MetroTex CEO Justin Landon: Can the MLS stay relevant in a changing real estate market?

HousingWire

Tracey speaks with Justin Landon, CEO of MetroTex Association of Realtors about how the MLS can stay relevant as real estate changes. Landon emphasizes the importance of preserving an open, cooperative marketplace.   He says the 2024 Sitzer-Burnett settlement changed incentives in the traditional MLS model. To encourage cooperation, he suggests rewarding brokers who contribute high-quality listing data.   They discuss how Open Real Estate could reshape the MLS, along with the need for nimble governance and valuable services. Landon sees irrelevance as the MLS’s biggest threat.   Related to this episode:   Tracey Velt’s LinkedIn  https://www.linkedin.com/in/traceyvelt/   Justin Landon's LinkedIn  https://www.linkedin.com/in/justin-landon/   MetroTex Association of Realtors  https://www.mymetrotex.com/   Open Real Estate  https://www.openrealestate.com/   Want more from Tracey? Don’t forget to subscribe to Real Estate Daily.   The RealTrending podcast features conversations with the brightest minds in real estate. Every Monday, brokerage leaders, top agents, team leaders, and industry experts join us to share their secrets to success, trends, and the lessons they’ve learned. Hosted by Tracey Velt and produced by the HousingWire Content Studio.

Transcript

00:00Everyone has questions about open real estate and the impact on the MLS. I had a wonderful

00:05conversation with Justin Landon. He is the president and CEO of Metro Tech's Association

00:12of Realtors. And we talked a little bit about potential impacts. We also talked about the

00:19future of the MLS and where he sees it going. And it's a really interesting conversation. So

00:24enjoy the podcast.

00:36I appreciate having you on Real Trending.

00:39Thanks, Tracy. Glad to be here.

00:40Yeah, I think it's perfect timing given all of the recent breaking news that we've reported

00:46on with open real estate. But before we get into kind of an MLS debate, you've spent your

00:54career in government affairs and the Realtor Association leadership, obviously. So what's

00:59shaped the way you think about the real estate marketplace?

01:02Yeah. So, you know, interestingly, I'm third generation in the business. My grandmother

01:06founded a brokerage, a Better Homes and Gardens franchise in the 60s in California while her

01:11husband was away at war. And she realized raising beagles wasn't probably the best way to put

01:16food on the table. And so she got a broker's license and opened a, hung a shingle. My dad,

01:20her son-in-law took that business over in the 90s. And, you know, kind of the running joke

01:24has been, I'm the failure in the family because I never got a real estate license.

01:27And so I went into politics, but, you know, we were talking about listings at the dinner

01:31table. You know, I helped my dad do HUD inspections when he was doing REO properties

01:35back in the early 2000s. And so I kind of come at this from an interesting angle where

01:41I grew up in the industry, you know, worked regulatory side during my time on Capitol Hill

01:47where I spent 11 years and then coming back full circle to kind of lobby on behalf of the

01:53industry as a government affairs director. And then for the last 10 or 11 or 12 years running an

01:58association and an MLS, I think gives me an interesting 360 degree view of kind of where

02:05we sit as an industry. And so I always say this is, I think real estate is one of the

02:09last true

02:10meritocracies in the world and it is worth preserving. And so that's where I sit, right?

02:15Like I think real estate is the single greatest wealth generating tool available to Americans

02:20and we need to do everything we can to preserve it.

02:22So you, you've talked about the need to rebuild an economy of cooperation in real estate. So what

02:28do you mean by that? And what do you think is broken in our current system?

02:32Yeah. So I've coined the phrase economy of cooperation a couple of times, and I think we

02:36have to rewind a little bit, maybe just a few years to 2024 when Sitzer Burnett settled.

02:44And, you know, prior to that, the MLS had been underpinned by cooperation and compensation.

02:50The idea that a group of competitors have come into a platform to facilitate the transaction of

02:54real estate. And the incentive to that is that if you put your listing into the system, you're

03:01guaranteeing a cooperative compensation to the other party. And that's reciprocated when a listing

03:07is put in. Now in 2024, that structure fell apart and it fell apart because a court said it had

03:13to.

03:14And so as compensation left the MLS, the behavior that was guided by that cooperative compensation

03:21model didn't change right away, but it changed the incentives in the, in the system. And so what I

03:28have suggested is that we have to figure out how to incentivize cooperation in a time where cooperative

03:35compensation is no longer part of the equation. Uh, I, I think we'd all like to sit here and say

03:40that, why do we need incentives? Just do the right thing. Um, you know, your state law, your license

03:45requires, you know, you to be a fiduciary for your client. Um, but all of those things are determined

03:51by where you sit. And I absolutely believe that somebody can be a fiduciary for their client

03:56and not put the, not put the listing in the MLS, right? There, there are absolutely situations where

04:00that's the case. Um, people will do the right thing almost always, but I can guarantee they're

04:07much more likely to do the right thing if the system incentivizes that kind of behavior.

