The Multiple Listing Services (or MLS) suffer from a several perilous flaws. These flaws are a massive opportunity for a legitimate path to disruption of residential real estate two-sided listing services market in the United States and other countries. Behind this opportunity is a worldwide MLS system able to expand across continents to help market listings internationally, something that has not been accomplished by any one online real estate portal to date. The hidden spark behind this expansion is a consistent, transparent, trusted, fair display listing format coupled with accurate geolocation metadata.
Over the last several years, the US-based MLS platforms have been under a frontal attack of antitrust lawsuits where the overall premises of the system are challenged as anti-competitive. This is a half-true argument, where MLS platforms can be anti-competitive if some bad rules are implemented, but these platforms do not have to do that — they choose to. In fact, MLS proposition as a whole can be a 100% pro-consumer tool if the correct rules for the right reasons are adopted.
MLS, in itself, is a product of media — a medium of exchange for information. MLS platforms do not provide listing services or buyer representation services, but operate in separate two-sided market where services provided are merely postings of listings on behalf of others, rather than facilitation of real estate deals. MLS is a two-sided marketplace for real estate brokers.
Historically, MLS was simply a series of localized meeting rooms where real estate brokers would come to and exchange homes listings information. Today, these meeting rooms have moved into digital space where about 700 local MLS platforms operate in various localities in the United States. Incidentally, it is this broker-to-broker origin that has shaped MLS systems into databases with certain antitrust vulnerabilities.
The Four Flaws of Traditional MLS
First flaw: traditional MLS systems are localized. There is no national MLS system, per se, because before the Internet was a thing, it would seem counter-productive to scale a product like this nationwide — all real estate, after all, is local. At the onset of Zillow and Trulia, MLS platforms have realized that these new nationwide MLS Aggregators do not abide by any territorial customer allocation agreements making them a deadly threat armed with scalable nature of network effects able to aquire data for over 130 million homes in the United States. (Yes, all MLS platforms have an unspoken agreements not to encroach outside of their service territories, which is per se unlawful, however, there is nobody who cares enough to challenge these agreements and they are difficult to prove since, again, all real estate is local.)
For these reasons, as Zillow and Trulia gained traction from startups to enterprises, all MLS databases have made a deal with the Devil and opened up their information to Zillow and Trulia in exchange for a promise that neither MLS aggregator will allow brokers to list homes directly on their platforms. In fact, no real estate broker is able to list homes directly on Zillow or Trulia for this reason — Zillow only accepts listings from FSBO sellers and off-MLS brokers as “segregated” non-MLS listings (such as listings posted by REX Real Estate that thought that they can outperform Zillow by starting an MLS-less brokerage business model.)
If any given broker utilizes MLS, however, they must list a home on the local MLS first, and local MLS sells this data to Zillow. In this deal, however, Zillow has lost something as well — an ability to receive listings directly from local brokers. The major shortcut flaw of this agreement is that Zillow must abide to MLS rules, and it accepts listings from a system that was never truly designed to give listings to anyone outside the MLS ecosystem system. This Devil’s agreement has a legal flaw that have recently came back to haunt both Zillow and MLS platforms in several pending United States federal court civil cases, which leads into the second flaw.
Second flaw: traditional MLS systems are built to connect brokers with other brokers, not consumers. The premise of MLS is to provide buyer agents access to listing agents based on the “blanket” medium of a Buyer Agent Cooperating Commission (BAC) offers as part of buyer’s ability to pay for transaction cost to the buyer agent from the escrow, rather than out-of-pocket. This BAC amount glues the MLS together where seller agents are willing to share part of their commission to close the deal, and buyer agents are eager to participate and get paid for bringing in the buyer.
This arrangement, however, does not allow buyer agent and buyer to negotiate commissions directly — they must do so by means of a buyer agent rebate. In 40 States and Washington DC, such rebates are perfectly lawful and can be used to establish competitive compensation between buyers and their buyer agents. In some States, such rebates are prohibited by state law (According to the latest information published by the United States Department of Justice, in eleven States buyer agents are banned from offering rebates: Alaska, Oregon, North Dakota, Kansas, Oklahoma, Missouri, Louisiana, Mississippi, Alabama, New Jersey and Tennessee.)
In effect, this means that BAC offers in the States where rebates are prohibited are locked-in without buyers being able to reduce their buyer agent compensation in a competitive setting. This is a major antitrust problem for MLS platforms that operate in jurisdictions with rebate bans. From the perspective of antitrust law, if the buyer is unable to negotiate a rebate, she always overpays for buyer agent commissions, thereby, MLS platforms in these eleven States facilitate inflated price-fixing hub-and-spoke conspiracy between buyer agents and listing agents in violation of Section 1 of the Sherman Antitrust Act. In the remaining jurisdictions, however, where buyers are able to negotiate rebates, the “blanket” BAC offers do not harm buyers with higher costs because any buyer is able to negotiate a refund (rebate) from the “blanket” amounts offered via MLS, hence the system itself does not restrain trade, but certain MLS rules under certain conditions are anti-competitive, which leads into the third flaw.
