In May, NAR will be discussing a policy proposal that originates with The Realty Alliance (TRA). You can read TRA’s open letter to NAR here on The Realty Alliance website. At issue in TRA’s letter is this position:
TRA believes current NAR MLS Policy already permits MLS Participants to use MLS data to create AVMs using third-party software and deliver the AVM results to financial institution end users for a fee separate from any brokerage commission that may be earned on the sale of the subject property. Since the use of MLS data for this purpose is a permitted use under NAR’s MLS Policy, MLSs subject to that Policy cannot effectively deny MLS Participants the ability to engage in this permitted use of MLS data by refusing Participants and their technology service providers to use the MLS’ VOW data feed to create the AVMs.
In other words, in TRAs view, NAR should require that MLSs provide data feeds to MLS participants to allow them to build AVMs for sale to third parties.
Over the next couple weeks, I plan to do four blog posts addressing this issue (not counting this one):
- Summary of current policy based on NAR responses to inquiries we made last summer and fall.
- Examination of TRA’s letter.
- Examination of NAR’s proposed policy language, when it becomes available.
- Some thoughts about the proposed policy.
I should emphasize that I don’t have any strong personal feelings about this issue. Some of our MLS clients believe that they should not provide data feeds for these broker-owned AVMs. Others are fine with it, provided the broker signs a license agreement that protects the MLS and other brokers. Still others have said [while aiming a data hose in the general direction of requesting broker] “You want data? Here it is!”
Instead, I see this as an opportunity to discuss the policy issue and existing proposals so that MLS leaders go into the NAR Midyear meetings equipped to make decisions after some thoughtful deliberation.
I can’t deliberate by myself, so this post is really intended as a warm-up. I’d like you to start thinking about the issue so that you’ll have questions when the later posts go up. Read over the TRA letter, too. It’s well-reasoned and carefully argued.
Thanks!
-Brian
Note: Our firm has previously represented The Realty Alliance, though not in matters related to MLSs. We currently represent the Council of MLSs, but these posts do not necessarily represent the position of CMLS or any of its members. And as noted above, our MLS clients have a variety of views on this subject, all of which appear to us to be supported by rational arguments. Finally, we also represent a few of the larger brokers in the U.S., some of whom are members of TRA; again, we don’t represent them with regard to their relations with MLSs. I have not consulted them regarding their views on this issue, and I therefore have no idea what their views on it are.
Sorry to throw cold water on this, but the topic seems moot since AVMs generated from MLS *listing* data will be wildly incorrect.
Active listings (the price a seller *hopes* to get) have no place in an AVM. The closed price is all that matters, and even some of those have to be tossed.
More importantly are the sales that happen off-MLS which, right now, are a large percentage of sales. Without these, the AVM is going to be inaccurate .
It may help an AVM to get the closed price the moment it’s logged into the MLS, so for that it may be a nice addition. Of course that assumes the record is correctly updated upon closing.
There may be an ulterior motive. The issue may be that TRA is not happy with the license of data for any reason and bringing it to light gets it stopped. Maybe they plan to license data once they get their own database up and running. Maybe they want the revenue used in other ways. Maybe it’s a red herring.
One thing it’s not: a way to make AVMs more reliable.
I don’t see this as cold water at all, but you’re responding to a different level of issue. NAR will likely make a policy decision next month, and I’m interested in discussing its options. Most of my comments are likely to seem tactical to you. You are talking about the motives and strategies of folks who are involved. That’s interesting, too!
I don’t think the MLS data that is used in most AVMs is just the List Price. AVMs relying strictly on public data get the sale of off market properties, as well as MLS sales, so sale prices are there from public records. What the AVM can make use of to refine valuations is days on markets, pricing trends, etc. These can help the AVM become more accurate indicators of the current market, as opposed to what sales were last month….