Apologies in advance to those that couldn’t care less about the inner workings of the real estate industrial complex. This article will likely bore you to tears. We’ll return to our regularly scheduled programming shortly. However, if you are in the real estate field, this may be helpful. Or maybe not. Who knows…
If you are a real estate agent who spends any amount of time on the Interwebs, then you have probably seen discussion surrounding the “Franchisor IDX Rule” that was rescinded at the recent National Association of Realtors (NAR) Conference.
Those discussions usually demonstrate general misunderstanding and confusion regarding the rule, and its subsequent rescission by the NAR Board of Directors.
Here is my attempt to demystifying the ruling, the rescission and how that effects agents, brokers and franchisors.
Let’s start with some definitions, as understanding a few terms is crucial to understanding the rule.
Franchisor — Here’s one definition from BusinessDirectory.com:
A franchisor is a company that allows an individual (known as the franchisee) to run a location of their business. The franchisor owns the overarching company, trademarks and products, but gives the right to the franchisee to run the franchise location, in return for an agreed-upon fee.
In the real estate space, companies like RE/MAX, Century 21, Keller Williams, etc are franchisors. Brokerages (and agents working at those brokerages) under those companies are not franchisors — they are franchisee’s.
This ruling, and its rescission, affects franchisor sites – think Remax.com, Century21.com, etc. It does not affect individual brokerage or agent sites.
IDX – IDX is short for Internet Data eXchange. IDX is a data feed from your Multiple Listing Service that can be used to display real estate listings on a website (or potentially other means of “electronic display” such as a mobile devices, via social media, etc). IDX rules and policy are established by the NAR and local MLS’s. If you have a “MLS search” on your website, that is IDX. (The MLS can’t actually be searched on an agent/broker’s web site. Only MLS members can search the actual MLS, and that is as it should be – the general public doesn’t need access to EVERYTHING in the MLS, particularly things like showing instructions, gate codes, lockbox codes, etc.)
With an IDX feed, agents are able to display listings from any broker that does not opt out of using IDX (and most brokers do not opt out, at least in the Phoenix area).
Syndication – there are multiple real estate search sites out there (like realtor.com, Zillow, Trulia, Homes.com, etc) that allow you to send them your listings for display on their sites. There are even services that will send your listings to multiple real estate search sites. That is syndication – sending your listing data to a real estate search site for publication on that site.
Syndication is different than IDX. With IDX, you are displaying your and other brokerages listings on your web site. With syndication, you are sending YOUR listings to another site for display there. You can not syndicate another brokerages listings (and your broker could, if they so desire, not allow you to syndicate your own listings. Remember, the listing actually belongs to your broker. They are free to tell you how and where it can and can not be displayed.)
History of the Franchisor IDX Rule
At the 2010 NAR Annual Conference, the NAR Board of Directors added a rule the the MLS policy to allow franchisors to display IDX data on their franchisor web sites. This is the rule in its entirety:
Participants may provide IDX information to their real estate franchise organizations ("franchisors") to be indexed for display on franchisors’ websites. For purposes of this policy, "real estate franchisor" is defined as a company granting real estate brokerage franchises under the franchisor’s trademarks pursuant to a franchise disclosure document meeting applicable Federal Trade Commission rules. Display of IDX information by franchisors is subject to the following requirements and limitations. Failure of a franchisor to comply with the following requirements and limitations can, at the discretion of the MLS, result in suspension or termination of the participant’s(s’) authority to provide IDX information to the franchisor:
1. Initial search results that provide minimal information (e.g., "thumbnails") are exempt from MLS required disclosures (e.g., listing firm, listing agent, source of information, notice that information is deemed reliable but is not guaranteed accurate) provided that a direct link to a detailed (“full view”) display that includes all required disclosures is provided.
2. Consumers can link directly to the detailed ("full view") display that complies with MLS disclosure/display rules of the source MLS.
3. IDX information is not used for any unauthorized purpose.
4. Inaccurate or incomplete information related to any listing is promptly corrected by the franchisor at the request of the source MLS.
5. No advertising may appear on pages displaying IDX information.
6. IDX listing information will not be notified, manipulated, or permanently retained.
What that means in English – Franchisors (C21, RE/MAX, KW, et al) could pull an IDX feed from any of their brokers and display them on the corporate web site (Remax.com, Century21.com, etc), in effect displaying listings from ALL brokerages on their sites, even if that broker was not a franchisee.
At the 2011 Midyear Conference, the Franchisor IDX rule was amended to require that brokers “opt in” to having their listings displayed on franchisor sites. So, if a broker decided they wanted their listings displayed on franchisor sites, they had to expressly opt in to that program. (See this article for more details and why I chose to opt in to franchisor display of IDX data.)
Fast forward to this years 2011 NAR Annual Conference that just recently concluded.
