Doorify Real Estate Podcast

TMLS State of the Union - Midyear 2024

• Triangle MLS • Episode 56

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A critical turning point for the real estate industry is here, and it’s happening fast.

In this episode I’m joined by Matt Fowler, the executive director of Triangle MLS. We talk about the changes outlined in the MLS proposed settlement and what they mean for real estate professionals. 

We explore new regulations around buyer agency commissions and the steps Triangle MLS is taking to comply. We also discuss technological advancements in transaction management systems designed to smooth out these transitions. 

As always, Matt brings his invaluable insights and practical advice. Plus, we tease some key information about our upcoming Prop Tech South event.

Don't miss this essential episode that could define your next steps in real estate. 

Specifically, this episode highlights the following themes:

  • Proposed NAR settlement and its implications for commission structures
  • Adoption and impact of RESO standards in Triangle MLS
  • Future plans for rental management and data handling

Links from this episode:

1ae5b43598204883b524f061d4880e6d10fca88c (for podfollow.com)

Matt Fowler [00:00:00]:
Our MLS data never ever has compensation in it, period. It's inside this vendor's software where it's password protected inside the terms of this deal. I can't access it myself as the administrator, no one can except for the people that are involved in that deal. But the software can be configured with a regulatory reporting as part of the deliverable. That is one of a universe of tools out there that triangle is considering to make sure we abide by the settlement, make sure we understand not just the letter of the rules but what they're actually trying to accomplish here and see if we can build, build a way to do that that keeps it out of the inbox, you know, smooths the buying experience for everyone, gives us the ability to have that transparency for the regulators and keeps it out of the inbox chaos, hopefully.

Matt Fagioli [00:00:49]:
Hey guys, welcome back. I'm your host Matt Faggioli here with Triangle executive director Matt Fowler. What's up?

Matt Fowler [00:00:56]:
Hey Matt, how are you today, man?

Matt Fagioli [00:00:58]:
Dude, welcome back. We haven't had you on the podcast in a little while in this form in terms of sort of state of the union and there's so many things going on. You know when you picked up the call today you were like, oh, there's not much going on, only every 8 seconds right now in the industry and a triangle. And so Matt, we really wanted to get your attention and share with members maybe your top five or something. This could be a long call, but give us an update on the most important things that are happening right now. We're going into August, into the settlement date and all the things around that.

Matt Fowler [00:01:35]:
Yeah, I guess that's top of mind. We have the proposed settlement nar legal matter that triangle is involved in because triangle is owned by the Raleigh Realtor association which makes our rules and policies and practices all tied up with those guys. And the whole thing, as I was telling you earlier, Matt, reminded me of why I didn't want to go to law school because, you know, spending a lot of time with lawyers, dough Fetts is kind of inversely related to my happiness. I think most people probably feel that way and I love my own lawyer, but you know, the other guys maybe not so much. But you know, coming out of this settlement there is mass confusion among the realtors, the public. Some of the stuff you read online is just not true, it's not accurate. And for realtors watching this show, for people that are real estate professionals, the very first thing I'm going to say is I'm not giving legal advice because I'm not a lawyer and you should definitely if you have a question, talk to your broker. But if you go to the help desk at Triangle, pin to the top, there's an faq about the settlement and the changes that are going to be happening in triangle.

Matt Fowler [00:02:46]:
Our changes go into effect early August and the settlement deadline is August 17, so we'll be well prior to that. And what's happening is a couple of different things and we'll cover that and then we'll go talk about what's happened in the first half of the year that's been really eventful running through June 30. So the settlement language means that we have to take a buyer agency commission out of the database for on market listings. So we're not changing anything to the data that we store for appraisers. When they look at who paid what at closing. When you move a property from active to closed, you'll provide the same stuff you did before. I'll let you talk to your appraisal folks about how that works, but we're not changing any of that. It's really about how on market commission is shared and it's not going to be on the MLS anymore.

Matt Fowler [00:03:40]:
And the best language that I've heard is that it's not going away. It's not like buyer's agents aren't going to get paid anymore. I mean they do really valuable work. People who do valuable work get paid, but you can't point to the MLS anymore and say that's how much I'll get paid. It's moving from an MLS term like square footage or I, whether it has a pool or not, to a confidential contract term. So used to be MLS field, now its a contract term and ive never, as the MLS director or an MLS subscriber been privy to the terms of the individual contracts that are typically on documents that are exchanged in a transaction management system or through email as a PDF where the buyers rep states to the seller what their deal terms are, the seller states their deal terms and it goes back and forth as we all know in the transaction, as it always has and we know it's always been negotiated. But the element that's leaving is that the amount that's negotiated is going to be disclosed inside of that deal term and it isn't something that you can point to and say I'll pay whatever it says out there in the network because it just won't exist anymore. So we can argue the merits of this till the end of time, but Triangle's response to this is going to be sequenced.

