Private listing networks, broker partnerships, and national platforms are beginning to challenge the collaborative MLS system that has defined residential real estate for decades, and many agents may not yet realize just how much is at stake.
The MLS is the central marketplace in the residential real estate industry and has worked extremely well for decades. However, some powerful forces are beginning to oppose the system.
While most agents still rely on the MLS every day, many may not realize how quickly the distribution landscape of their listings can start to change. For most agents, the MLS is simply a system they log into to do their work. Here, they enter properties, search for homes, get comparable sales, and share properties with customers.
Before I explain further, I should mention that I currently serve as Chairman of the Board of MARIS, a regional MLS serving the St. Louis metropolitan area and surrounding areas of Missouri and Illinois. This article is not written as such, but from the perspective of someone who has worked as a real estate agent and investor for over 40 years and has watched the industry evolve through some major changes.
The MLS was one of the most important institutions supporting the real estate market in its time, which is exactly why the current development is noteworthy.
Built around collaboration
Many agents don’t always take into account the fact that there is no national MLS. The United States has just under 500 MLS organizations operating independently throughout the United States. Despite its fragmentation, the MLS system works extremely well because it is built around collaboration.
Brokers agree to share their listings with other brokers, and in return, those brokers help attract buyers to trade. Once a listing is entered into the MLS, it becomes visible in professional marketplaces within that region and flows through IDX feeds and syndication to websites and search tools across the internet.
This collaboration is one reason the residential real estate industry continues to have access to independent brokers and agents.
Over the past decade, the environment surrounding listed distribution has begun to change. Technology companies have invested vast resources into collecting listing data from hundreds of MLS systems to build national search platforms, and that effort alone shows how valuable MLS data really is.
Recently, some of the nation’s largest brokerage organizations have begun experimenting with private listing networks and internal distribution systems that circulate listings within their brokerage ecosystems before making them widely available through the MLS. In some cases, this may be interpreted as giving sellers more options. Sometimes it’s about competitive positioning.
But whatever the motivation, this concept raises important questions. What if more listings started circulating within private networks instead of jumping straight into the MLS?
This does not require hundreds of companies to change the structure of the market. If a relatively small number of brokerage firms control the majority of trading in major markets and listings proceed through proprietary networks before reaching the broader MLS market, the role played by the MLS may change gradually over time.
It’s easy to look at private listing networks, broker alliances, and technology platforms and think this is just competition, but if listing distribution moves from an MLS to its own network, the implications for agents and brokers could be very real.
MLSs work because listings are widely shared, creating a collaborative marketplace where agents and brokers participate together. As listings increasingly circulate within private networks, exposure can become even more concentrated within those networks, giving large intermediary platforms a significant advantage as they can control where listings appear, who sees them first, and how they are distributed.
While this would not eliminate agents, their role could gradually change from operating in a broadly cooperative market to operating within a platform where the distribution of lists is controlled by a small number of companies.
Looking beyond the local market
The MLS community has long dealt with fragmentation, as agents typically only have direct access to listings within their own MLS system. But as technology advances and consumer expectations change, agents increasingly want broader access to listings beyond their immediate market.
National portals have gained the advantage of aggregating listing feeds from many MLS organizations into one experience. In response, many MLS organizations have begun to explore ways to expand data sharing while maintaining the cooperative structures that have always defined MLS, including what is known as networked MLS.
The idea is simple. Rather than MLS organizations merging, multiple MLS systems agree to share listing data across a collaborative network, maintaining independence with local governance and local decision-making, but with listing data accessible across a broader network.
For agents and brokers, this is important. MLS systems have always been broker- and agent-centric, as professionals representing clients register listings, manage data, and control how listings are marketed within the cooperative marketplace.
Gradually the distribution of listings shifts to proprietary platforms controlled by a small number of companies, which could shift that balance and reduce the role that agents play in managing the information that facilitates trading.
None of this suggests that MLS should remain static. Although it has evolved over the decades as technology and consumer expectations change, and will continue to do so, the core concept behind MLS—cooperation among brokers in a shared marketplace—remains one of the most powerful ideas the real estate industry has developed.
The real question going forward is whether the industry will strengthen its cooperation model or allow a gradual transition to listed distribution in a closed network controlled by a small number of companies. Agents don’t need to be experts in MLS policy, but they should at least be aware that these conversations are happening.
Dennis Norman is the Broker-Owner of MORE, REALTORS and Chairman of the Board of MARIS in St. Louis, Missouri. Connect with him on Facebook or Twitter.
