Differing Approaches to a Realtor Necessity

Access to Midwest Real Estate Data (MRED), Chicagoland’s MLS, is an exclusive privilege that association members enjoy, and easily one of the main benefits of joining a Realtor association; after all, though syndication sites such as Trulia and Zillow may continually strive to improve the accuracy of their listings, and online brokerages such as Redfin may feature direct IDX feeds to their sites, they will never quite match both the stats of the MLS and its control over the most accurate real estate listings in and around Chicago.

As ubiquitous as the MLS may be, though, all the associations approach their relationship to the MLS differently. As Terry Penza, the president and CEO of NSBAR explains, MRED charges all of Chicagoland’s Realtor associations a base fee for access to its data, which is $18 per agent, per month. So an association with 10 agents, for instance, would be charged $180 for every month of the year to access the MLS. Those agents though, Penza says, pay the association an amount that is greater than that $18 fee to cover the association’s costs of administrating the MLS access.

At the end of the day, all of Chicagoland’s associations are providing their members with  the same kind of access to the MLS; however, for an additional fee, some broker/owner members can gain access to MRED’s inner workings and have a voice in the general direction and policy of the MLS.

To attain such a status, Realtors have to become preferred unit holders in MRED. There are currently 73 preferred unit holders of MRED, and Rob Schaid, the president of MRED and one of those preferred unit holders, says the process of becoming a unit holder is quite straightforward.

I want us as an association to finally say, ‘Hey members, we’re here for you. What do you need? We want to provide what it is that you perceive you need.’ We want them to tell us what can we do better for them this year.”

Tonya Corder, Mainstreet Organization of Realtors

Besides being a licensed broker/owner, the individual must be a subscriber to MRED through one of Chicagoland’s participating associations. If those conditions are met, the person can purchase a share of MRED for $1,000. The share is purchased in the name of the person’s firm, and no firm, including its affiliate offices, is allowed to hold, own or acquire more than one preferred unit. Also, Schaid says that shareholders are not allowed to sell their shares once they are purchased.

It is among these shareholders that the MLS’ 15-person Board of Managers is assembled. The board, Schaid explains, is composed of four different subsections that reflect the nuances of the shareholders. The first three sections are made up solely of the shareholders, and the sections are organized based on the size of the firms the shareholder represents. So, four individuals are elected from the first group, which is for small brokerages; five individuals are elected from the second group, which is for medium-sized brokerages; and four are elected from the third group, which is for large brokerages; and of course, the specific sections vote on who will represent them in the Board of Managers.

The final section, then, is reserved for the Realtor associations. Of the seven associations that work with MRED, Schaid says two CEOs are chosen to represent the associations on the board, and by definition, they are not shareholders; the current CEOs are Penza from NSBAR and Jim Haisler from HRO.

Finally, the positions of the president, vice president, treasurer and secretary are chosen from among the board, with the board members again conducting an election to select the new representatives for the positions.

MRED does place term limits on its board members, Schaid explains, though there is a bit of a catch to how it operates. Board members serve two-year terms and are able to serve three consecutive terms. Once those three terms have been served, though, the shareholder must take a year off from the board before running again. Though nothing can stop shareholders from running for continuous terms after each one-year break, Schaid says the rule was a step forward for the MLS, considering that, when it first formed in 2008, there were no term limits for board members.

Schaid, who is also the broker/owner of RE/MAX Plaza in McHenry and a past president of HRO, says the responsibilities of his presidency are not very expansive. Given the breadth of MRED’s staff, Schaid says his main role is running the MLS’ board meetings. Rather, Schaid says the influence of being a preferred unit owner is a collective one, with the unit  holders developing the broader framework under which the MRED staff operates the minutia of daily tasks and decision making.

“As long as [the staff] is doing things that are within the direction we’ve set out, then it’s up to them,” Schaid says. “But it’s up to us to set the direction.”

One example Schaid cites is the “Midwest Homes” iPhone app that MRED recently developed; the idea, he said, originated from a preferred unit owner who felt the MLS should invest more in mobile technology; after that initial spark, it was the staff that ultimately developed the app and implemented it into MRED’s business model.

Schaid admits, though, that such benefits are implicit – there is no direct financial benefit to becoming a preferred unit holder in MRED. Instead, the benefits come from having a much greater involvement in the local real estate markets, along with networking opportunities and, perhaps most notably, the education one attains from working amongst such respected Realtors. The lack of a more explicit financial benefit, Schaid believes, is why so few members of the MLS (again, just 73 of 36,000-plus members) ultimately take the step to becoming shareholders.