MLS Espana - exciting changes in the European real estate industry
Throughout my career in the real estate industry, I have had the opportunity to do quite a bit of work outside the United States. This work has taken me to Canada, England, Germany, Spain, Italy, Ireland, Norway, Israel, and Brazil. Just having a chance to be in these countries doing business, rather than just being a tourist was great, as you get a totally different perspective on the culture and the people than when you are just sightseeing.
You recognize many differences in how people approach a business relationship compared to the way we do and this can vary immensely from country to country. These experiences also gave me the opportunity to understand how different real estate is outside of the US, as well as a huge appreciation for how we conduct real estate in North America. Trust me, there’s no place like home!
In December 2017, I was invited to speak in Spain at the National MLS Conference for MLS Espana and was thrilled with the opportunity.
I first started working in Spain in the early 1990’s. The MLS company I worked with at that time, Interealty, was hired to provide technology for the new RE/MAX Europe regions spreading throughout Europe. I was the Director of International Services for Interealty and got to work with Javier Sierra, the owner of the master RE/MAX franchise in Spain, who helped create MLS Espana and is now its Chairman.
Later, with the WAV Group, I became MLS Espana’s consultant and did a speaking tour with them around Spain, in a number of different cities on the value of MLS, its history, and why it works so well in the United States and Canada.
Today, I am happy to say I am still working with Javier to help Spain execute improved technology paths for their future, and increase national adoption of the MLS system.
Spain started their MLS in 2001 and made great progress after its creation, until Spain ran into one of the biggest recessions in history, in 2007 and 2008. This recession totally decimated the entire economic market! Many companies went out of business and while the MLS did not go away, it also did not grow during that period.
However, little by little, as the market repaired itself, the MLS became healthy once again and is growing exponentially. From 2012 to 2017, the MLS grew nearly 500% from 188 offices to nearly 1000! As important, today there are 23,695 exclusive listings in MLS Espana.
When I returned to Spain in November to speak at their conference, it was great to see how much momentum was occurring in the MLS. I was asked to share my opinions on why the MLS is so successful in the United States and Canada, and give some historical perspective on how it began and evolved, and how things look for the future.
As a student of our industry, I love the whole topic and it was fun to share what I could over the morning and afternoon session with brokers and company owners of the MLS in Spain. They were extremely interested in understanding how things work on our side of the pond and how we overcame the same issues they are facing today, with getting people to change how they have done things for many hundreds of years. Convincing sellers to list exclusively seems to be the biggest hurdle they face.
How Real Estate is Transacted in Europe
To understand how significant the success with the Spain MLS is, I should share some background on real estate in Europe, in general. It’s what I would call the “Wild West” of real estate!
It’s funny how most Europeans look at Americans as being less civilized than Europeans. While that may be true in many areas of our lives, it is not true in real estate. When it comes to managing the buying and selling process of real estate, the United States and Canada are the gold standard. The US and Canada have a strong national trade association, NAR being the largest in the world, with a proven system of cooperation between competitors that works! We also have the best MLS technology in the world, our real estate practitioners are licensed, and most people work under the ethics and guidelines of our national associations.
By contrast, this is not the case in many European countries. In many countries, including Spain, licensing is not required. Throughout Europe, exclusive listings are the exception and, even when there are exclusives, people don’t often share their listings or they do so through personal agreements.
In the late 90’s I lived in London, England for about 18 months, and one of the first things I did with my wife was experience the home buying process. The experience we had was so different from what we have in the U.S. it floored me. In England, you would have to go to every single Estate Agency on High Street, which might be 12 or more offices, to see the inventory, because nobody shared listings. Then, you would have to work with that agency to make an offer because it was their listing.
The differences didn’t end there. We were looking at homes over $500,000 pounds at the time, and in the late ninety’s that was a pretty decent house. Yet, when we went in to inquire, we were typically asked a few questions and then we were handed a brochure. Our next instruction was to let them know if we were interested. We had to make our own arrangements with owners to see properties and the estate agent did not come along.
The other kicker in England is the commission. The lack of effort from agents is a bit easier to understand when you find out that typical buy and sell commissions range from 1% to 2% in the UK, so they can’t spend a lot of time running around showing properties. Thankfully, the rest of Europe is more in line with U.S. commissions, averaging in the 5% range for both sides.
Real Estate Portals in Europe
During my time in Spain last month, I learned quite a bit about the portals that operate there and in other European countries. In Spain, even though the MLS is growing, it is still not everywhere. Consumers might go to a portal like http://idealista.com/ to find a home as a first step. Once they do, they will need to contact a specific agency that is listing that home and has “paid” to advertise it on the portal. If the listing is an MLS listing in Spain then the consumer will know (or should know) that the listing will be “exclusive”. Many of the listings you see on portals, however, could be listed with several different real estate companies because exclusive listings are still the exception, not the norm!
Here’s another big difference in Europe: not only don’t portals pay for listings, real estate companies in Europe have to pay the portals to show their properties on the portals. Companies might typically pay $2000 Euros, a month, to put their listings onto a single portal!
Throughout the Q&A session of my talk, brokers expressed concern about the threat Portals may pose to the MLS in Spain and whether I thought they were a threat in the US. I shared some of the major concerns expressed by real estate companies regarding U.S. portals, from having to pay for leads on their own listings to dominance on web searches and their perceived importance to consumers. But I also assured the brokers that, in the U.S. and Canada, MLSs are still the source of listing data and we don’t expect that to change. In fact, MLSs are not only the source of most listings that appear on portals, but they also provide us the opportunity to work with the broker and agent of our choice while still seeing all of the inventory.
Key Advantages of MLS In Spain
One of the key focuses of my talk was why MLS is so valuable and how it offers an advantage to those that use it at both the consumer level and the professional level. The advantage of exclusivity is one of the major discussions. While it is always difficult to get people to change habits, I tried to emphasize how they need to truly educate the public on the value of the MLS system and how exclusivity actually increases their home’s exposure, which in turn, increases the chance for a faster sale at the best market price.
Here are a few of the talking points I shared:
- Listing in the MLS in Spain means that you have almost 1000 brokers trying to sell your listing rather than the limited number you might have in a “non-exclusive” listing agreement.
- Listing in the MLS means that you can work with the broker/agent of your choice with increased market exposure.
- Working with one broker/agent simplifies the communications with the seller, making the overall experience more efficient and easy.
- Listing on the MLS in Spain means your listings don’t have to just be on a portal, it is also on the professional real estate system of the MLS exposing it to all members immediately.
- When a listing is on the MLS is must be “exclusive”. This should be clearly marked on every listing, especially when it is on a portal, as this gives the consumer the comfort of knowing it is only listed once, and they can work with the MLS broker/agent of their choice.
Just Because an Idea Makes Sense Doesn’t Mean They’ll Listen!
One thing I learned very clearly when I was living in England is just because something makes sense, doesn’t mean it will be adopted. Europe is steeped in tradition and doing things the way they have always done them, which is a sentiment we aren’t as familiar with in North America.
You see strong tradition not just in their culture but also in their business practices and real estate professionals are not alone in the blame. Consumers too are used to what they are used to. But sometimes we have to break tradition to make way for the future.
“I love helping our local industry learn about different real estate models around the world and adapting ideas for our market. MLS Espana has an incredible opportunity to revolutionize real estate in Europe. We must be attentive to the changes that will occur in our industry in the coming years and open more relations between the MLS and the various professionals within the real estate industry. Together, we will transform real estate forever.”
- Javier Sierra, Chairman of MLS Espana