At that conference the MLS Committee voted to recommend to the Board of Directors that the Franchisor IDX rule be rescinded. Removed, killed off, eliminated. The crux of the thought was that Franchisors are not members and participants in the MLS, they aren’t brokerages, so they really aren’t entitled to the use of IDX data.
And the way the MLS and IDX policy are written, that’s a true statement.
So away it went.
“But Jay, third party listing sites like Trulia and Zillow have an IDX feed! Why not franchisors?”
But they don’t have an IDX feed. They get their listing via syndication (see above). Brokers can send them a “feed”, but it’s not an IDX feed and they can only send their own listings, not *every* listing in the IDX feed.
Look for franchisor sites to become syndication channels, soon. They want more listings on their site. Heck, I want my listings on their site and yes, I will syndicate them to them as soon as I can.
Why? Why would I want my listings on Remax.com and other franchisor sites?
For the same reasons I mentioned in this article about a large regional brokerage pulling their listings from some third party sites. It’s all about exposure. And as a small independent brokerage, if any of my agents ever get this question from a seller:
But if we go with a Century 21 agent, then our home will be displayed on Century21.com. That’s a big site with lot’s of traffic!
They can answer with this:
List with us, and your home *will* be displayed on Century21.com and tens of hundreds of other real estate sites as well.
I don’t buy the somewhat prevalent, “big franchisors will have an advantage over the little guys if we let them display IDX data!” argument. I *am* a little guy. I *want* my data on their sites. Some think they will use that data to smack me down in search engine results. Whatever. That’s the same argument I hear about third party listing sites. We can hold our own in the SEO battle against the third parties, and we can hold our own against the franchisors. I say bring it.
The Bottom Line
Franchisors can no longer pull an IDX data feed from their brokers into their franchisor web sites. Honestly, this isn’t that big a deal because once they become syndication channels, and in my opinion they will very soon, they’ll have a way to display non-franchisee listings. We will be there. So will many others. Some will chose not to do that, but those brokerages wouldn’t have opted in to franchisor IDX either.
Nothing in the rescission of the franchisor IDX rule changes how agent and broker sites currently utilize IDX data.
What might change how agents and brokers utilize IDX data is the fact that for the fourth time in the last three years, an NAR committee or Board of Directors has sent recommended revisions to the IDX policy back to a small work group to hash out potential changes to a policy that is in dire need of revision. Who knows what may come out of that work group, or how the MLS Committee, the Executive Committee and/or the Board of Directors will react and respond to any proposed change at the 2012 Midyear meetings.
But franchisor IDX? Forget about it. Stop worrying about it. Watch for when franchisors become syndication channels (and trust me, they will let you know) and decide if you want in or out. It’s really that simple.
An aside – on ‘controlling the data’
Trust me when I tell you the subject of “controlling the MLS data” comes up frequently in any discussion on any level about changing MLS or IDX policy. It seems there is a significant number of agents and brokers that feel if brokers could just sink their claws into MLS data and control rigidly who had access to it then all the evils of the world would be resolved and we in real estate sales would all magically become ridiculously prosperous. I’ve talked to brokers that think we collectively blew it when we allowed listing data to escape our grip and be put to use outside of our direct control.
What a load of hooey.
If as an agent or broker you think the only value you bring to a real estate transaction is MLS data, then I have to respectfully suggest you find another line of work. Our value isn’t in the MLS data, our value is in the service and expertise we bring to home buyers, sellers and investors. Sure, we need MLS data to help us do our job, but it’s the understanding, use and interpretation of that data that matters. Data without expertise, without the ability to analyze and interpret the meaning, is useless. Today’s consumers demand access to information, and as the creators and curators of that information, we owe it to the consumer to deliver it. Keeping the data behind a closed system in the name of “control” is essentially a waste of time – our time, and the time of home buyers and sellers. Rather than attempting to stuff the escaped genie back in the bottle, rather then try to change consumer behavior, we should be embracing it, and using that need for information to our advantage – and to help the consumer. You want to be a kick-ass real estate agent, right? How does controlling data and saying, “sorry, you can’t see this” help anyone? Provide the consumer exceptional expertise and service, that is how you’re going to be a kick-ass agent. Help them, don’t hinder them. Use the data in a way only your experience and expertise allows and stop incessantly complaining about how we’ve lost all control of the data, and therefore our livelihood. Please. Just. Stop. Figure out what value you really add to the real estate transaction, and use that to wow your clients.
If you are a Realtor, you can download the entire 154 page Handbook on Multiple Listing Policy here (realtor.org login required). It includes IDX policy. Fair warning, remove all sharp objects from within reach before you sit down to read it.
Also on Realtor.org (login required. Why, I have no idea. Smacks of “controlling the data”…):