Colorado’s two largest multiple listing services — REcolorado and Information and Real Estate Services (IRES) — have signed a letter of intent to merge, the MLSs announced in nearly identical blog posts Wednesday.
The agreement appears to signal a thawing in months-long tension. After IRES rejected its surprise multimillion-dollar buyout offer in January, REcolorado cut off a data share between the two MLSs. The discord illustrates that the road to consolidation is often slow, bumpy and infused with politics.
In this case, the unrest prompted 20-plus large brokerages in the state to put pressure on a deal, while a third-party — T3 MLS — was called in to mediate “highly charged” merger talks. With the letter of intent, T3 has seemingly shepherded the MLSs one step closer to the altar.
If the MLSs were to combine, they would join the ranks of mega MLSs forming as part of a real estate industry trend toward consolidation.
The newly formed Bright MLS in the Mid-Atlantic region, SmartMLS in Connecticut, and a forthcoming merger between two associations and their MLSs in Florida have led the way so far this year. Two Texas MLSs run by local Realtor associations in Austin and San Antonio also announced merger talks in February.
Proponents say such mergers could mean several benefits for agents and brokers on the ground, including better services and tools, a larger footprint, and increased efficiencies.
REcolorado has about 20,000 agent, broker and appraiser subscribers while IRES has about 6,000. Both operate in Colorado’s Front Range, which includes Denver and Boulder.
A road map
REcolorado and IRES signed the letter of intent on May 25, at a meeting attended by the presidents and chairs of the five Realtor associations that own IRES and the three Realtor associations that own REcolorado.
The chair of the Pikes Peak Association of Realtors also attended. PPAR is not yet involved in the merger, but is considering participating, according to the blog posts.
“The meeting was specifically held to create a strategic plan and deadlines to facilitate a merger between the two companies,” the MLSs wrote.
“Both companies have jumped right in to complete their tasks and we feel confident that we are on the road that will lead us to one Front Range MLS,” they added.
The letter of intent includes a 15-point road map toward a merger based on each MLS’s “top 10” most important issues as they explore moving forward, according to IRES CEO Lauren Hansen.
“It includes things like establishing a common vision, delving into financials, developing organizational outlines for governance and representation, system assessments, and more. We are targeting the initial group of items to address first,” Hansen told Inman via email.
The MLSs agreed to an “aggressive” Nov. 1 deadline to have a signed commitment to merge — “or sooner if we get the 15 points addressed with a consensus,” Hansen added. The MLSs cautioned, however, that “the date may vary based on unforeseen challenges.”
Next steps
The letter of intent was created by T3 MLS, a division of real estate research and management consulting firm Swanepoel T3 Group, which was hired to facilitate merger talks between the two MLSs in March after IRES declined the acquisition proposal and the data share cut-off flagged the attention of other big brokers in the state.
Before the talks, Colorado brokers sent IRES and REcolorado (as well as PPAR) a letter asking for the creation of a single database no later than Jan. 1, 2018 “to enable us to do our jobs, serve our clients and remain relevant and valuable to the people who pay us.”
T3’s “commitment” to the two MLSs concluded with the letter of intent, but the MLSs have pledged to use another facilitator to help manage and guide the merger process as they move forward, according to Hansen.
The association presidents and chairs will work on providing a list of facilitators for the MLSs to choose from. They will also work on creating an ownership model, the MLSs said. REColorado and IRES are working on creating a core mission statement and providing financials to each other, they added.
“We are exchanging documents, ideas and information at this point. Future meetings are being scheduled, but some items may be accomplished electronically,” Hansen said.
When the T3-mediated merger talks came to light, Bright MLS Chief Strategy Officer David Charron praised the decision to engage a third party. “In every merger, the parties believe ‘…we are the best and therefore our solution, people, processes, etc. should prevail,’” he said.
“So if each party has the best, invariably you need someone to help break it down after which consensus on a plan to move forward can be achieved.”
REcolorado is owned by the Denver Metro Association of Realtors, South Metro Denver Realtor Association, and the Aurora Association of Realtors.
IRES is owned by the Boulder Area Realtors Association, the Fort Collins Board of Realtors, the Loveland-Berthoud Association of Realtors, the Longmont Association of Realtors, and the Greeley Area Realtor Association.
