Our MLS - A Service Worth the Price
Report on findings of the Joint Task Force on MLS costs
Chris Reese
CBR Treasurer
Leadership by the members
Our multiple listing service operates under the leadership of the MLS Committee, elected by the brokers of the MLS; and the Board of Directors, elected by all members of the Board. Most of us realize the diligent hard work required of our MLS Committee and Board of Directors and the difficult important decisions they make to keep our service up-to-date. Good examples of their decisions are our relatively new web-based Tempo system, and of course what happened this summer – the addition of the new Realist product to our host of valuable tools.
Financially, our MLS is self-sufficient. With its own cash in the bank, MLS pays its own bills including rent for use of areas in the Board’s membership headquarters. When you take into consideration all the costs associated with keeping a state-of-the-art MLS, computers, communications, cutting-edge web-based software such as Tempo and our new Realist product, keeping knowledgeable tech staff and trainers on staff and available to well over 6,000 members; plus the administrative support – it shouldn’t be too hard to believe that the annual MLS operating costs are in the $2 million range.
Joint task force appointed
Determining how these costs are effectively recovered through a variety of member fees is one of leadership’s duties. In our planning for 2005, President Skip Weiler appointed a special task force of members from the MLS Committee and members from our Board of Directors. Brokers and agents representing companies both large and small worked together on this joint task force to evaluate projected MLS operating costs for 2005.
Findings of the task force
In their work, the task force identified some trends that truly affect how MLS will be able to recover its operating costs into the future. Some of those trends include:
- Brokers and agents alike have equal, easy access to the tools and benefits of our MLS, even though the annual member fees we pay are covering about half of the cost of the service.
- Non-dues (or user fee) income historically has been able to offset some of the rest of operating costs, but several of those sources are declining.
- Prior to our current web-based system, agents bought PC-access software, costing up to $150, to access the MLS. Software sales no longer help to offset operating costs.
- MLS book sales are declining, and with publishing costs on an upward spiral the MLS no longer can count on profits from book sales to help offset operating costs.
- MLS no longer receives Internet royalty income that used to help offset operating costs.
- Saving wherever possible on costs should always be emphasized. Specifically, both photography and the supply of standard forms to MLS brokers were identified as areas to be watched.
- Historically, MLS has established member fees only at a level to cover cost plus a small profit margin to create a cash reserve. The resulting reserve is there when needed to help pay for new systems, upgrades, or new products like Realist.
- Membership in MLS has grown significantly, partially due to economic factors, and partially due to board mergers or regionalizing. This enables spreading of costs over a greater number of members.
Recommendations of the task force
The task force considered the trends affecting MLS costs and made recommendations to the Board of Directors that would both stabilize costs, and assign justifiable member fees.
- MLS cash reserves should absorb the $100,000 cost of providing the Realist product over the second half of this year, rather than making any mid-year assessment to the members.
- Additionally, a $100,000 advance payment from reserves to our current vendor MarketLinx will significantly reduce the cost of the Tempo system for the next three years.
- Photography and MLS forms costs must be monitored closely in 2005.
- When setting member prices, the mark-up on cost should be kept at the low rate of 4%, which will still enable a gradual re-building of our cash reserve.
- MLS books sales must be monitored, and the book price adjusted quickly when publishing costs change.
- Monthly fees that are charged only to Brokers (in addition to an annual member fee) should recover not only a justifiable pro-rata share of all the MLS operating costs, but also the costs of governance, including meetings, accounting fees and legal fees.
- The task force recommended a graduated change in member fees over the next two years to accomplish the justifiable balance in fees. The recommendation has been adopted by our Board of Directors, and our basic fees effective January 1, 2005 are:
- Annual Agent MLS Member Fee - $244 total
- Annual Broker MLS Member Fee - $244 + Office Fee $564 (12 mo @ $47) = $808 total
- The recommendation approved by the Board of Directors also included a $15 reduction in the broker’s monthly fee effective in 2006, and an increase in the annual member fee paid by both brokers and agents of $21.
- Changes in overall MLS operating costs or in the number of members by 2006 may affect, perhaps offset, the actual changes that would go in effect 2006.
Service worth the price
MLS recovers the operating costs of our system by assessing fees across all the membership. Being able to spread the costs across such a large membership as we now have makes our service - which includes the ability to perform many functions that each of us used to purchase separately like PC-access, MapMerge, label-making programs and fact-sheet programs - more affordable and a service definitely worth the price.
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