The lasting value of MLS databases is being called into question as new technology and innovation advances. Real estate portal sites like Zillow are drastically changing consumers’ homebuying habits, and startups across the country are threatening to disrupt major parts of the industry.
Experts are beginning to ask if the MLS will remain valuable amid the explosive growth of real estate portal sites and innovative tech startups. Today, most consumers start researching homes independently before contacting an agent–and an increasing amount are choosing to forego agents altogether.
- The value of MLS databases is threatened by the rise of real estate portal sites and disruptive startups
- Sites like Zillow, Trulia, and Redfin are making it easier for average consumers to search for homes themselves
- The MLS still encourages competition and provides standardized and more reliable information
Today, homebuyers have taken the search into their own hands. They’re using sites like Zillow, Trulia and Homes.com to find potential properties before even calling an agent. And while these sites don’t list full-scale MLS data per se, most agents are putting their homes on them anyway just for the exposure. (Zillow alone has more than 160 million visitors every month.)
When you throw in the countless other industry platforms, tools and startups out there that are circumventing the MLS as well, it begs the question: Could the MLS be on its last legs?
Why The MLS?
Now, the purpose of MLS databases isn’t quite as clear, but advocates tout its ability to encourage competition, as well as its standardized, reliable data.
“In my opinion, the MLS is a powerful force for competition,” said Karen Elmir, CEO of The Elmir Group, a real estate agency based in Miami. “The real estate market is competitive, and the business is unique in that competitors must also cooperate with each other to ensure a successful transaction. MLS systems facilitate that cooperation.”
Unlike Realtor.com and Redfin.com—which use only MLS listings posted by those with a valid real estate license—sites like Zillow, Trulia and Homes.com are open to the public. Anyone can create an account and list a property, leaving the door open for inaccurate or unreliable information.
“You don’t know who is entering the information in all these new apps coming out,” said Adam Kaufman, vice president of sales and operations at Pordes Residential real estate firm. “In the MLS, the listing agent is required to input all the information, so you know they are going to make sure it’s accurate. The MLS is also regulated by a board, so typically all of the information is going to be correct.”
It’s not just websites like Zillow and Realtor.com that are changing the game, though. It also comes down to the changing attitudes of homebuyers. According to Jack Ryan, CEO of REX Real Estate, they just want to be more hands-on than in years past—and that makes the MLS and agents less of a commodity.
“It’s amazing how smart the buyers are when they come to visit the home that we’re selling,” Ryan said. “They spend on average nine to 12 months looking for a home on their own. And then they call us if they want to see a home or email us or text us. They know why they want to move to a certain area, what block they want to live in, where the school districts are the best. They know what other homes sold near for what price. They’re so educated.”
Growing buyer independence is requiring less work of traditional agents—and the tools they utilize.
Savvier buying isn’t the only thing rendering the MLS unnecessary. Big data, AI and new tech are also playing a role, paving the way for more seamless, hassle-free real estate transactions on the whole.
Take REX, for example. The company uses data science to essentially remove real estate agents—and their internationally high commission rates—from the home-buying process. Instead of an agent listing a home on an MLS and casting a wide net to find potential buyers, REX uses data to reach the most qualified buyers directly, based on their interests, demographics, location and other data.
“We can tell that this person cares more about schools and pools, and this person cares more about kitchens than garages,” Ryan said. “And this person cares more about commute time. You can change the ad for all those different permutations for 50,000 different people. There’s just no way a human can do that. It’s just too complex.”
If REX is an indicator of things to come, the days of the MLS—and maybe agents in general—could be numbered.
View the original article at Forbes