04:11And so the best systems work when everybody wins by participating in the system. And so that's what

04:17I mean when I say rebuilding an economy of cooperation, I don't know that I have all the

04:21answers on what that should look like, but I have some ideas about pieces of it. But if we want

04:25the

04:25MLS to remain the center of the ecosystem, this cooperative marketplace, there has to be an

04:30economy and an incentive structure behind it. Yeah. And let's talk about that because you're, um,

04:36matching, um, payments to brokers for high, that contributed high quality listing data. So it does

04:42put a financial, um, value on participation. So talk to me a little bit through, you know, talk me

04:49through that, why you think incentive is so important rather than, um, you know, just a rule

04:56enforcing it. Anybody who's governed an MLS or has been responsible for MLS compliance knows that rules

05:02are not always enough. Uh, that that's for sure. Uh, and, and as somebody who worked in the federal

05:06government, I think we also, we also can acknowledge that the rules are not always enough. Um, again,

05:11because everybody interprets rules in their own way. Um, so that's always a challenge. I think

05:17from our perspective, the reason that we've created a revenue share, uh, or a, um, revenue

05:24back to brokers for contributing good listing data, uh, is really at the heart of a lot of economic

05:30models that we've seen since the internet has become what it's become and even predates the

05:35internet. If all of these analogies break down, if you analyze them too closely, but bear with me,

05:40uh, in the 1970s, there was an absolute shift in the way that professional sports monetized itself,

05:46prior to that, the athletes were employees of, of sports leagues. And there was a recognition that

05:53the content was created, like the sports league existed, not because of the billionaires who owned

05:57the team, but because of the athletes that were creating the product. And it changed the way that

06:03athletes were paid. Uh, fast forward to the internet, uh, uh, YouTube in the early 2000s was

06:09getting all kinds of video content created and, and people were just creating videos because they were

06:13fun, right? They loved the exposure. Uh, and then come to find out YouTube realized pretty quickly,

06:18they were going to lose those content creators. If they didn't include them in the revenue that was

06:22being generated by the ads that they sold adjacent to that, um, that content, same thing with Spotify

06:28and Napster and, and, and music artists. Um, now real estate content is not the same as those things.

06:35Um, but at the end of the day, there is a broker and an agent in every transaction that sits

06:41across

06:41a kitchen towel, the kitchen table from a seller and creates a listing. They create that listing

06:47content and then work with a photographer and a media specialist to create this, this package

06:51that then gets sent to the MLS. That data gets distributed. And there are downstream users of

06:58that data that are making billions of dollars in revenue off that, off that data. And so that's

07:04ultimately, I think where we come at this is to say, the system needs to make sure that there's a

07:09feedback loop that, that those that are creating the data, creating the content, um, get to participate

07:16in the economics of it. Not, not all of it. Right. But, but get to participate in those economics.

07:21So how could that change with open real estate and their kind of national database? Um, you know,

07:29they talk about data monetization. Although when I talked to the leaders, they do not have a plan

07:34for that. Um, they've talked about ideas, but they don't have a plan. I know there are a lot of

07:39questions from the MLS is about what that means for them. Um, and the monetization of the data from

07:47companies purchasing it. Um, you know, so talk to me a little bit about the way you're doing things now.

07:54And if that changes because of open real estate, uh, and myself and Netras, uh, and their CEO,

08:05Chris Carrillo and Metro techs all see the world the same way. Uh, I think the truth is, and I,

08:13you know,

08:14there's always been this question of who owns the data. Does, does the, does the home seller own the

08:19data? Does the, does the listing broker and agent own that data? Does the MLS own that data? And the

08:27answer is yes. Uh, you know, the, the, it's the seller's home, the, the data that's, that's created

08:35as part of that listing is the, is the product of the listing broker and the agent. And then the

08:39MLS

08:39is assembly of that, that compilation of data is the MLS is intellectual property. And so the answer

08:44is yes to all of it. If open real estate is successful in creating a database of listing

08:52content that lives above the MLS. And, and by the way, I believe that they are not the only ones

09:00pursuing that strategy. I certainly think that has been the strategy of, of BLX broker listing

09:05exchange through brutality. Um, 20 years ago, that was the strategy, you know, perhaps the strategy of

09:10upstream, although they may not have disclosed it at the time. Um, uh, it's, I also think it's

09:16the strategy potentially of a lot of the major players in real estate right now. And if you go,

09:22there's, I could go find a quote from Zillow rocket co-star stone point capital, you know,

09:30all of them talking about creating an end to end real estate transaction platform that lives outside

09:34the MLS, right. They're all talking about it. Um, so I think we're, we're all aligned in what,

09:39what we want to accomplish. We're excited about what open real estate is talking about. And I say

09:43that excitement in that they still believe in the infrastructure of an open and transparent

09:49marketplace that everybody has access to. And I think that's really critical. Um, and so if that

09:56means that perhaps someday the MLS is not the origination of the listing, um, that may be okay.

