Whose Data Is It? REcolorado Decides Its Theirs
In which I react to a new and egregious Participant Agreement from REColorado
I’m at a conference this week so pretty busy, but this news I received yesterday from a reader deserves a quick look.
I am making this a public post because I think this may be a sign of things to come; and only vigilance by brokers and agents can prevent this from being a the status quo across the country.
As most of you know, because you are Notorious readers, the MLS for the metro Denver area, REcolorado, was recently sold to a private company. From the FAQ published by REcolorado:
MAZL, LLC, a private company formed specifically to acquire the MLS service. Headed by Joseph Burks, a leader in the real estate industry for more than 40 years, MAZL has agreed to purchase REcolorado from DMAR and SMDRA. The new ownership will support REcolorado with unwavering dedication to our customers ensuring that the MLS remains a cornerstone of the real estate community with an even broader offering of services. It’s important to clarify that MAZL is a private entity and not a Private Equity Firm.
That sale was recently finalized, according to my sources on the ground.
Well, some brokers in metro Denver were just sent a new Participant Agreement by the new REcolorado with October 9th as the deadline to execute this new agreement. Failure to execute means losing access to REcolorado.
I haven’t done a full deep dive into the new Participant Agreement, but I have gone over it a couple of times.
If the new owners of REcolorado thinks this document is what “unwavering dedication to our customers” means, I think that bodes very ill for the brokers in metro Denver.
This issue is worth highlighting because given all of the recent changes, given all of the recent chaos, given all that is going to change, we may see more and more MLSs both private and REALTOR-owned consider taking similar steps.
In short, this new Participant Agreement represents a massive grab of brokerage data. If lawyers for REcolorado or other legal professionals want to weigh in and tell me how I’m misreading this, I’m all ears. I am happy to be wrong and be educated, but I do have to call it like I see it.
As always, please consult your own attorney for actual legal advice. I am not your lawyer, and none of this is legal advice; it is commentary for education and entertainment.
[Please note, as I have stated before, I am working on an alternative MLS, and I want to be upfront about any potential bias. Make of that what you will.]
The Participant Agreement
Let me embed the new Participant Agreement here. I have highlighted certain sections that were the most eyebrow raising.
The trouble begins almost immediately in Paragraph 3, Data License. This is the paragraph that grants rights to the Participant brokerage. I have read quite a few MLS Participant Agreements over the years, but I have never read language like this before:
DATA LICENSE. REcolorado will grant Data Licenses, including without limitation Internet Data Exchange (IDX), Participant Data Access Policy (PDAP), Back Office, Virtual Office Website (VOW), to Participant upon the receipt of a written request from Participant, in a form acceptable to REcolorado, and subject to approval.
The data feed will only be granted pursuant to a License Agreement, which REcolorado has no obligation to grant.
REcolorado reserves the right to deny a license to Participant, any Users, or any Vendor that is in default of any written agreement with REcolorado or MLS Policy.
In addition to any applicable license fee payable by Participant, the Users, and/or the Vendor, Participant shall pay to REcolorado all costs and expenses incurred by REcolorado in connection with any licenses and any services provided by the MLS in connection with such licenses. REcolorado reserves the right to audit the usage and distribution of Participant's data feed. [Emphasis and line breaks added]
The major problem here is that this license scheme includes Participant Data Access Policy, or PDAP.
I have spoken about PDAP on an Industry Relations podcast before, but let me touch on it. I wrote about it in this post last year and might repeat a lot of that.
A fundamental understanding in real estate and the MLS world is that the broker owns the listing. Hence, every broker can do whatever he wants with his own listings. Period, end of story. He can send the listings to portals or not. He can fly a plane trailing a banner, or not. He can hire singing telegrams to market that listing if he wants.
Because of this basic premise, that the broker is the owner of the listing, PDAP was never considered a grant of license by the MLS.
From the NAR MLS Handbook:
A Multiple Listing Service must, upon request, promptly provide an MLS Participant (or the Participant’s designee) a data feed containing, at minimum, all active MLS listing content input into the MLS by or on behalf of the Participant and all of the Participant’s off-market listing content available in the MLS system. The delivery charges for the Participant’s listing content shall be reasonably related to the actual costs incurred by the MLS. The data feed must be in compliance with RESO Standards as provided for in MLS Policy Statement 7.90.
Note: MLSs will not limit the use of the Participant’s listing content by the Participant or the Participant’s designee. (Adopted 5/20)
What this section says is that the MLS has to give to the brokerage all of its own data. To be crystal clear, the brokerage owns the data, and the MLS is a “custodian” of sorts. Therefore, the MLS must give that data back to the brokerage if/when the brokerage asks for it. And the NOTE at the end is important: the MLS cannot place any limits on the broker’s use of his own data, because the MLS is not the owner.
There is no grant of license. There is simply the command to deliver to the broker a data feed containing all of that broker’s own listings and off-market listing content. With no strings attached.