Matt Fowler [00:05:06]:
So on August 6 we're removing these fields. Later we may consider adding seller concessions for on market listings as defined in the terms of the settlement. We're allowed to do that. One of our neighboring associations, Longleaf pines, with whom we have a data share, is adding the seller concession field, but not like California is doing it or bright, they're just adding a yes no. So are seller concessions available? And the reason triangle is not adding it at the start at least, is because we're concerned about the misuse of these fields, that subscribers who maybe don't read every email that comes from their broker will think that this is where you put seller concessions now and the penalty for doing that is really extreme. So we'd like to avoid that. So the yes no kind of makes, makes sense to us. That's something you may see triangle do this fall.

Matt Fagioli [00:06:03]:
Can you talk a little bit about, you and I have talked about this offline, but there's, you know, there's all these websites popping up and there's like all these efforts all over the place, agents and brokers trying to circumvent the rules, which is going to get you sued. And I guess I'd love to get your wagging finger boss language on that.

Matt Fowler [00:06:22]:
So you know, the terms eight and nine in the, in our summary of the proposed settlement are new things that the MLS is required to audit. So there's a bunch of changes that are required and two of them are I have to go prove stuff. I have to prove that the buyer's agency representation form or agreement is in place prior to touring the property. We have some language around that. If you don't do that to punish you with loss of access to MLS, not with a monetary fine, and then the compensation that might be paid to a buyer's agent by the seller, that agreement has to be off of the MLS. And the reason, and we covered that, but the reason they want it off of the MLS is because they have asserted that there is a network effect of having the number present in the network so that people naturally adhere to that practice, cultural practice, to use that number and they simply don't want it visible anywhere. And they've said not on MLS. And if it just moves over to the broker, so you have a website that says we pay buyer commissions.com and you go over there and you can see the commissions to be paid by multiple brokerages on multiple properties, then you are a big target in my opinion.

Matt Fowler [00:07:54]:
I'm not giving legal advice, but it appears to be the same prohibited behavior on a by a different, you know, corporate environment. I don't see any particular immunity given to them just because it's not us.

Matt Fagioli [00:08:08]:
So my goal basically created another de facto mls breaking the same rule shadow site.

Matt Fowler [00:08:16]:
And I would love if we could just. This is what a few people have been saying online matt, that I really agree with. And this is really being made so overcomplicated, like you don't have to go do those things right. You can put seller concessions accepted in remarks today. You can put on a sign writer, you can put a signature open house, you could send emails to everybody that you want. The thing you cant do is make a blanket offer of compensation to any and all comers, period. Thats a practice that they would like for us not to do anymore. And this is maybe something thats a little second and third or third and fourth quarter, maybe the first quarter next year.

Matt Fowler [00:08:54]:
Every mls of the country either has a transaction management system or offer management system in place or they're looking at them to help brokers manage the deal flow. So it's not in the best interest of buyers or anybody going through the real estate buying process. If this is chaos and lives in people's inboxes or there's these, you know, weird shadow sites where you have to go get some of the data. Doesn't make any sense to me when you can still do it all. You know you can find the house and do everything else you want to do inside the MLS system. Everything. And when it comes time to talk about compensation, you do that in a specified confidential way that can't be overseen by someone causing that network or cultural impact. So if you just think of it that way as a conversation that the buyer's agent is going to have to have with their customer now.

Matt Fowler [00:09:46]:
And it's a conversation that's going to be negotiable based on the purchase price and everything else that needs to be done on that house. You know, that number moves around in deals that you were in.

Matt Fagioli [00:09:56]:
I want to take you back to the offer management or really to the underlying rule. You mentioned earlier that one of the things that the MLS is now responsible for is making sure that that buyer brokerage agreement is in place before the showing. But if I understand it correctly, the MLS is now also responsible to be able to show this varied commission behavior and all of that on the offer side. Can you expand on that a little bit?

Matt Fowler [00:10:21]:
Well I don't. I mean I anticipate having future disclosure required to the courts where theyre going to ask me to prove the impact of the settlement. And if everythings off MLS as they say, and were going to do that August 6, then that data becomes more opaque, less accessible to them and to me. So MLS have been looking at offer management platforms that would put some guardrails and have some rule based processes in the collection of these offers that would create a couple of positive outcomes. One of the biggest ones is that its loggable. So it creates a reportable, searchable log of every single thing that happened on every single transaction whose offer came in first. And it lets us look back at the result of the settlement and see if the ship turned. We would like to be able to look at the level of variability in commissions paid and show to the court that they have increased numerically increased variability, which would indicate the presence of more competition in the payment of those fees.