10:05Um, I think I look forward to seeing what open real estate really is and what their real strategy

10:10behind it is, but there's no question that it will come with some monetization. Um, and not to get

10:16into other analogies, but I'm a little concerned as I look at the landscape of organized real estate

10:21right now is not lost on me by the way that organized real estate and open real estate have

10:25the same acronym, uh, ORE. Um, it's not lost on me though, that this reminds me a lot of what

10:31television streaming did to, to the cable industry. Uh, you know, 20 years ago, 15 years ago,

10:37we all paid our cable company, you know, a hundred bucks a month and we got all the channels. And

10:42if

10:42we were feeling really sexy, we spent an extra 20 bucks and got HBO and Cinemax. Right. Um,

10:48and then Netflix came out and we were like, sweet, you know, for nine 99, we can get all these

10:52shows.

10:52We have to pick cable anymore. And now rocket money almost solely exists to tell us how many of those

10:58dang cable packages or, uh, streaming packages we're paying for right now where most of us are

11:02paying $200 a month or more for streaming. Um, are we better off? I think it's debatable,

11:09right. Um, but it's certainly has decentralized, um, you know, television, uh, and, and led to a lot

11:16of innovation too. So there's good and bad. Um, but I think it's, it's progress and progress is

11:22typically a good thing. Yeah. Yeah. It'll, it'll be interesting. I think there's a, there's a lot of

11:27questions behind it. I mean, they just went out for RFP. So is it possible? Cotality will be one

11:34of the companies that they work with. We don't know. Right. Um, we don't know. And I will tell

11:39you that, you know, certainly the BLX announcement, which is, I think now at least six months old. Um,

11:49and at least thus far has not, has not, um, entered the market completely, uh, as they go out for

11:56RFP

11:56with open real estate. I mean, I think understanding the technology that's going to

12:00facilitate these opportunities. There have been attempts at this in the past, whether we want

12:06to talk about AMP and upstream from 20 years ago, or we want to talk 15 years ago, we want

12:10to talk

12:10about, um, OcuCell, which is a, which is a strong market entrant in the space or, or bridge that Zillow

12:17bought years ago. There have certainly been many companies that have attempted this. It's very hard

12:21to scale nationally. Uh, but technology has come a long way in just five years and, and we'll see,

12:27um, what technology emerges from these different investments that folks are making.

12:31Yeah. I, I, you know, Leo Paragia, he did address that on a podcast that I did with them, um,

12:39saying there is a difference between BLX and what they want to do, um, in that theirs is a database

12:48database and not necessarily a platform. Um, you know, it's a, it's a kind of a nuanced,

12:56um, distinction. So I will be interested to see what it actually is. I think there's concern too,

13:03of the four, these four large brokerages, how much influence they will have over it when it does

13:09finally go. Um, because they do want to start a separate company and they are hiring a leadership

13:14team for open real estate and eventually become directors and not, you know, once this is,

13:20is moved forward. So it'll be interesting what it actually does turn into. To me, they all seem very,

13:29um, authentic with wanting to, you know, be more transparent to consumers. Um, but then again,

13:37you have to be in order for antitrust, not to be involved in the whole project. Um, so, so yeah.

13:46Yeah. I think one of the things I would just, I would add, and I, we're in the realm of

13:51pure

13:51speculation, so I won't, I won't speculate on what open real estate is doing. Um, look forward to

13:55learning more like everybody else, but I will, I will remind everybody that when we talk about a

14:00multiple listing service, we think about this technology platform that agents log into and put

14:06data into, and that sends data out. And we miss what an MLS really is. An MLS is a set

14:12of rules that

14:14a group of competitors have agreed to cooperate around for the benefit of the consumer. Like the

14:21MLS, it's literally a PDF document that that's the multiple listing service. Uh, the technology that

14:26we layer on top of it is, is just that it's just a technology layered on top of the MLS.

