MLSs use AI to detect commission lawsuit violations

From an outsider’s perspective, the integration of compliance tools within various MLS-related technologies can look somewhat incestuous. Mapping the connection between each MLS, MLS system, single sign-on (SSO) and data security dashboard, compliance system, and photo compliance module would look like a small child drawing random lines on a white board.

Some of the companies that make compliance tools are companies that have been converted into a separate entity through an MLS. Listing Data Checker (LDC) – CoreLogic’s compliance software – works on MLS systems that CoreLogic’s Matrix MLS listing management platform directly competes with. Some compliance systems integrate photo compliance modules built by companies with their own compliance systems.

LDC has an overwhelming majority of the addressable compliance software market and has the built-in advantage that an MLS does not need to be on Matrix to use it.

Other platforms such as Rapattoni And ICE’s Paragon have no internal competitors for LDC, so they allow MLSs to add LDC to their platforms. This ensures that LDC is compatible with virtually every MLS in the country, while also discouraging competing MLS systems from building compliance systems that would replace LDC.

Historically, compliance tools flag listings for possible violations and an MLS staff manually reviews these listings to determine if they are actually in violation. If so, and the MLS imposes fines, there is an internal process for distributing invoices.

But advances in technology are allowing newer companies to automate processes, including billing, and use computer vision to scan photos and large language models to more thoroughly assess potential violations.

Woop-woop, that’s the sound of the police

Combined LA/Westside service for multiple listings (CLAW), which serves 16,000 members in Southern California, started building its own software more than two decades ago. After receiving interest from other MLSs in licensing the software, CLAW was founded VestaPlus, a technology company that houses the MLS’ software products.

VestaPlus has a full suite of MLS product offerings, including a compliance system called CheckMate. The company built it before the NAR settlement, so VestaPlus believes it is in the right place at the right time to attract new customers from MLSs looking to increase their compliance capabilities or who are dissatisfied with LDC.

Currently, CheckMate is licensed to six MLSs, and VestaPlus manages compliance for three others using Checkmate.

In July, San Diego MLS (SDMLS) has switched from LDC to CheckMate. CEO Saul Klein says licensing software from another MLS experiencing issues with SDMLS was attractive when weighing different options.

“Part of my philosophy is that I really like to support other MLSs because we share the same issues,” Klein said. “MLSs that develop products can turn out to be really good because they have such great customer interaction.”

The photo compliance part of CheckMate and LDC is powered by third-party companies that specialize in artificial intelligence and computer vision, technology needed to scan photos for sneaky things like an agent’s phone number in a list of photos or a dice on the coffee table. the number three.

Restb.ai is a leader among these companies because its AI and computer vision are purpose-built for the real estate industry. The Barcelona-based company launched an AI photo compliance tool five years ago.

Although LDC does not create a photo compliance tool, MLSs can purchase Restb.ai as an add-on to their existing LDC account. VestaPlus’s CheckMate primarily uses ListAssist to power its photo compliance module, but the company says it is “agnostic” on photo compliance tools, and that it can integrate another if the MLS prefers one above the other.

“We are seeing a resurgence of interest when it comes to compliance, and especially photo compliance,” says Dominik Pogorzelski of Restb.ai. “One of our partners actually said that we live in 2024 and you can’t have a compliance tool without having photo compliance in it.”

Integrations to detect violations

Advanced compliance technology is also making its way into newly built MLS software that is not an underlying MLS system.

REcore, a single sign-on and data security dashboard launched in January following the purchase of REcenterhub from California Regional MLS, a dashboard similar to Relevate or CoreLogic’s Clareity. Within REcenterhub there is a compliance module that REcenterhub users can use.

The company is exploring ways to integrate its compliance tools into third-party dashboards and MLS systems. October also saw a leap forward with the release of “MLS Buyer Registry,” a tool intended to help MLSs comply with settlement rules regarding buyer broker agreements.

Ocusell has built a platform intended to streamline the listing process by allowing agents to post listings to multiple MLSs through a single interface, while also using AI to auto-populate much of the listing information.

According to the company, listing violations remain on an MLS for an average of five days, while Ocusell’s compliance tools detect violations in real time as the agent enters listing information. The platform can also be customized to the specific rules of a particular MLS.

The number of companies producing computer vision tools for analyzing photos is too many to count, according to people in the space. But the number of companies making compliance systems for MLSs is small, in part because taking significant market share away from the least developed countries is an uphill battle.

Restb.ai’s integration with LDC makes it easier for MLSs to stay with LDC and simply add Restb.ai, rather than starting over with a new compliance system. LDC also benefits from CoreLogic’s vast array of technology products, allowing LDC to compete on price better than a newer, smaller company.

There is also potentially a hard ceiling on how much of the entire MLS market is reachable due to the 500+ MLSs; only larger ones need a compliance system. For small MLSs with very few listings, the staff can have them manually reviewed without paying for something they don’t need.

And while some companies may have an edge at the moment, new ones will introduce more advanced technologies and efficiencies, while old ones will find a way to replicate them, similar to how Instagram co-opted Snapchat with Stories and TikTok with Reels. This prevents any given company from having a competitive advantage for a very long time.

The question is whether the risk of NAR or DOJ involvement makes some MLSs wary of adding compliance tools, especially those that rely on agents to monitor other agents’ listings. The “snitch” system will not be able to catch every potential violation, and MLSs have less room for error in a post-settlement environment.

“Sometimes agents don’t like to follow the rules, so warnings followed by enforcement become essential,” said David Charron, former CEO of the MLS and executive advisor to the industry. “For those [MLSs] who would have us believe they are playing a never ending game of Whack-a-Mole, stricter compliance is the only antidote.