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Sometimes, you just have to learn the hard way. That seems to be the industry’s preferred method of implementing tools – at least for the last twenty years or so. A herald comes over the hill, the masses become excited, everyone just starts doing it: And that’s when the highest risk to sound business principles usually occurs. Which is exactly where we are today with IDX – the “sharing” of listing inventory between competing ’ websites. It sounds like a good idea, except for one small snag:

Your million dollar website now looks awful because the data from your friendly cooperating brokers sucks.

It’s not like we didn’t know that data is pretty much useless anyway. Let’s be honest: If you’re using “current ” to create a pricing report for a potential new seller, you’re perpetuating the “over-priced” market disaster because you’re using bad data – the prices set by other brokers who don’t know how to price inventory – to yet again overprice your next listing. Days on market is totally unreliable too, since many MLS systems have adopted practices to let brokers “trick” the system into only representing the “current” days on market – not the total days on market, since that little “two week off-market hiatus” a while back. Good stuff when it comes to using MLS for running your business…

But IDX is a really, really, really bad idea. We’ve been doing it for a while now. So why not step back and ask: How is it working out in the “real world”?

The first thing we might find is – contrary to popular belief – more listings on the website do not necessarily generate more leads. Especially when the plan is for brokers (with unknown websites) to share more data with other brokers (with equally unknown websites). So we’re all keeping the secrets now, is that the plan? Spreading the data amongst brokers does not necessarily mean it’s spread to the consumer. Why? Because brokers are broke these days – so they’re not putting too much extra money into online and traffic generation. When cash is low, SEO and PPC goes right out the door.

The next thing we see is that the shared-display of listings between brokers has led to a substantial number of anti-competitive policies for the use of listing data. For example, some MLS systems have an absurd rule that no signs, logos or other brokerage-identifying information can appear in the photographs of the listing. The “reason” is because those photos are going to show up on a competing broker’s shared listing display. Of course, along with those photos will be – by another rule – a line indicating who is the actual listing brokerage (a “courtesy of” line) but otherwise no marketing content can appear in the photo. Just the front door, toilets and darkened bedrooms. Can anyone tell me why this is a good marketing move for brokers – any of them? Is the “benefit” of getting your stuff on someone else’s brokerage website really greater than the benefit of marketing your listings with the maximum amount of branding? You take a guess.

But the really, really, really, really bad effects of IDX aren’t even the silly, “it takes a village” restrictions of the MLS kibbutz system. The danger comes in a quieter, more insidious attack:

Putting other broker’s listing data on your website directly undermines your company’s image in the marketplace. Here’s how:

Let’s say you have built a website. If you’re a major franchisor, you’ve spent millions on it. If you’re a local broker, you’ve still spend tens of thousands. In fact, you may have spent tons of money your competitors aren’t spending – because they opt for the cheap, silly-looking “virtual office website templates” that can be had for free or a few hundred bucks from the MLS, too. In fact, there’s a disincentive for smaller, less-funded brokers to build websites when their bigger, more businesslike competitors are going to spend the money anyway: the smaller guys know that their inventory is going to show up on that website because of the “rule” that requires all listings to be shared by all participants. So IDX’s first destructive outcome is that it forces some of the companies in the market to make all of the website and marketing investments, while other freeloaders just go along for the ride. But that’s okay, right? I mean, we all “co-broke” each other’s listings – so can’t we all just get along?

But wait! There’s more damage to come. As we all know, not all agents are trained equally. Any quick look at REALTOR.COM’s poor inventory will show you that, in fact, the vast majority of agents have no idea how to take photos, write property descriptions or even completely fill in the data (like taxes, heating, etc). So, most listing inventory data sucks. It’s minimalist – just enough to fill in the required fields in MLS – but hardly anything that makes consumers swoon. The goal continues to be to force the consumer to contact the agent for “more information” – which is exactly what you’d expect from companies who don’t take internet marketing seriously enough to build their own websites. They’ll just put their junk-data into MLS, with a blurry front-door photo, and wait for the better websites to bring in the traffic for a “co-broke” offer.