14:32Um, what an

14:34MLS becomes if the database of listings lives somewhere else and the rules around how those listings

14:42are created live somewhere else, it changes what the MLS is. The MLS as we know it today, the MLS

14:49companies as we know it today. And so I think ultimately what open real estate wants to be, what

14:55PLX wants to be. Um, I certainly believe that compass would love to have its own, its own ad edit

15:01and the MLS being an end point. Um, brokers have been pursuing the Hobi Hanna and Hanna real estate

15:08have absolutely done this with OcuCell. Um, and so what does the MLS become when it's only a data

15:15receiver and no longer a data center? And I think that's a question that all of us should be asking

15:21ourselves, um, especially acknowledging that things are going to continue to progress.

15:27I don't think the MLS in five years will look like the MLS, uh, five years ago.

15:32Well, let's talk about kind of paying if, you know, if you're listing data is valuable enough

15:37to pay brokers to contribute it. Does that fundamentally change the relationship between

15:42the MLS and the brokerage? Yes, probably. Although what we're talking about is not new.

15:49I mean, you can look at, at, um, FMLS in Georgia. Um, they have obviously been built on,

15:55on sharing revenue with brokers from, from its inception 50 years ago. Uh, Bright MLS and CRMLS

16:02have both had broker, um, uh, revenue sharing. I don't, I don't, I don't know what words they

16:09use to describe it. We all, we all describe it differently, but broker rewards programs,

16:13you know, it's not new. Excuse me. Um, I'll start over on that answer if you'd like. I know,

16:24I think, I think Rebecca doesn't like it when there's noises in the middle of it. Uh, um,

16:30I don't think what we are doing is inherently new. Um, at the end of the day, uh, FMLS in

16:35Georgia,

16:35Bright MLS, CRMLS have all had some level of a broker rewards program. So to suggest that it

16:41changes the relationship to the brokerages, I don't, I don't know if that's true. Um,

16:47I do think it repositions the MLS with the brokerages. Uh, at the end of the day, the MLS

16:54needs to be a business partner to the, to its customers. I mean, every vendor is a partner to

17:02its customers. And at the end of the day, the MLS is a, is a entity that is paid for

17:08by brokers

17:09and agents. Um, and we have to be in partnership with them. It's challenging because you're in

17:15partnership with all of them, right? All of the, all of the marketplace. And so you have to make

17:19sure that what you're doing is equitable and fair, um, and creates, uh, transparency. And unlike a lot

17:25of other vendors, we also have a responsibility to the consumer, right? Because at the end of the day,

17:29the consumer has, should have access to the data. Um, I hope that as we transition, that we become

17:38more, um, nimble in how we respond to the needs of the marketplace. And I think if we really analyze

17:44why we are where we are, the MLS, when it was created, was created to solve a problem. And it

17:51was to solving the problem of the day, which, which was again, 50, 60, 70 years ago,

17:57the MLS really changed a lot when the internet came and then got very, very stuck. Um, we have

18:05not necessarily kept up with the pace of change inside the way that real estate is sold. A great

18:10example is coming soon was like pulling teeth in most MLS entities because we couldn't get, um,

18:17the governance of the associate of the MLS to agree that coming soon was necessary in the marketplace.

18:22It's hard to imagine there was a time where coming soon listings were abnormal, right? They're weird.

18:27We don't want to do those. Um, and we've always, we've always been a little bit behind. And, and a

18:34lot of that is because of how we're governed, right? We're governed by typically a volunteer board of

18:40directors that's either appointed or elected among the membership or among the subscriber base.

18:46Um, they don't run an MLS. They don't have experience running an MLS that they have a

18:51tremendous amount of experience selling real estate. And so, uh, but they all have their own

18:56business models and they all have their own preconceived notions about how the business

18:59should operate. And it can be very challenging to build the consensus that the MLS staff executives

19:06need to move things forward. And we're starting to see that crumble a little bit as MLSs and their

19:13boards of directors are starting to realize that fact, and they're creating more nimble governance

19:16arrangements. What Arizona regional MLS has done in the last year is a tremendous example of that,

19:22where they've really removed, um, their market participants from, from being the sole deciders.

19:28They brought in people from outside the marketplace to help make those decisions. Uh, and I think that's

19:33a trend that we'll, we'll likely see continue to give the MLS the ability to more rapidly meet

19:38what the broker's expectations are. Um, and you suggested that the MLS could evolve beyond being

19:43just a database of properties with cooperation, obviously, um, into a marketplace that captures

19:49buyer demand. So what does that look like and what new opportunities would it create?

19:56Yeah, I think, um, I think I made one link to post about that. So it's a good catch.

