• When small groups of contiguous MLSs can’t find a way to work together for the good of their members, those members will eventually look to the outside for other options.

Why is the MLS so misunderstood? This timely question was posed by FBS CEO Michael Wurzer (provider of FlexMLS software), regarding the highly publicized 2018 panel by the Center for California Real Estate this month. (The CCRE is an institute of the California Association of Realtors).

The event put our industry’s dysfunctional consolidation discussion between brokers and MLSs in the spotlight. It also shed light on two divergent paths that will likely guide the future of MLS organizations (skip to the end if you’re already code-certified).

Code and confusion

MLSs, like brokerages, can be wildly different from one another. They don’t all have the same motivations. So it’s not surprising when conversations between brokers and MLSs often sound like they’re scrambled into cold war code.

The participants often don’t understand each other, and sometimes just refuse to state their intentions clearly. Anyone who’s been through an MLS’s executive session on consolidation knows just how much goes unsaid publicly.

Let’s try to clear up some of the confusion with facts.

Who are our MLSs?

In researching for NAR on MLS policy, I’ve been lucky to find RESO’s API with the best available dataset I’ve seen yet on our nearly 700 MLSs. I’ve displayed it here as a starting point for the conversation: TheMLSMap.com.

What do brokers want from their MLSs?

Let’s get this answer directly from brokers and dive into a few moments in the event. I’ll provide a bit of unsolicited translation to avoid the industry’s coded language.

Start with the broker needs

Mark McLaughlin of Pacific Union wants a national database (Upstream) to support his data needs because his MLSs are not technically capable of delivering/storing all of it. He’s a tech-savvy broker with the resources to innovate, and the speed/resources of (some of) his MLSs can’t keep up. Those MLSs dominate his concerns, so they lead to comments like “we will continue to look for alternatives to the MLS.”

Craig Cheatham of the Realty Alliance is well-known as a blunt critic of MLSs that don’t meet broker demands. It’s his job. He asked MLSs to give brokers open and broad access to their data, whether it’s in a single database or many.

He introduced a concept that became a theme of the event: there may be 200 “good” MLSs, but that means there are 500 “bad” ones (my oversimplification).

They both want consolidation. Whether that’s consolidation of tools/data/systems or governance, they want less MLS red tape. If that requires consolidation of entire organizations, so be it.

What’s wrong with MLS?

There were some sweeping statements made about MLSs that David Charron, CSO of the multi-state Bright MLS, quickly corrected.

The godfather of mutualistic MLS deal-making, Charron reminded the brokers that some MLSs are innovating and asked the brokers to “call them to the carpet” if they’re not living up to their responsibilities. The brokers quickly reiterated that MLSs like Charron’s aren’t the issue.

This was a bit like having Elon Musk sit on a panel and try to allay the concerns of Kia’s customers. It wasn’t surprising, but only the top tier of MLS leadership was on the stage to answer the complaints about “the 500.”

Sandra Deering, a broker for NRT in California, brought up a common concern as a consolidation barrier: “Those people are so protective of their jobs. The fight for maintaining those jobs is incredible. What do you do to overcome that?”

David Silver-Westrick of Keller Williams OC Coastal Realty concurred that the attitude is often, “I’m willing to move toward the future, so long as I’m still here.”

Charron added, “There are no technical challenges in doing this. It’s really human and political factors that stand in the way of greater cooperation and consolidation.”

Charron understands this better than most. He himself stepped aside from the CEO position as MRIS merged with Trend MLS and others to form Bright MLS.

What’s wrong with brokers?

It’s easy to lay the blame on MLS folks trying to save their jobs, but brokers are also involved in inhibiting consolidation. MLS leaders, of course, aren’t likely to blame their brokers or their association on a stage like CCRE’s.

W&R Studios’ Greg Robertson’s recent podcast touched on a commonly unvoiced concern: “The politics comes down from the brokers themselves. They don’t want ‘those guys’ in ‘this area,’ so therefore we put up these technology barriers. And then what happens at the end of the day? … You [brokers] created this [lack of data sharing/consolidation].”

I’ve met brokers who’ve proudly told me that their 125-person board will never give up the local MLS, solely because they don’t want the brokers from across the water coming over.

Some threaten board members and MLS execs with losing their jobs if they even start a conversation with another organization about consolidation. It’s maddening, and it shouldn’t be a taboo topic at forums like these.

