in fostering mutually rewarding relationships with their vendor communities and the innovation that has occured as a result. I wonder if the industry realises how dangerous it is to try and exert internal ownership and control over the innovation process and where this leaves it in the long term.

    Finally, why does the industry think it is so necessary to have such control in the first place? What’s the innate insecurity? Yes, I know that there are “good reasons” for many of the “controls” that exist around MLS data but other industries have similar requirements without stifling innovation. Surely we can find ways to accomodate these needs without de-incentivising the vendor community through things like internal competition and unlevel playing fields. Then again, maybe the industry is so adverse to change that it is happy to have those pesky vendors just go away. Maybe the industry doesn’t care if Facebook becomes the defacto national MLS in a few years because the younger members within the industry have grown tired of the internal restraints on innovation. Then again, the way the housing market is going in the good old USA most of us vendors have got to be wondering what the future holds.

    Ken Galpin

  10. Great post Greg, completely agree on point 1. Top Producer has worked hard over the years to integrate with MLS databases of all sizes. It has become more difficult in recent years to enter into markets that do not demonstrate the potential of an immediate return. The price points on our products are pretty low, and to spend 4-6 weeks developing/mapping our software to work for a 100 members MLS is a resource heavy process. On the flip side, we don’t want to say no based on a low threshold – our customers deserve better. If it took days not weeks to integrate with an MLS database, we wouldn’t have to be put in that position.

    On point 2 we definitely respect the fact that a thorough analysis is important for our MLS partners. What is difficult for me to stomach is when I see an MLS release what I would consider to be the same product, and several months later the BOD declines our request. Many MLS’s have standards for approving vendors based on guidelines, and I would like to see more adopt a process that sets some basic expectations and timelines. Often in this industry it is not what you do but who you know that determines if you will have success at the BOD level.

    Though this might surprise you, I have to disagree on point 3 and 4, though I am VERY familiar with varying licensee fees per MLS. I think that some walls are important to keep out the tire kickers, and licensee fees can definitely accomplish this. We make our decisions on moving forward based on expected revenue and subscriber levels. If the fee is too high (which can happen) we will request a reduction to an acceptable level or propose a revenue share agreement. If it is still a no go, we let our potential customers know and they will often petition on our behalf.

    Lastly on point 7, could not agree with you more. I used to support sponsorships, but measured our return on 3 large packages we purchased for various MLS/state shows. The return was dismal, and conversely for shows that we paid for just a booth we performed as good or better. Right now I look for opportunities that include e-exposure, through web banners and emails. You can measure these with dedicated landing pages, so even if you didn’t get the result you wanted, you have some metric to measure going forward.

    Thanks for the post, it was a good read.

    Warmest Regards,
    Robert Love
    Top Producer Systems

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