Except for one small issue: Your million dollar website now looks like (fill in the blank) because you’ve been forced to post this (fill in another blank) listing data from your “cooperating competitor.”

On your website, you might require your agents to have a minimum number of photos – higher than the MLS’s minimum probably. You may even have managers review the listing comments to make sure they’re written in some recognizable language. Your website may accommodate (or even require) a minimum number of virtual tours and multimedia videos. Perhaps it automatically generates local town information and map, because your system accepts GIS coding that’s not required in the “MLS data feed.” In every conceivable way, you have spent the money, time and programming knowledge to create a powerful website with the features consumers want. You can even send listings to Blackberries and SMS text messages. You’re armed and ready to compete for consumers.

But, wait! What’s this? Listings on your site that say “Too New For Photo”? Property descriptions written in Latin abbreviations like “2 BR / 1 BA with a Lg Fm Rm nearby PubTrans.”

Wow – classy stuff there? Now it’s splattered all over your website. Your well-groomed website has been infected with graffiti marketing. And since the “rule” is all-or-nothing, your inventory may actually end up low in the search results because your competitors will take any listing, at any price, crowding out the key spots at the top of your inventory.

You’ve now become the pimp of poor performers. And you’re supposed to like it. Because REALTORS cooperate.

This is why IDX is a suicide pact. Much like the airline industry, IDX let’s the poorest performing companies set the public’s perception of the industry. Websites like Orbitz put the Cheap-O Airlines’ prices right alongside Top Quality Airlines, and the public is left to tell the difference. Like consumers know the difference…

IDX logic is faulty: It assumes that consumers are looking for the “most” amount of property inventory – not the “best” information. It assumes that having “more listings” automatically leads to having “more business” or at least, more leads. IDX logic actually assumes that inventory is irrelevant – because any policy that simply gives away the data to anybody who is in the REALTOR-Club means, by default, that the inventory itself is worthless. Which, by the way most REALTORS post their descriptions, photos and un-marketable pricing, it might likely be worthless.

There is a solution to the problem. But it’s one in which the “village” will need to accept “private property.” Here’s how to eliminate the dangerous outcomes of current IDX policies:

  1. Let MLS only warehouse the data. Just create a centralized database with an open-sourced system for participants to pull data as they want (see #2 below). No rules. No forced displays. No limits on content. If a broker wants to add 100 photos, 20 videos and put their logo on every corner of their data, let them do it. It’s their data. It’s the product of their work. And it’s the way they make a living. Tell the rules-making committees to just shut up.
  2. Create a filtering system to pull data that each broker customizes according to THEIR standards of performance. Let’s say a luxury property broker doesn’t want their site to be filled with sub-million dollar listings. They could create a filter that only pulls the MLS data they wish to add to their site. A different broker might only want to show competing properties that have at least ten photos and twenty key fields filled out. They could set the filters to restrict the inventory according to those requirements. By permitting brokers to setup their own filters for “sharing” a part of their marketing tools and financial investments with other brokers, you will let the market determine the standards of performance. And it will let brokers ensure their websites don’t become polluted with trash from less-capable listing houses.
  3. Put the data into a universal data format. Any MLS system that is still running a “proprietary” data warehouse or data feed system should be fired. If I can post a Wall Street Journal article onto my Facebook page using my Blackberry, all for FREE, then it’s absurd that proprietary systems or formats continue to impede the full marketing deployment of listing data to web sites, pages, cell phones and iPods. IDX and MLS policy must get out of the way. They should have NO SAY in how a broker uses their own data. (Hint: MLS systems need to remember who pays them, and start acting accordingly). (Another hint: Eliminate any MLS committees. Just warehouse the data and let creative brokers do (and pay for) whatever they want with their data.)

Most imporantly, get rid of the “all or nothing” rule. This policy is anti-competitive. It forces some brokers to accept the dumbing-down of their investments by other brokers’ ill-trained and no-standards marketing efforts.

IDX isn’t spreading the wealth. It is poisioning the well.