One database

Dale Ross, CEO of RPR, and Joel Singer, CEO of CAR and zipLogix, spent a lot of time focused on the idea of a single standards-based back-end database, one system where we “build the standard” (RPR AMP).

This is where the headlines say “national MLS,” but this solution, doesn’t preclude many MLSs existing as broker cooperatives with distinct policies, members and user interfaces. The “single node” is merely the technology that houses the data for brokers and MLSs.

There’s much disagreement with the philosophy here (Wurzer’s post provides plenty).

An MLS data network (MLS Grid?), built on standards, that provides a streamlined nationwide access point for real estate data from many nodes could be just as effective as a single database in some ways.

It might be superior if it could achieve significant MLS adoption (a challenge) and provide competition between organizations to innovate.

Rebecca Jensen of MRED spoke eloquently against the “be the standard” ideology. She preferred support of an effort to get the best solution from the collective (MLSs with RESO standards-based cooperation) instead of just saying “I’m the smartest person in the room” (a philosophy sometimes attributed to RPR by its critics).

Jeremy Crawford of RESO spoke of the hundreds of MLSs that take three to six months just to grant an IDX feed to a broker while NAR’s policy requires them to respond within five days. They don’t deliver sold data because they won’t or can’t. Accessing this part of the grid is daunting.

What is an MLS supposed to be?

Jeanne Radsick, an agent with Century 21 and longtime NAR MLS Policy committee member, spoke to a growing concern of many agents. As MLSs spend more time and money adding technological bells and whistles to prove their value, they’re distracted from their core role of cooperation and providing easy access to listing data. Many brokers agree.

It’s worth highlighting the words of Art Carter, CRMLS’s CEO and the philosopher-pugilist of the industry on MLS’s primary directive: “We are not a technology company first. We are a broker cooperative, we maintain a database that brokers can rely upon.”

Two diverging paths

It’s clear that consolidation is happening, but the speed with which it does is in question.

Is the final number of MLSs in a perfect world five, 50 or 200?

It’s not 500.

It’s also clear that organizations that create a platform for serving broker needs will continue to find more broker customers at the expense of others. As the borders on our data, knowledge and tools become obsolete, so do MLSs’ restrictions on serving customers in new geographic locations.

There appear to be two paths forward for MLSs. These are neither threats nor demands. They’re merely the logical progression of MLS created by the momentum of consolidation and the acceleration of services available through geography-independent technology:

1. Start a conversation with all of your brokers, not just those on your board of directors, to see if they’re satisfied. If they’re not, bring the discontented brokers with you, and start a conversation with other associations’ and MLSs’ leaders.

Ignore those who would discourage and undercut the conversations for political reasons. Set aside pride and history, and embrace becoming a participant in innovation.

Have an open-minded discussion about how joining forces could benefit brokers, and work out the “how” later. Find a path to mutual benefit together in consolidation, and be part of the momentum.

2. Protect the status quo for as long as possible until more aggressive organizations unilaterally consolidate the marketplace with brute force and scale.

Don’t take my word for it.

CRMLS’ Carter doesn’t mince words on the push for MLSs to accept the necessity for consolidation: “You can bring a horse to water, but you can’t make him drink. The corollary to that is, you can salt the oats. Consolidate with the willing. Data share with the unwilling to consolidate. And go around those willing to do neither.”

Borderless MLS

Matthew Consalvo of Arizona Regional MLS described this “go around” strategy in a piece for MLS Roundtable, outlining this future of MLSs untethered by geography: picture ARMLS supporting a cooperative of brokers in another state, or even another part of the country, who are unhappy with their current situation.

It’s a possibility I’m encouraged by, and it’s even more refreshing to hear this kind of open-minded thinking directly from an MLS executive.

When small groups of contiguous MLSs can’t find a way to work together for the good of their members, those members will eventually look to the outside for other options.

The market is speaking, and its words are clear. Let’s heed them, and take the path toward a solution. The other path doesn’t end well.

Catch Inman Connect’s MLS series during the Data Intensive track Thursday, Jan. 25.

Sam DeBord is Managing Broker/VP of Strategic Growth for Coldwell Banker Danforth, Past President of Seattle King County Realtors, and 2018 Vice Chair of Multiple Listing Issues and Policies Committee. You can find his team at SeattleHome.com and SeattleCondo.com

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