20:01Um, I will say that I think all of these things should be on the table. Do I think there's,

20:08um,

20:09a day soon where the MLS is trying to, you know, quote unquote list buyers? I don't, I don't think

20:13so,

20:14but I think we need to be analyzing all of the opportunities. At the end of the day,

20:19the MLS's role is to help facilitate a marketplace. We are a marketplace. There's a reason that France

20:24and South America and Asia are looking to the MLS leaders and the brokerage leaders of the United

20:30States to help create the infrastructure that we have here there. And it's because we've created

20:35a marketplace, an open and transparent marketplace. Um, as that marketplace evolves, it will need new

20:42things. And the MLS needs to respond to that. If there comes a time where the buyer is more scarce

20:48than the listing, then I think, yeah, the MLS probably needs to think about how we can help

20:54facilitate matching those, uh, scarce buyers to, to a glut of listings. We're not there today. Uh,

21:02we still have generally more, more, more buyers than we have homes for sale at scale. Although

21:08we're in a much more balanced place than we've been in a really long time. Um, but yeah, I think

21:13we need to keep an open mind. And I think that concept of, of buyer listing, if you will,

21:19is an interesting one, but I don't necessarily think one that's right. Okay, great. So if we

21:23have this conversation again, five years from now, um, what do you think will have changed

21:28most about the MLS, which is almost impossible to guess, but it is, um, I will, I will say this,

21:37I'll share with you a little, a little model that I've been thinking a lot about. Um, we, we hear

21:44the word SAS thrown around a lot, right? Software as a subscription. And, you know, obviously we've

21:50heard a lot of the death of SAS, right? SAS is going to die because AI is going to make,

21:54um,

21:54software as a subscription sort of irrelevant. And there's some truth to that, but the MLS is very

21:59much like a SAS business, right? We, the MLS buys technology, packages it together, and then,

22:05and then resells it onto its members. In some cases, like Iris in Colorado or real tracks in Tennessee

22:13or Utah real estate in Salt Lake city, like they're actually developing their own technology

22:17and retailing it to their members. I think if there's a change that may come, it's, it's a

22:23repositioning of that to a different SAS acronym, which is service as a subscription. And I think the

22:30MLS, and by the way, I think the association is exactly the same, um, service as a subscription,

22:37our members pay us. And unfortunately it's been positioned often as a payment. They have to

22:43make a payment they want to make, not a payment they want to make. And I think we have to

22:47position

22:48ourselves as we are providing a service that helps brokerages and agents attain their, attain their

22:55goals. Um, and if we do that really well, the MLS and the association, both will continue to thrive

23:03in, in, in different, different paths, but continue to thrive because we're doing something

23:07that brokerages need and want. Um, I'm really proud of the work we've done at Metro techs and

23:13the proud of the work that we're helping Netris accomplish, uh, here in the DFW market. Um,

23:19and I, I think if others lean into that, um, we'll see the MLS continue to thrive as a service

23:25-based

23:25business that is servicing brokers, not just providing them. Yeah, there's, I mean, there's really

23:29a lot of great, um, products and services coming out of associations. I of course see all the Florida

23:34realtors stuff and they do an amazing job with, um, what they have to offer too. So I think that

23:41that's just going to keep getting better from associations as we move forward. Um, so yeah,

23:49I'm excited to, to see what's to come with, with associations and MLSs. Um, and I have a lightning

23:56round for you. So we're going to just do a couple of these. So biggest threat to the MLS,

24:01private listings, regulation, or irrelevance.

24:07Irrelevance. No question. Um, I think open real estate and, and their launch this week,

24:14I think makes that even, even more clear to me. Uh, they have very clear, right. It's not going to,

24:18it's not going to get rid of the MLS, but it does risk making the MLS less relevant.

24:23One MLS policy you would rethink if you were starting from scratch.

24:28Ooh. Um, I can go a couple of different ways with this. I would say almost every MLS policy,

24:34when it was founded, it made sense at the time. Uh, I would say that IDX is one I would

24:39rethink

24:39today. Um, are there too many MLSs in the U S? Yes. Great. Um, I know you just merged. Um,

24:49well, that's your association did with Collin County area realtors. Um, so yeah, I would just

24:56say that the answer is yes. I don't know what the number is. It doesn't have to be scale. Isn't,

25:02you don't have to go to scale, right? You don't, you, I don't know that we need 10 MLSs. I

25:06don't

25:06know that we need 50 ML. I don't know what the number is. You can have a really healthy, smaller

25:11organization, but we have to have the MLS has to be serving the marketplace and it has to be serving

25:17the marketplace effectively. I think we have too many MLSs that are okay. Great. Well, Justin,

25:22thanks so much for joining real trending. I appreciate having you on. This is a great conversation.

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