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