Will the commissions verdict kill the MLS? Not so fast, say portal execs
The Sitzer/Burnett verdict has the industry bracing for a sea change. But leaders at Zillow and Homes.com say MLSs add value and can’t simply be torn down.
Key points:
- Zillow COO Jeremy Wacksman told investors this week that dismantling the MLS structure is unlikely and would be difficult to do.
- Wacksman added that some in the industry “may have forgotten” the benefits offered by the MLS.
- CoStar CEO Andy Florance previously shared his thoughts on the MLS structure and said it has “been a huge benefit.”
The Sitzer/Burnett verdict is in, and the industry is bracing for change. While appeals and additional litigation could take years to complete, agents, brokerages and home search portals — some of which rely heavily on revenue from buyer agents — are looking ahead to a future where buyer and listing agent commissions are decoupled.
But what about the MLSs? How will they be affected by the fallout from Sitzer/Burnett, and could the MLS structure as it currently exists go away?
Leaders at two top home search portals, Zillow and Homes.com, see value in the MLS system — which provides them with much of the data their sites rely on — and believe it benefits real estate professionals and consumers alike.
Zillow: 'Taking a giant hammer' to the MLS structure unlikely
During this week's earnings call with investors, Zillow's chief operating officer, Jeremy Wacksman, answered a question about a hypothetical future "where the MLS structure devolves," leading to opportunities for others to take its place.
"We just don't think it's likely ... taking a giant hammer to the hundreds of MLSs around the country," Wacksman said. "How that legislatively, regulatorily, or legally would happen would be a pretty difficult thing. There's a ton of value provided by having an integrated marketplace where most consumers and partners can see everything on the market."
If anything, industry professionals might not realize what they had until it's gone, Wacksman warned.
"And while many of the industry participants may have forgotten that benefit, we believe that if things begin to fragment, they will remember that benefit."
CoStar: The MLS 'works extremely well'
As Homes.com vies for a top spot in the portal space, Andy Florance, CEO of parent company CoStar, sees the residential MLS system as an asset. In May, Florance shared his perspective on the MLSs with Real Estate News.
"The MLSs have been a huge benefit to us and will continue to be a huge benefit. It's a system in which the agents are collaborating, cooperating to produce high-quality, reliable information to help market their sellers properties, and also to help facilitate the connection with the buyer," Florance said. "So that system works extremely well. We love the MLSs. We would love to see the system work forever because on the commercial side, we have 1000 people that have to replicate that at a huge cost and huge effort."
Additionally, Florance said he didn't see any business sense in trying to duplicate or replace the residential MLS.
"We're spending hundreds of millions of dollars in creating new content — new content that's different — but we wouldn't be able to create that content if we had spent hundreds of millions of dollars trying to [recreate the MLS]," he explained. "The industry is able to produce a higher net product to the consumers and the agents. Having a solid MLS is good for us, it's good for the agents, and good for consumers."