What’s the future of MLS services in Vallarta?

As mentioned in my earlier post, the local real estate boards are looking into an alternative 3rd party vendor to supply their MLS service, something we have been doing for the past 20 years. I’ve been reflecting on this for the past few weeks, for we have also been reflecting on the service we provide them; is it the best way to help people who want to buy real estate get in touch with people who want to sell, or with people who have real estate to sell? That, in essence, is what a good part of our business is about, functioning as an intermediary to help buyers find real estate and realtors and developers to find buyers. Is the current system the best one?

It strikes me that the whole real estate industry is in a state of transition and transformation, driven primarily by advances of the Internet and most recently, the rise and popularity of social networking. On one side there are major heavyweights such as Google getting into the real estate information distribution game, as well as others such as Zillow, Yahoo and even Craigslist. Then there is Facebook, Twitter and LinkedIn, the social networking sites that provide a completely different way of marketing or connecting buyers and sellers – often without the middleman or intermediary.

In the past, MLS services were owned and operated by real estate boards. They invested in the technology, owned the systems outright, and paid the costs of operations, maintenance and upgrades. Over the last few years, however, they have found that its less work, less expensive, to have a 3rd party operator do it for them, and let them take care of the cost of operations, maintenance and upgrades. To date, 75% of real estate boards operate in the manner with less than 25% still owning and operating the MLS service themselves. And that number continues to decrease as more boards see the benefits in letting someone else take care of the system. There are more than 20 large 3rd party vendors who do this on behalf of real estate boards in the USA in Canada.

In Mexico, MLS systems have not had much luck in getting established. There are few MLS systems, not all that great, with the current system for Vallarta being the oldest running service in the country. However this system cannot provide all the features that the companies from the USA can, who provide MLS service for many regions; many of them very large in numbers of members. Many have more than 10,000 members. Vallarta’s has less than 250 members. But they can take the R&D they had invested in, in the USA, and bring that to Mexico, and offer something that we could not invest in, as it would cost us more than we could ever take in with just 250 members. And the current company that is offering service to the local board, is actually, primarily, in the land title insurance business – MLS systems just assist them in being in regular contact with clients and the people (Realtors), who have the clients.

Real estate boards tend to want to keep information private, or closed, so that the clients has to come to them or their members for information about what real estate is available for sale. That has been the structure of operation for many years. And in the early days of computer systems and databases, when they were complicated to set up, they had a monopoly. Lately, however, they are facing competition, as the cost and the simplicity of setting up MLS systems has dropped significantly. Today, there are a number of open information distribution systems available for both Realtors and owners selling on their own (FSBOs), and they usually are free to use. How do you compete with free?

The biggest, and the one that boards should be the most concerned about, is Google. They have the ability to “level the playing field” allowing those interested in buying to quickly hook up with those who are interested in selling; bypassing the middleman or the Realtor. The Realtor may be need to write up the transaction, but it may mean accepting a whole lot less than they have been used to getting. Now, I am a firm believer that a Realtor should be used by all purchasers and sellers, especially in Mexico. You want somebody that understands property law and can ensure you are protected. I am concerned, however, of who will control the distribution of information on what is for sale. Google is in a much better position to handle that, than both my company is and the real estate board.

What a 3rd party vendor can offer the local real estate board is a great, back door system, which allows them to track what’s been sold, to generate reports, comparative market analyses (CMAs), etc. Even Google can’t offer this, and I don’t even think they are considering it. But the 3rd party vendors can’t offer the front end, the connection with buyers and sellers, because traditionally (and through the regulations of the real estate board), this has been taken care of by individual real estate companies. This, however, is the market that Google, Yahoo, and others such as Zillow, can be/are a threat to real estate companies. I don’t know how they can stop this and allow them to keep information private when this is the direction everything seems to be going.

So with that said and understood, I need to try and understand where we now fit in, if we fit in at all!

We do have a few things going for us that neither Google (at least currently) nor 3rd party vendors can offer. We have multiple websites that have very good positioning for primary phrases on Google Search (“vallarta real estate”, “vallarta MLS”, for example, we are in first position) and we can offer advertising on these sites. We can export into print publications such as an MLS catalog or a print, free distribution such as the Vallarta Real Estate Guide. These have value. So we should probably be concentrating more on this, the front end, instead of the back end and trying to compete with major corporate 3rd party vendors. This would give AMPI better back end service, and their own system, and we would just concentrate on helping them market their properties.

We have some interesting ideas regarding this, and have also completely revamped our MLS Search by really implementing the powers of Google Maps; we’ll be releasing these in the next month or so.


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