The Multiple Listing Service (MLS) is one of the worst inventions made by man and continues to hold the industry back.
Lets rewind a bit. Its the 1970s and you want to sell your house, how do people find it? This was a very real problem that got solved in a relatively clever use of local power. Instead of putting up a sign and praying someone saw it, you would hire a friendly local realtor who with their knowledge and skills, would make sure lots of people saw it. How did they do it? With a lot of paper, and some books. The exact method varied by area but here is an abstract.
- Your agent gets all of the relevent details in order to advertise it
- They bring this to their broker who puts it in a binder, filling cabinet, etc of that brokerages currently listed homes.
See the problem there? This system would only allow agents within that specific brokerage to have access to it. If the broker was smart, he'd make it easy for other agents to see it but that means agents from other brokerages need to visit all of the little brokerages weekly to check their books for houses their client might like. Thankfully we where smarter than that, I actually skipped the third and most important step of this whole process
3. Your broker submits the latest copy of all their houses for sale to the local real estate board.
Whats a local real estate board? What exactly your local real estate board does varies but in general they are your local areas governance and assistant for all things real estate. Often they were limited to small geographic regions or individual cities. They typically offer lots of services to local realtors like training, equipment, get togethers, etc that are funded by every local realtors dues. Their most important role however was being the centralized location for all available homes in the area. They would collect and disseminate all the local listings so that agents and even consumers can see whats available. This would present a problem for out of area agents or buyers but this was probably the best that could be done in a world run entirely on paper.
This system worked well for its era. Especially with local boards that tried. You could walk into a town and grab a magazine of every home thats available right now in almost any store, it was often right next to the local newspaper. I have fond memories of grabbing a real estate book outside of my local Dennys and looking at all the cool houses while we waited for our food. Sometimes on roadtrips, I'd grab a couple from places we stopped at to see how different houses where in these areas.
So where does the disdain come from? Well as I've outlined, the system works great in an era when the world runs on paper. The biggest problem is that
It largely still works this way
I hope you like history because now we need to step back into the late 1990s (or early 2000s for ones that where behind the times)
It's the 1990s, you can't use the phone because your kid is asking jeeves about the Pacific Northwest tree octopus. This new internet thing is beginning to revolutionize the world and the phrase “Mass Communication” is getting thrown around a lot more. As everyone is getting online and whole new paradigms are being created with our ever more connected world, your local real estate board was begining to realize this potential as well. They can keep the same hierarchy as before but entirely paperless and up to date by the second with agents submitting listings directly to your server. Agents can also access up to the minute current listings from their computer anywhere, empowering them to further help their clients. This would become the current system we have today where your local real estate board runs a database somewhere that has every listing available right now.
This might not have been a problem when these systems where being designed but in the year 2023, its still fragmented like this with data split up into seemingly random zones based on geography. This problem is also largely hidden by titans with lots of wealth and protected by the National Association of Realtors. Your average consumer doesn't expereince this headache because when they go to Zillow, they see everything and think thats just how it works. Little do they know that Zillow is individually licensing access and building interfaces to get this data from thousands of tiny little databases spread out over the country, often times running into technology thats older than me. Your local realtor doesn't think about this because they just list a home the same way they always have and it eventually sells.
Better ways exist and most probably already think it works like this. The solution is to
Nationalize the MLS
Technology is amazing. Think of all the things your little glass rectangle in your pocket can do that we completely take for granted. I can instantly send something to someone living in Europe, know their weather, read about anything I can ever imagine, watch hours of video from the middle of nowhere, and way more. Our world is extremely connected and practically everything is at your finger tips. The only thing that makes real estate feel similar is an illusion created by a handful of companies with enough money and development power to patch it all together. If Zillow died tomorrow, most people wouldn't know how to find a house. Even searching local would take a hit as most of those real estate magazines are gone and consumers have no idea what a real estate board even is, let alone the name of theirs and the specific name for their MLS product. You can call your local agent who can probably still find you things locally since they where already using the local MLS but even they would have trouble finding something out of area. They would have to call someone in another district like in the old days and see what they have. This is asinine.
Real estate is one of the most important parts of the American economy and one of the most important indicators our government watches for to indicate economic health. Despite how much my generation complains about not being able to own a house, we still want one and will eventually have to interact with these systems to move up the ladder in life. Real Estate is one of the most vital cornerstones to many peoples goals whether thats the space to have children, place near a good job, etc. The infrastructure to facilitate this vital part of the economy needs to catch up.
The solution is obvious and thats to unite it. With how important it is to America and how bad it is in most parts, a government take over would solve so many of our issues and even create new levers to stimulate economic growth. Americans only think in negative freedoms so this is unrealistic. There does exist a more capitalistic method that would still solve all of these probelms
Buy them all
Seriously, its that easy. Zillow is happy to license the data and build things on top of it instead of getting down in the dirt with us and fixing it. It's time for someone new with a lot of funding to start buying and consolidating all of these tiny MLS databases and leave the local real estate boards intact. The real estate boards still somewhat make sense for their local expertise and uniting power, but them controlling the data to an area is outdated. The biggest obstacle would be the NAR who is notouriosly sue happy and will fight anyone that tries to bring real estate into this century. They have a dirty secret though, they lose more than they win. The NAR has repeatedly tried to illegally bury people in paperwork because they knew they would lose in court, only for groups like the ACLU to step in and provide enough funding to beat them back. If someone comes in with a considerable war chest, they would be free to drag the industry into this century and pound the NAR into the ground where it belongs. These challenges may seem immense but they bring a lot of advantages to the table. Most MLS databases are out of date, have different info fields, security issues out the wazoo, and so much more that can easily be fixed.
Seriously, as much as this is a wet dream of mine, you are free to do this. Don't even give me credit, start buying up the MLS and fix the industry. Zillow doesn't seem to care what happens down here so you can extract whatever you want in licensing fees. Your local real estate boards also won't have to be responsible for infrastructure and as long as you build in mechanisms for them to police their members, many of them would be on board. Those that wouldn't are likely boomers that will get voted out as their members realize how backwards they are with the industry leaving them behind.