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1) Is RETS a form of IDX? Is it a language? Is it a connection script? So lost, my php/html expertise doesn't cover all of this stuff.
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IDX is a policy not a format:
http://www.metalsoftware.com/idx-real-estate.html
RETS is a data exchange protocol
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2) And is an 'RETS server' the original hosting, main MLS server (in this case with Filogix at MLS.ca)? Or is the RETS server something installed on the end website's (shared) server?
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RETS can either be built right into the MLS database or sits as a separate server that acts as a bridge to the MLS database - either way, same end result.
For the website, RETS is a client program that connects to the RETS server and does the pull
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3)Once the data is in the local db (mySQL) can it be modified by a local admin tool (php) just for display on the local site (not spit back to MLS)?
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once it is in your DB you are free to do whatever you want - keeping in mind there are data usage policies and restrictions