REcolorado eviscerates the meaning of PDAP.
REcolorado purports to provide the broker’s own data back to the broker only upon receipt of a written request, in a form acceptable to REcolorado, and subject to REcolorado’s approval. That is not ownership by the broker. I don’t know what that is, but it isn’t ownership.
On top of that, the broker wanting his own data back must sign some License Agreement — for his own data, mind you — and REcolorado straight up says it doesn’t have to grant that license agreement. Again, that is not ownership. The broker does not own his own listing data in any significant sense of the term.
And then REcolorado has the nerve to tell a broker that it can audit the broker’s use of the broker’s own data?
This is not an MLS. This is a boss. Your lord and master.
If your bank treated your money this way, where you deposit it, then have to go beg and plead to get your own money back, and the bank can deny you, and condition withdrawal on you signing an agreement, and then can check to see how you’re using your own money… that isn’t a bank. I don’t know what that is, but it isn’t a bank holding my money. You would find another bank.
Well, I think brokers in metro Denver ought to consider the same. This is a straight up theft of intellectual property.
For the legally minded, I would also read Section 4, subsections 2 and 3 and see what you make of that language. I find it incredibly burdensome as well as poorly written, but it does seem to suggest that REcolorado is the real owner of the Listing Content, not the Participant whose agents went out and did all the work to acquire the listing.
By Hook or by Crook
If REcolorado were still a REALTOR MLS, then this Participant Agreement would be thrown out immediately as it is in violation of NAR’s MLS Policy. PDAP is not an optional rule. It is a mandatory rule that every REALTOR MLS must follow.
And the grant of license language is extremely favorable to REcolorado and essentially robs the brokerage of any real rights to his own listing data.
It is, as I said, straight up robbery — theft of intellectual property.
I think this is a danger because what REcolorado did here may be something other MLSs are considering.
Losing compensation is a huge blow to the MLS’s value proposition; they all know that.
The remaining value of the MLS is in being a central repository of listing data.
Moves like this one by REcolorado seeks to shore up that value as the central repository of listing data, not by adding value to the brokerage on whose behalf it is aggregating and distributing the data, but through slick legalese that most brokers won’t read. Only too late will the brokers realize they no longer have any rights to their own listing data.
It’s a shit move, frankly.
If you belong to a REALTOR MLS, chances are that your Participant Agreements did not rob you of all rights to your own data. And PDAP policy is still in effect. Still, maybe go read that Agreement just to be sure.
If you belong to a non-REALTOR MLS, and the MLS wants you to sign a new Participant Agreement… read it very carefully and ask your lawyer to take a look to see what you are giving away.
More pointedly, if you think you should own your own listings that your agents worked hard to acquire, maybe ask your MLS straight up who owns the listings and ask them to prove it to you.
How? Ask for a PDAP feed right now, as per the MLS Handbook, with no limits and no restrictions and no fees beyond what is “reasonably related to the actual costs incurred.” That fee should be zero for competent MLSs, and nominal for incompetent ones. Anything beyond nominal warrants immediate suspicion and investigation and probably looking for a different MLS.
Tentative Conclusion
As I said, I’m at a conference so I can’t take the time to really comb through this document and investigate. I will do so shortly.
This new Participant Agreement should be renamed to a new Bonded Serf Agreement. The limits placed on brokerages accessing and using their own data — not anybody else’s data from the MLS, but their own that they entered into the MLS — are egregious. This is not the MLS working for you, but you working for the MLS… and paying for the privilege.
If you are not in REcolorado market area… get with your MLS leadership and demand straight answers that they will not pull this kind of stunt on you. Demand that they put in writing their respect for the fundamental bargain of the industry: broker owns the data, and merely allows the MLS to be a custodian and to put together an “MLS Compilation” which belongs to the MLS.
Some free advice for the brokerages in metro Denver:
Do not sign this new Participant Agreement. Have your lawyer look at it carefully, and tell you what rights you will have left to your own data if you do sign it.
Immediately demand a copy of your own data, via PDAP, under your current Participant Agreement prior to October 9th. As of today, you still own your own data deposited with REcolorado; after signing this, not so much.
Consider agitating for a change in this egregious
highway robberyParticipant Agreement; the response of REcolorado will tell you much about what “unwavering dedication” means to the new management there.
Of course, you are free to ignore this advice. I can only point out the giant gaping sinkhole in the road; I can’t force you not to drive into it.
This is the poster child for why there needs to be real competition between MLSs for brokers to choose from. Not only is this tone deaf, it is flat out wrong and most likely illegal. This is total bullshit. They need to remove their PDAP section immediately. Sadly, the reality for brokerages to move to another MLS is that it is disruptive and time consuming, and can be a significant speed bump -- some MLSs view this as one of their "advantages".
Rob Im 100% with you. This is something association boards need to look at before they sell to a private entity in this instance (or dare I say private equity in the potential future)