The Council of Multiple Listing Services (CMLS) claims around 230 members—MLSs ranging in size from a couple hundred to over 100,000 members. As many in real estate are quick to point out, each serves a unique geography, and often has different structures, resources and goals—both a unique boon and a huge pitfall in the face of threats.
As MLSs face an existential—or at least foundational—challenge from Compass, and bigger questions about their role in the real estate ecosystem, can the fractured and notoriously entrenched community rally to protect the structures that have undergirded real estate for decades?
“This industry has been insulated,” says Brian Donnellan, CEO of Bright MLS, the nation’s largest. “Folks have been able to ignore what’s going on and not necessarily help…(but) the tide’s going out, and we’re going to see who has a bathing suit on. Because I think you can’t hide anymore if you’re not helping.”
Donnellan, who has led significant changes at Bright, focuses on what he has described as the necessity of evolution and scaling MLS, while also saying unequivocally that he believes MLSs are broadly coming together, led by CMLS CEO Jessie Edgerton.
Richard Haggerty, CEO of OneKey® MLS in New York, says he is also optimistic about MLSs coming together, and supports the “very important” role of CMLS, particularly around advocacy. He argues that people who question the “relevance” of the MLS industry aren’t “looking at the consequences of what would happen if the MLS were to disappear tomorrow.”
“I think that is a rallying cry, quite frankly,” he says.
Not every MLS leader is so confident. One MLS executive, who spoke to RISMedia on the condition of anonymity, said they were considering leaving CMLS in the near future, pointing to how some MLSs are on vastly different paths in relation to their legislative, legal and infrastructure priorities.
“I just want to be sure that (my MLS’s) dollars, that’s money from brokers—I have to make sure that it’s not going to come back to bite me,” the executive says.
Getting organized
Compass has not shied away from characterizing the MLS industry as an illegal monopoly—sometimes affirming its positive impact on real estate while arguing that MLSs should essentially cease any rulemaking or oversight over brokers.
The mega-brokearage has repeatedly pointed to what it characterizes as a significant portion of the MLS market that has dropped restrictions on off-MLS listing practices. Other MLSs (and brokers) have claimed that these rules prevent “free-riding” by brokerages that want to access other company’s listings without providing their own (at least initially), and repealing them would spell the end of cooperation and the “open marketplace.”
CRMLS, which has led pushback against Compass’s attacks on the MLS, is currently embroiled in a court battle with the mega-brokerage, joined by (at press time) eight other MLSs, including OneKey.
Notably, CRMLS announced it was launching an “MLS Cooperation Legal Defense Fund,” intending to cover legal costs for MLSs targeted for policies that CRMLS argues support cooperation. CMLS kicked off the process to create a similar fund only weeks later.
CRMLS declined to speak to RISMedia for this story.
Edgerton tells RISMedia that both funds will continue to operate separately “at this stage.”
“We support both efforts and encourage those who want to contribute to the MLS community’s efforts in current litigation to consider supporting both funds,” she says.
Edgerton, a lawyer herself, says she is confident that the legal fund is grounded in good practice and precedent, while acknowledging that every initiative at this scale has risk and “anyone can sue for anything.”
“The function of a legal action fund is one of those fundamental offerings made by trade organizations regularly,” Edgerton says. “Is there the possibility that we will get sued? Sure. Am I ready for that? Absolutely. That’s the world that we’re living in right now.”
Both sides
It is one thing for the industry to confront these external legal challenges together. But what happens when MLSs are litigating essentially opposite positions on policies—and theoretically drawing from the same resources?
Most notably right now, MRED in Chicago is tied up in court-ordered mediation with Zillow as it stands by policies ostensibly meant to prevent the portal from restricting “private” listings—with Compass as a co-defendant.
In New York, CRMLS and the other eight MLSs are fighting Compass while essentially taking the opposite position from MRED, defending their ability to restrict off-MLS transactions.
Other MLSs have taken very different approaches to these questions, which are now being mulled by at least one federal judge.
Asked if CMLS’s fund can function in this type of environment, Edgerton says the organization is being “very strategic” and setting up a process with “deep objectivity,” planning to anonymize grant applications and ensure decision-makers bring “as much outside voice…as possible,” along with legal expertise.
“Everyone has been deeply, deeply in support of the Legal Action Fund,” Edgerton says. “But the other half of it is, this is not a standalone effort in terms of the voice the MLS needs right now.”
The MLS executive who was granted anonymity said they wanted to see evidence that CMLS’s fund—and the organization more broadly—was actually functioning in this objective way.
The executive also expresses skepticism about CMLS’s ongoing lobbying push, based on the same conflict—specifically, that “template legislation” (theoretical, at this point) that could be used as a roadmap by multiple states to advance MLS priorities might not be what some MLSs want enacted in their markets.
“We’ve spent years investing in our government affairs,” the executive says. “And now, is it going to split the message if a regulator has a decision to make one phone call or another phone call? That just diluted the messaging that we’re trying to put forward.”
One battle or another
As many MLSs prepare for a drawn-out legal battle, in the meantime, the real estate industry continues to move relentlessly toward control and consolidation. Regardless of any decision by judge or jury, the role of the MLS as either broker cooperatives or listing platform is likely to face challenges.
Open Real Estate (ORE), which has promised to launch its own listing platform with “sole discretion” over where data is syndicated, remains somewhat of an enigma, with many MLS leaders expressing support while still looking for answers on specifics.
“Open Real Estate isn’t the MLS,” Donnellan says. “The MLS offers a transparency that individual brokers can’t.”
Donnellan says he believes that ORE is really just about brokers having more control over listings, while adding he believes that the brokers involved “believe that an MLS does a really good job for them…in terms of an open and fair marketplace.”
“I know Bright has worked hard to work with a variety of brokers to have a clear and transparent marketplace,” he says. “So no, I don’t see this as competition with us. Our jobs may be a little bit different. We may have different aspects or focuses, but we’re here to have rules for what a listing is and how that listing is going to be used within a professional environment.”
As far as how MLSs need to evolve, Donnellan emphasizes scale, and notes that around 30% of agents aren’t affiliated with any of the big national companies like Compass or those behind ORE. He also says that 99.3% of listings end up in the MLS before they are sold, even after Bright tweaked its rules to allow more off-MLS “pre-marketing.”
“That leads me to believe that we’ve been doing the right policies and going the right way for transparency,” he says.
Could a big court decision or new legislation—potentially driven by a landslide election that shifted power at both state and federal level—change how MLSs operate? Donnellan says he isn’t expecting any surprises, noting that the industry has always had to monitor legal changes as well.
“It’s more about states, not about federal,” he says. “I suppose the good news in all of this, and I say this somewhat tongue in cheek, is that it doesn’t move fast. And usually the signs are on the wall before something happens.”
Haggerty, for his part, says that he believes MLSs need to start at a much more basic level in terms of advocacy and lobbying, something that (hopefully) they are more united on. He notes that CMLS’s early meetings with lawmakers have really just been explaining to lawmakers what an MLS is.
“We have to educate, first off, our local, state and federal legislators why an MLS is so vital to a vibrant, open, pro-competitive marketplace,” Haggerty says.
MLSs are “that key building block,” he adds.
