24 Oct The Real Value of MLS Data
“Smaller sample sizes of data are definitely the right way to go…when it comes to big data and analytics, the SMALLER your database is, the more VALUABLE it is!”
– No one ever.
It seems that there is quite a bit of controversy lately over the value of MLS data. It’s really not a new concept. Brokers and MLS’s, and even N.A.R. for that matter, have long been chasing the holy grail of profit hidden within MLS databases. Those past attempts have all failed: either due to political opposition, a lack of complete national coverage, or perhaps the simple fact that outside entities don’t value the data as much as we in real estate wish it were worth. If huge, well-funded companies cannot meaningfully monetize their abundance of high-quality national data outside of charging agents for advertising, then what is the alleged value of very local data?
“Value” is never hidden; it is always known. It may be underappreciated at times, but not completely obscured. Any real estate agent who has recommended a list price to a seller based on good comparable sales, only to have that seller argue for a much higher list price, insisting the agent does not appreciate the “real value” of the home, understands this principal. Sellers wish for a price, but in the end buyers set the value by actually paying the price that the buyer determines. This principal holds true for a home, and for determining the “value” of MLS data.
There are those who claim to have found a new frontier in monetizing MLS data through something called “Predictive Analytics”. But what is predictive analytics? Simply, it means using all available data on a a group of subjects, say home sellers and buyers, to try to predict what they will do next. But forecasting consumers’ future behaviors is no easy task. It takes a direct relationship with the subjects in question, and it requires gathering through that relationship a wealth of information about how, where, when, and how frequently they do things, correlated with specific demographic data about their lifestyles, income, spending habits, etc. Only once all that information is obtained and analyzed can it hope to be useful in predicting what those subjects will do in the future. Big data and big stuff.
So what does this have to do with CRMLS and why are we writing about it? Does CRMLS have all that data? What are they doing with it? Let us clarify:
CRMLS, through its member broker and agents, collects and stores a lot of data about a home selling. But CRMLS has no direct relationship with our member’s clients, the sellers and buyers. The primary collection points of home sale data are our member agents and brokers, because our job is to support their business, not mine data from consumers. Therefore, if anyone is going to monotize listing data, it should be the brokers who own it, not CRMLS.
But individual brokers only have access to small, localize data sets, what about the value of data when it is sold in a large bulk?
There is absolutely a monetary value in the aggregated data housed in the MLS database. The primary issue, as we see it here at CRMLS, is again who has the right to monetize that data! It has been the longstanding policy of the CRMLS Board of Directors that it is primarily the right of the brokerage community to monetize that data, not the right of the Association or the MLS. CRMLS fully places the right of distribution and monetization in the hands of our brokers.
But what if CRMLS has the opportunity to monetize the data from an outside entity that only sees value in the data coming from the MLS?
In the past, when CRMLS has been approached in this manner, the Board of Directors has carefully considered the issues and usually declined to participate. However, over the past year and a half, a number of opportunities have been presented to CRMLS where monetization of data could be realized by CRMLS on brokers’ behalf. The CRMLS Board of Directors has carefully considered those offers. They have agreed to move forward only on opportunities offered explicitly to the MLS (not to individual brokers) in which CRMLS collects the revenues on the brokers’ behalf.
Is that taking control of the data away from the brokers?
Absolutely not. CRMLS has also always maintained that any revenue generating opportunities require the express consent of the individual Listing broker to participate. To be very clear: CRMLS would not and does not monetize your listing data without very explicit and clear opportunities for our brokers to either opt in, or opt out of participation.
No amount of potential revenue or “hidden value” will sway the driving principles of CRMLS:
Listing data belongs to the listing broker, and each broker has the right to choose if their firm will participate in any opportunity to further distribute or monetize their data.
Consistant with these principals, CRMLS is pleased to announce that later this month, CRMLS brokers who have chosen to participate in our current data monetization opportunities will receive their first checks directly from CRMLS for the revenues collected on their behalf. Participating brokers will receive the full amount of revenue earned from their contributions, minus only the cost of distributing the checks. CRMLS is now proof in practice that the value in large-scale, aggregated listing data not only exists, but can be utilized to the direct monetary benefit of its brokers, while brokers maintain full rights to their data.