Matt Fowler [00:11:33]:
As we understand it, and we're reading the tea leaves because we don't actually talk directly to them. We look at, someone said that we look at the places they didn't shoot, like where are there no, where are there no bullet holes? Unless maybe that's what they want. So I mean, we can intellectually think about what they're doing here and they're trying to stimulate competition in the payment of these fees. Now how would you go about doing that? And it's one way is to take it off of this, the network. So it's now a conversation that's happening case by case is the words that they've used deal by deal. So if you're a broker and you have off and you have properties listed, you have to have a conversation with your sellers about, you know, what do I do when someone comes with an offer and they'll just, you have this conversation now you just write it down in the appropriate contract. In North Carolina is two separate contracts. But again, I'm going to stay out of that two separate agreement.

Matt Fowler [00:12:30]:
It's not contracts. I'll probably get in trouble from that. But you have to do that. It has to be written down in these deal terms. I'm just suggesting that in some markets that won't be a PDF that you do by hand or you form fill or something, it'll be a form on the screen that's just a web form where you fill out the terms of your offer, you push the go button and it's submitted into a spreadsheet down underneath that is off MLS. I'm making the argument that even though Triangle MLS Inc. May facilitate these contracts and make sure that the data gets where it's going, our data, our MLS data never ever ever has compensation in it, period. It's inside this vendors software where it's password protected inside the terms of this deal.

Matt Fowler [00:13:24]:
I can't access it myself as the administrator. No one can except for the people that are involved in that deal. But the software can be configured with a regulatory reporting as part of the deliverable. They do this in Canada. The Canadian Real Estate association adopted a countrywide transaction management platform from an australian company that I just heard today was acquired by a company called Final Offer. So OPA has been bought by final offer. So that's a cool software. That is one of a universe of tools out there that triangle is considering to make sure we abide by the settlement, make sure we understand not just the letter of the rules but what they're actually trying to accomplish here and see if we can build a way to do that that keeps it out of the inbox, smooths the buying experience for everyone, gives us the ability to have that transparency for the regulators and keeps it out of the inbox chaos.

Matt Fowler [00:14:24]:
Hopefully that's our goal for the settlement.

Matt Fagioli [00:14:27]:
Well, so with you got all of that going on and I don't want to shelve that at all because it's a long big conversation. And actually before we go any further, I want to point out, so we have this big date coming up for the August 6, which is preemptive of the August 17, I think deadline, right? That's right. And guys, if you're hearing this, may make sure you are present on September 19 at prop Tech south where we're going to have an extensive conversation with some really important industry experts that are coming about the details of this and how business is going to go forward. Matt, can you tease a little bit about our guest that's coming to that conversation?

Matt Fowler [00:15:12]:
Yeah, I'm really excited about this. Matt Triangle is doing our second annual proptechsouth.com event here in research Triangle park. And last year we had really great speakers. We're going to do it again where we've got Dylan Carson, former DOJ antitrust trial lawyer, coming to us. Dylan spoke a couple of years ago at CMLS and I heard him say some really, I thought, I don't know, actionable things that I, it wasn't legalese, fudge words, people trying not to say something. He actually was saying look guys, this is what you need to be doing. And he was talking about if you dont have a consumer portal where you tell your story about what omlss do and how is it really valuable. Well, the only people telling your story are people that are shooting at you.

Matt Fowler [00:16:01]:
So he says, Im not a pr person, Im a lawyer. But he said he talks to consumers all the time who turn in these antitrust complaints and the things that they say about us aren't great and they're rarely true. Right. At least in my, the way people look at these fees to me just doesn't make sense. I understand we're not litigating that anymore. But Dylan gives, it gives us the ability to kind of get some inside scoop not of what's going on with the current team, but maybe get into the mind a little bit of the regulators and what are they actually trying to accomplish here. And of course he has some turn by turn guidance on how to run your brokerage, how to think about these things in a holistic way. And I think our brokers could really benefit.

Matt Fowler [00:16:45]:
All brokers could benefit from hearing from somebody like Dylan.

Matt Fagioli [00:16:48]:
Well im incredibly excited about that conversation and I know you are. And you cant get much closer to the horse's mouth than a former horse's mouth. And to hear what you're saying about his practical approach to things is phenomenal. So guys, make sure you're at prop Techsouth not only for that conversation but some of the other things that are, that are going. But, but Matt, with the couple minutes I have left with you, I just love to hit a couple other points of, you know, kind of stuff that's new at triangle, things that members need to know about.