Third flaw: MLS utilizes Clear Cooperation Policy. This is a no “free-riding” policy that requires brokers to post listings advertised anywhere else within one business day on the MLS platform that they primarily belong to. This policy ensures that all participants share listings. Without this policy, some brokers will search listings on MLS, but will not share their own listings as a fair form of information exchange. This seemingly reasonable policy, incidentally, prevents brokers from sharing what is known as “pocket listings” with one another elsewhere.
The root flaw of no “free-riding” policy resides with the fact that MLS is used by and between brokers, it was never designed to connect brokers directly to consumers. In the original MLS design, consumers are deliberately excluded from the equation. De facto, MLS is a form of a pocket listings service that merely attempts to include almost every local brokerage into the equation. Before Zillow and Trulia came into play, it was impossible for consumers to access MLS data without hiring a broker — hence all brokers shared what was really “pocket listings” that were simply available to the majority of all brokers.
In the PLS.com v. the NAR legal matter, courts have grappled with this issue for this reason exactly, where the NAR keeps arguing before the courts that MLS is an inclusive system that opens listings to the public and PLS is a closed system that constrains listings. In fact, both systems are closed to outside participants. If it wasn’t for MLS Aggregators, such as Zillow and Trulia, who originally opened MLS to consumers, MLS would continue to operate as a widely-adopted pocket listings service. Artificially restrictive “pocket listings” combined with no “free-riding” policies naturally constrain any one broker who attempts to use both systems to communicate with other brokers, where “pocket listings” policies of one database are harsher than policies of another. In effect, PLS more restrictive “pocket listings” policy disallows brokers from using a more liberal “pocket listings” services administered by NAR when coupled with no “free-riding” policies, which leads into the fourth flaw.
Fourth flaw: MLS is susceptible to abuse. Certain “paper brokers” or “sham” real estate entities operate by means of organizing competitors into broker referral fee networks. Such referral networks often utilize MLS information to obtain data about listings in an effort to funnel consumers toward referral network colluding participants, for a cut of their commissions. This is a major problem of competition where MLS is used as a data bank to fuel cartel activities, rather than to help facilitate competitive real estate transactions.
According to NAR, a “[m]ere possession of a broker’s license is not sufficient to qualify for MLS participation. Rather, the requirement that an individual or firm offers or accepts cooperation and compensation means that the participant actively endeavors during the operation of its real estate business to list real property of the type listed on the MLS and/or to accept offers of cooperation and compensation made by listing brokers or agents in the MLS.”
“Paper brokers” that administer networks of competitors are unlawful MLS participants that, despite being licensed as real estate brokerages, do not operate as brokerages, or operate as brokerages that form network of others (some well-known “sham” real estate entities and broker-to-broker collusion schemes that operate in the United States include: Localize, FastExpert Inc., Home Captain, ReferralExchange, Agent Pronto, homegenius by Radian, IDEAL AGENT, Ramsey Solutions ELP, EffectiveAgents.com, Neighborhoods.com (aka 55places), Estately by Realogy, HomeStory, Zillow 360, Zillow Flex, UpNest, Tomo Brokerage, Rocket Homes, Realtor.com ReadyConnect Opcity, Opendoor Brokerage, Nobul, mellohome, LemonBrew, Clever Real Estate, Blend Realty, Xome, SOLD.com, OJO Labs, Landed, Better Real Estate, HomeLight, Redfin Partner Program, etc.)
In the United States alone, consumers lose about $15 billion annually due to overpriced commissions laced with kickbacks paid into such “sham” real estate entities.
The Solution: Fair Listings Display Home Search
Geodoma is a worldwide home search experience that connects home searchers directly with the listing contact. In the highly challenging world of real estate, certain information is confusing and misleading to consumers. For these reasons, Geodoma promotes Fair Listings Display Guidelines designed to help consumers and real estate professionals to offer and consume accurate information and to enjoy a fully transparent real estate process in accordance with antitrust and truth-in-marketing principles and regulations.
No Ads for Other Brokerages or Agents Displayed on Listings.
To provide transparency, Geodoma aims to publish information about real estate for the public entirely as an impartial media service. All honest real estate professionals are valued users on Geodoma, regardless of specific brokerage affiliation.
Consistent Display of All Listing Data.
