The number of businesses that provide the multiple listing services used by real estate agents across the country to post and find listings in local markets is dwindling as rival online offerings make it easier for homebuyers to shop on their own.
There are now around 700 multiple listing services in the country – down from about 800 a couple of years ago, according to industry sources.
Some observers expect that number to eventually shrink to less than 100 due to mergers.
The prospect doesn’t daunt Annie Ives, chief executive of Beverly-Hills based Combined LA-Westside Multiple Listing Service Inc., which operates website TheMLS.com.
Combined LA is jointly owned by the Beverly Hills-Greater Los Angeles, Malibu, and Southwest Los Angeles Realtor associations, which receive a dividend based on the company’s profits. Agents pay $440 a year to access the website, which would put its annual subscription revenue at $6.6 million.
The organization is intent on keeping Combined LA independent, serving its more than 15,000 agent members across Los Angeles County from Malibu to the west, Highland Park to the east, Hollywood Hills to the north, and Inglewood to the south.
“By maintaining local control, we can better assist our members on local matters,” Ives said. “Real estate is local, and business is done differently in different cities. For example, the laws are not the same in Beverly Hills as they are in Newport Beach.”
ITech MLS, a 1,700-member company owned by the Glendale Association of Realtors and Pasadena Foothills Association of Realtors, also has chosen to remain independent.
Agents using Combined LA have access to more than 95,000 active listings, including information from other markets it receives through data-sharing agreements with seven other multiple listing services companies in Southern California. Ives said her members have access to 85 percent of listing information in that region. The company is also spending money to improve its online platform for both homebuyers and agents.
“Because of the massive amount of data that our members have access to through data shares, there is no need for a statewide MLS,” according to Ives, who said her company has received acquisition offers.
Combined LA has signed a data-sharing deal with San Dimas-based competitor California Regional MLS. That company grew its agent membership to 82,000 this year from 20,000 in 2005 after a series of four mergers, according to Chief Executive Art Carter. It is now jointly owned by 35 Realtor associations.
Carter said he is in talks with four other multiple listing services about merging with his company in an effort to create one statewide entity.
“The amount of investment income on the real estate technology side has exploded,” he said. “And to think that smaller (multiple listing services) are going to be able to respond to increased competition to provide more and more product for their agents to remain relevant from a technology standpoint – there’s just no way.”
Northridge-based broker Mel Wilson of Mel Wilson & Associates, who’s on the board of the National Association of Realtors and California Association of Realtors, said technology advancements happened quickly in the real estate industry.
“The investment required to keep up to date with those rapidly changing technologies meant local boards stopped being in the business of owning the MLS because they’d be responsible for all the tech advancements,” Wilson said about the reasoning behind the mergers.
Carter said he eventually envisions less than 50 multiple listing services sites operating nationwide due to rising technology costs. He acknowledged that data-sharing arrangements, such as his company’s deal with Combined LA, can be a good way for competitors to work together for the benefit of agents.
“It’s just a matter of building a system where everybody feels the local voice is being heard,” he said.
Tech investment
Most of Combined LA’s competitors pay for software made by other firms to run their websites. The firm has taken a different approach, hiring an in-house team of about 30 developers to update the agent- and consumer-facing platforms.
Such an endeavor comes at no small cost, though the business declined to provide financial details. The effort has taken a year to develop so far, with a planned rollout in the fall set to include interactive maps and improved search tools as part of an effort to emulate some of the most user-friendly features offered by platforms such as Redfin, Realtor.com, Zillow, and Trulia.
Ives said she opted to make the investment in part because Combined LA’s agent members complained that their clients search for homes on third-party sites rather than the company’s website, a portal that allows agents to see what their clients are doing, communicate with them, and have more control over a transaction.
“Our interface will be comparable, but we will never be able to compete with those organizations because they spend millions of dollars in marketing and technology,” Ives said. “We do the best we can.”
One of Combined LA’s biggest challenges, she said, has been competing with companies such as Facebook Inc. and Google for top-notch software engineers. The company has turned to overseas talent as a result, with a third of the development team based in Argentina.
Small multiple listings service companies also compete with larger rivals when it comes to contracting with vendors to provide different offerings and software products to members.
“I can negotiate better pricing for 82,000 members than they can ever negotiate for their 2,000 to 3,000 members,” said Carter of California Regional MLS. “If I can guarantee a vendor that they will get 82,000 people using their product, they will price it much lower than they would otherwise.”
He added that his firm has saved $2 million in costs so far operating as a unit rather than as five separate businesses – money that could go toward technological advancements.
California Regional MLS merged with the Torrance-based South Bay Association of Realtors’ multiple listing service in 2008, which served the Southwest county. It then merged with L.A.-based California Association of Realtors’ site in 2010, and with the Southern California MLS in 2011, which served Long Beach, Whittier, and Orange County. The company also merged with the Central Coast Regional MLS last year, adding Paso Robles, San Luis Obispo, and Santa Ynez Valley to its geographical portfolio, among other areas.
California Regional MLS has also been contracted to run the website operated by Crisnet, which is owned by the Van Nuys-based Southland Association of Realtors. Crisnet is one of Combined LA’s main competitors.
“(Crisnet) recognized the difficulties to remain competitive and cost-effective for a 10,000-member organization is kind of tough sometimes,” Carter said.
