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The Broker / Startup Strategic Argument Against Standardized Feed Platforms

There’s a number of arguments for the use of standardized MLS data feeds across many MLS’ by real estate brokerages and startups:

  • Compliance is a pain in the ass.
  • Legal is a pain in the ass.
  • Every MLS feed contains different fields, which ends up being a pain in the ass.
  • Fees differ by MLS. Another pain in the ass.
  • Most engineers a brokerage/startup hire don’t know the nuances of MLS feeds. That means a big learning curve, which leads to an (expensive) pain in the ass.
  • Feeds break / change, and someone has to fix them. Pain in the ass.
  • Did I mention, compliance is a pain in the ass?

Trestle (which we covered here and here), Spark Platform (covered here), Retsly, and others operate in the space of delivering standardized MLS data.

That said, let me give you the strategic argument against such platforms…

Risk

The big argument against standardized MLS feed platforms is strategic business risk. Becoming dependent on one entity for a crucial piece of your business is not a enviable position to be in. In fact, listings are beyond crucial; they are essential. Without them, there is no product or business.

What happens if the platform you’re using pulls the plug? What happens if they change their business model? What happens if they get bought by a competitor? What happens if the CEO leaves? What happens if the platform goes out of business because they can’t find enough clients to operate cost effectively? What happens if they start displaying ads of your competitors? What happens if their tech team is incapable, and the platform is offline for a week? What happens if they service your primary competitor?

Where do those scenarios likely leave a broker or startup?

A couple years later, with direct integrations with exactly zero MLS’. Sure, you could theoretically go sign up for another “platform” and migrate your contracts/credentials over — but all those same risks outlined above apply, and it means integrating your systems from the ground up with a different MLS data vendor.

If you have independent relationships / integrations with MLS’, there’s little chance your entire business will shut down if one or two of them pulls the plug on you. There is a 100% chance your business ceases to operate if your one and only data vendor pulls the plug.

Being dependent on a platform like Trestle, Retsly, or Spark is not unlike Zillow being dependent on ListHub for listings a few years ago. We know how that turned out. They’ve since spent the last few years building direct relationships with MLS’ around the country to mitigate that risk in the future.

Wrap Up

Don’t get me wrong, I’m not saying platforms standardizing MLS data are a bad thing. They aren’t. Significantly shortening the time required to get real estate software to market and decreasing costs in the process are both good things, indeed. There is certainly a place for such platforms in this industry. As a startup, it’s not worth building for a scenario of being a $1+ million a year company, when you don’t know if you’ll ever reach $50k per year in revenue.

If anyone (i.e. your competitor) can go sign up for platform X and be up and running with listings across the same geographic footprint within a matter of days/weeks — there become virtually zero barriers to entry. That said — business owners always need to mitigate risk, and build long term strategic leverage and differentiation. If listings are no longer hard to come by, where does that leverage and differentiation come from?

Will we get to a point in this industry where MLS data is a true commodity? Perhaps. Only time will tell.

About Drew Meyers

Founder of Geek Estate Blog. Zillow Alum. Travel addict & co-founder of Horizon. Product & Marketing for 360modern. Social entrepreneurship & microfinance advocate. Fan of Red Hot Chili Peppers and Kiva.

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  • Nate Joens

    Structurely is both using Retsly and WolfNet for data standardization, to allow us to focus on building tech on top of this data and not just building tech to deal with the data.

    That said, we made this decision to diversify our listing data sources, but I still don’t feel the barrier to entry to obtain new MLS data in a given market is any less significant. It is certainly not a commodity.

    I don’t think MLS data can ever become a true commodity until their is a mass consolidation of the data itself. Until we have one contact, one API feed, one set of contracts, etc will MLS data be truly commoditized. Im not sure that day will ever come, at least not willingly from the MLSs themselves.

    • “That said, we made this decision to diversify our listing data sources, but I still don’t feel the barrier to entry to obtain new MLS data in a given market is any less significant. It is certainly not a commodity.”

      What do you feel the barrier is still? Legal / getting credentials?

    • “I don’t think MLS data can ever become a true commodity until their is a mass consolidation of the data itself. Until we have one contact, one API feed, one set of contracts, etc will MLS data be truly commoditized.”

      I’m not optimistic that day will come either.

  • Sep Niakan

    The basic listing data should be a commodity. The way that data is mashed up with other data and presented is what moves us forward. I think that having these feed services allows companies to innovate faster, instead of being bogged down in trying to add in dozens of feeds one by one. They can stick to the things that make them truly unique.

    • “They can stick to the things that make them truly unique.”

      What exactly are those?

      APIs are usually setup for real time access. That works, if all you’re doing is displaying the data. But most applications require backend jobs/tasks/analytics as a huge part of their value.

      Another issue is derivative works. I know there’s license issues to sort out with MLS’ in order to use their data to make other data products regardless of whether there is a direct integration or working through a platform, but you do need raw data access in full to run algorithms. I’m honestly not sure how these platforms handle this use case currently.

      • Sep Niakan

        OK, you got me. I don’t have experience with any of these services. I went under the assumption that we could customize and mash-up the information that comes through. So if not, then yeah, you are right, the value is not huge if a start-up is really trying to differentiate themselves by providing a truly unique angle on things. As for MLS licensing issues in order to make derivative works, yeah, if they limit the use of the data to a box that’s a big problem and has to go so people can really innovate with new ways at looking at things.

        • It is possible to get a raw standardized feed from some vendors, but I believe it’s a different pricing structure than an api feed. I would be wrong. Any vendors in the space are welcome to correct the record…

  • Visa and MC have always been rivals, but had they not agreed on data standardization for CC numbers and mag stripes and data transfer protocols we would have no credit card industry today. The TCP/IP stack gave us the Internet. These lessons should be no-brainers – data format and storage is not competitive differentiation, it is a dead-end. That’s why I’m amazed that in 2017 the RE industry should still be bogged down with these issues.

    Maybe the RE industry should hand it all over to Google. They’d have it fixed in a week, then we could quit spending money on conversions and feeds and focus on best-in-class front end software to add and visualize the data.

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