Geodoma promotes Fair Display Listings Guidelines designed to help real estate professionals display and find accurate listings information and enjoy a fully transparent online real estate process in accordance with truth-in-marketing principles and federal antitrust laws.
Transparent Offers of Cooperative Buyer Agent Commission.
Geodoma does not prohibit the home seller and their listing agent to make competitive cooperative offers of Buyer Agent Commissions, as a concession to allow the future home buyer to offset the high out-of-pocket costs of hiring a buyer agent, as long as the home buyer can lawfully negotiate buyer rebate with their buyer agent.
Real estate professionals may make cooperative Buyer Agent Commission offers only in jurisdictions where buyer agent rebates are allowed by state law. According to the United States Department of Justice, in eleven US states buyer agents are banned from offering rebates: Alaska, Oregon, North Dakota, Kansas, Oklahoma, Missouri, Louisiana, Mississippi, Alabama, New Jersey, and Tennessee. In all other jurisdictions where buyer agent rebates are allowed, cooperative Buyer Agent Commission offers may not be contingent upon an increase/decrease of demand/offer price of the underlying property transaction.
Making a cooperative offer of Buyer Agent Commission on Geodoma is optional and the amount must be established independently by each real estate professional with expressed consent from each individual real estate seller for each individual property listing. Real estate professionals may never use Geodoma services to offer uniform, collective, or standard cooperative Buyer Agent Commission offers and must establish all commissions and cooperative offers of compensation individually and independently in accordance with federal and state antitrust regulations.
Unrepresented sellers may not make offers of cooperative Buyer Agent Commissions directly to buyer agents when using Geodoma services.
User listings are never excluded or ranked in search results based on the amount of cooperative Buyer Agent Commissions compensation offered, or not offered, to home buyers represented by buyer agents.
These policy safeguards protect all real estate professionals from antitrust liability when it comes to making and accepting legitimate one-time individually-set offers of buyer agent commissions.
No Professional Services Offered for Free.
Real estate professionals should never characterize their real estate brokerage services as free if they are receiving compensation from any source.
Fair Listings Display as a Worldwide Service
Geodoma is Latin for “home on Earth” approach to real estate listings. The ostentatious idea behind the service is to build a scalable and compliant platform that can unite localized real estate listings with listings for rent, short-term vacation homes, FSBO, and any other possible uses for a specific home on geolocation basis anywhere. Geodoma is a worldwide Geolocation Listing Service (GLS) and a multi-sided online digital platform for real estate and related products and services.
This approach requires application of uniform consumer-focused principles that expand into hyper-local search applications in any country, regardless of local real estate rules and regulations. For a startup, this undertaking is impossible without outside help — primarily Google Maps API.
Google strategically keeps itself out of real estate listings and largely remains impartial to how people search for homes in different parts of the world (although, Google Travel is now a direct competitor to Airbnb and Booking which means that Google is not afraid to go after any one vertical, where sometimes they simply choose not to.)
Google API technology allows Geodoma to develop services worldwide without having to expand massive resources to develop hyper-local knowledge, yet still being able to serve these localities with information about local listings. It is fair to say that without BigTech Google Maps API, Geodoma is not possible.
Meta Marketplace real estate listings, of course, is a major competitor to Geodoma, a Big Tech with massive resources and network effects built-into the Meta’s social network platform. Meta, however, does not share information with external search engines, including Google. Whatever listings are posted on Meta, they stay on Meta. Geodoma does the opposite, where each listing submitted on Geodoma one business day before MLS Clear Cooperation Policy distribution is submitted directly to all major search engines with properly described geolocation metadata. This incentivies agents to post information on Geodoma first because Fair Display listings space is never sold to third-party brokers.
The initial test of Geodoma is to expand services in the United States. United States MLS market is highly competitive, but it is also highly abused sector that fights a number of strategic antitrust battles at a loss, burdened of liability and bad press. Real estate professionals have realized a long time ago that MLS Aggregators are not their friends — they work to steal listings and load them with ads for third-parties or sell consumers’ information into a network of “partner agents.”
The supreme art of war is to subdue the enemy without fighting, and in this case, the true disruption of MLS is not Geodoma, but anti-competitive network effects sown for decades, primed to reap the whirlwind.
Instead of establishing broker-to-broker connections, Geodoma’s primary mode of operations is an ability to connect all our users together hyper-locally and worldwide, which includes direct consumers of real estate as well as providers of real estate representation services on an equal fair display playing field.
Geodoma is an entirely different approach to listings because it works to connect consumers with the help from real estate professionals, rather than to connect brokers together. Moreover Geodoma is designed to operate as a worldwide Geolocation Listing Service, rather than a local listing service, where, eventually, anyone anywhere should be able to easily post and search for listings information locally on the platform.