Industry Decoded: Why MLSs should think differently about data
The value prop of MLSs as data aggregation organizations could be industry-changing. But like in "Moneyball," they'll need to play the game differently.
Thinking big about residential real estate success requires a big-picture perspective. Industry Decoded features industry experts who can enrich your understanding of issues affecting the industry as a whole.
In my business life, I'm always looking to find creative solutions to business problems — the bigger the problem, the greater the intrigue. And in my personal life, I love sports movies. So, it makes sense that one of my all-time faves is Moneyball.
Based on the book "Moneyball: The Art of Winning an Unfair Game," the story is primarily about Billy Beane, the GM of the Oakland Athletics baseball team, who implemented an analytical, evidence-based approach to assembling a highly competitive team on a small budget — when the rest of the league was in an arms race of sorts to outbid each other for the "best" players. Despite spending up to a third less than the top-spending teams, the A's were able to make the playoffs in 2002 and 2003, and in 2002 broke the American League record by winning 20 consecutive games.
Moneyball, the movie, was a boatload of fun, and to this day is one of my favorites.
Moneyball, the book, left an indelible mark on me in the business context. It gave me insight that sometimes business is "unfair," and that to effectively compete with larger, more highly resourced or more established competitors, one has to play the game differently. It requires challenging accepted norms, and as Steve Jobs coined, to "think different."
Which leads me to the changing role of the MLS.
Thinking beyond listing data
I was excited to read a news release earlier this month that California Regional Multiple Listing Service (CRMLS) had entered into an agreement with Local Logic where, according to the release, Local Logic will provide all CRMLS subscribers with "powerful localized data insights such as demographics, location scores, local neighborhood profiles, points of interest, and school data."
But what was super-interesting to me was this quote from CRMLS CEO Art Carter:
"By working with Local Logic, CRMLS continues to expand our mission to provide as much property-centric data to our users by offering the most innovative data solutions." (Emphasis added.)
Hold that for a moment.
Back in 2014, I was vice-chair of the NAR Data Strategies Committee, which had been created just a year earlier to explore the different ways the industry might leverage data. Even back then, before the real emergence of "Big Data" — not to mention AI and machine learning and GPT — I was eager to discuss how the industry could find a way to leverage the massive amount of data it collectively creates or has access to.
But to my disappointment, it seemed like much of the discussion was focused on the concept of "listing data." I understood the narrow paradigm, and I knew that the industry would break through it at some point — I just didn't know it might take a decade to do so.
Given what is happening in technology (AI), the courts (anti-trust lawsuits) and government activism (DOJ/FTC), I believe that CRMLS and some other large MLSs are moving in exactly the right direction. One of the fundamental value propositions of MLSs in the past was their ability to aggregate and share listing data, creating a cooperative marketplace of commission sharing. While extremely valuable to the industry, it is arguably a narrow approach to the value the MLS could have if it expanded its definition of data. And that's why it is exciting to see CRMLS and other forward-thinking MLSs expand their mission to include broader data sets.
MLSs as aggregators of all relevant real estate data
While this is certainly progress, I don't think moving to a "property-centric" approach goes far enough. We are on the verge of a technological revolution around AI that is already touching real estate, albeit in some very rudimentary ways. The ability to use ChatGPT to create listing descriptions is neato, but it's not the kind of thing that could ultimately turn the industry on its ear.
I believe MLSs should consider expanding their definition of data to include all data that its customers, real estate brokers and agents, might find relevant to their work. With this mindset, the MLS could go from being solely an aggregator of listing data to an organization that aggregates, shares and creates applications around a much broader set of brokerage-related data — and monetizes it in the process.
Just recently, several large MLS launched REdistribute, a joint venture of large MLSs which, according to its mission statement, is changing the way that MLS data is collected and used for institutional use. I love the mission and the endeavor. The only question I'd ask would be why limit this to traditional "MLS data"?
The value proposition of the MLS as a platform for cooperation and compensation was significant. The value proposition of the MLS as a real estate data aggregation organization could be industry-changing.
Competing by playing a different game
Which brings us back to Moneyball. Like the NY Yankees of the early 2000's, there are large, well-heeled companies (and some who have not even been formed yet) who understand that real and sustained leverage in this new dawn of the real estate industry, where AI is at the heart of all technology and where "cooperation and compensation" may be short-lived, involves the harnessing of all relevant real estate business data. These companies have a ton of money, significant technology resources and operate at a breakneck pace.
I believe it will be difficult for MLSs to compete with these firms on their playing field. But like the A's, I don't think they have to in order to win.
MLSs, especially the larger ones who have more sophisticated leadership, can play a different game. By leveraging their vaunted place among industry participants who have trusted them to share listing data for decades, MLSs — with the right vision — have the opportunity to leverage that cooperation around a much broader definition of data which could support a stronger industry collective as we enter a new age in real estate.
Russ Cofano is the CEO of Collabra Technology, which operates the digital marketing platform SphereBuilder™. He has more than 30 years of senior leadership experience in brokerage, technology, MLS, associations and affiliated businesses. Previous roles include president and general counsel of eXp World Holdings and SVP of industry relations at Move, Inc. The views expressed in this column are solely those of the author.