Matt Fowler [00:17:17]:
Yeah, yeah I've been thinking about this matt, and how to, I don't know how to look back at the first half of the year, which was turbulent for sure, and then kind of anticipate the second half of the year. And I think what I can do is I can give you a couple of statistics. Data guy, thats what we do. Data complete and accurate data is our motto. We turned on the front end of choice project on November 29 and had extensive trouble getting the data all synchronized. And June 22 is a long time from November 29 and its not perfect. I think it wont be perfect until the downstream vendors, that's black Knight and Corelogic, people that receive the data. Instead of originating the data, they have to get their systems fully compliant with the reso standards.

Matt Fowler [00:18:11]:
They have to ingest the data and present it in the receiving systems using the new terms and descriptions and lookups that exist in the data. The biggest accomplishments in the first half of the year, once we publish that data, we had it certified. Our database of record and the spark database has been certified by the real estate standards organization at the very latest level and we are the first I get to talk about it on this podcast. We're the first mls in the country and currently as I looked this morning, the only mls in the country certified to receive data in the research standard as well as to download data in the research standard so you can write data into your listings. If you're a broker watching this and you have your own software systems and you would like to say change the price or edit the remarks or reorder the photos or edit most of the fields in the compilation, you can do that from Matt sellsatlanta.com instead of logging into Paragon, Matrix or Flex and having to do it through one of our systems. That means that youre a, your employees can stay inside of the user experience that you built for the unmetchered brokerage that I want to support and extend and animate that work as much as I can. Anything inside the mls that you need to get out to animate your business, I want to do that. We have these interactive live data streams now.

Matt Fowler [00:19:36]:
The reason I'm telling you all that is because that's why we went through all of that pain and suffering in November was to clean all our data. Some of the vendors took longer to get up to standards than others. It sounds like I'm throwing them under the bus. I'm absolutely not. We just signed contracts with both of them to extend their time in the triangle because I know that there's around 10,000 I think it's 9000 something triangle subscribers who, when choice expired, when the trial period expired and you had to pick 173 percent of them chose to stay with with Paragon. So even in its little bit slow not entirely matching the underlying data because of the translating that's happening, they still picked to stay with Paragon because it's the one that they know and know how to use. What we did is allow them to stay with the platform that they chose. Had we done a normal conversion and moved over to FPS in order to get the backend that we needed, all 10,000 of those people would have been forced off of Paragon against their will and been forced to use fleximus.

Matt Fowler [00:20:44]:
In this instance we allowed the Corelogic people from elements to stay on Corelogic. We allowed all the Paragon people who wanted to stay to stay on Paragon. And there's about 2000, almost 3000 new flex users in the triangle who wanted to use flex MLS. That's the biggest accomplishment of the first half of the year. The two resource certifications, also our own internal database, have been certified as the one that you can read and write to. So some of our viewers might remember the Rapatoni outage from last summer where an MLS vendor was off for like eight weeks or something. So there were 30 something cities in the US, some of them big, who just couldn't send bills. They couldn't do a search.

Matt Fowler [00:21:28]:
The MLS was down. You couldn't add any listing. People were adding their listings in the MLS in Wilmington and just pointing people to that because they didn't have anywhere else to put it. And if that happened to us today, it would be rough if we lost FPS completely and we're still not to a point where we could just flip a switch and have it keep going. But we were a lot closer and that database has now been certified as well. So there have been some really important, just kind of engineering things done in the first half of the year. We also have a. Before we get out, I can't miss mentioning we have a research program underway with all the property managers to look at what we're going to do with rentals in 2025.

Matt Fowler [00:22:11]:
The current contract with rental beast expires at the end of this year and we're trying to decide if we want to continue that or not. Property managers have some very specific things that they want and we're listening. And we have a special group run by Alan Nielsen working on exactly what we're going to do with that. We'll let everybody know what their decision is by the probably end of Q three. So tons going on. Prop tech sales coming up. We've got a new CEO coming in at Raleigh. Dave Phillips is retiring, so there's a search committee going on.

Matt Fowler [00:22:41]:
We've been kind of distantly related to that and looking forward to getting through this settlement changes so we can focus on some changes to the dashboard coming in in the second half of the year. We have a new name, new brand launch coming up. Triangle's got a new consumer focused approach coming this fall. That's going to be big news in September. So yeah, we've got a, the next one of these, Matt, at the end of the year will be, have a lot to cover.

Matt Fagioli [00:23:09]:
Awesome. Well, Matt, thanks a ton and guys, make sure you were at Project south on September 19 in the triangle. Get your pass today, proptechsout.com and you're going to get the deep dive on all of these updates. But Matt, thanks again for all you do. And I can't wait to get the update at the end of 24.

Matt Fowler [00:23:29]:
Thanks, Matt. Good to see you. 

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