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More on MLS Networks

I wanted to continue the discussion/dialogue about MLS networks…

First, this weekend I listened to the Listing Bits Podcast episode with Michael Wurzer which touches on the staying power of the MLS. Greg Robertson and Michael both have years of MLS technology, and discuss the future of the industry (among other things).

Second, Michael wrote a response to my last MLS post titled Creating MLS Networks.

I definitely agree with Drew that cooperation exists independent of any particular technology, but Drew goes on to presume that the trust created by the MLS would continue even without the MLS. The problem with this analysis is that the MLS works with brokers and agents to create the terms of use, if you will, that outline exactly what it means to cooperate. Without the MLS, therefore, the cooperation necessarily goes away and the question then looms, who establishes the rules on which the brokers will cooperate? Zillow terms of use? Not likely. No, without the MLS, there literally is no cooperation among competing brokers. And, as Sam says, that’s the end game.

I believe that an agreed upon terms of use — and enforcement of those terms — is absolutely necessary to facilitating cooperation (among any group of people, not just agents/brokers). On the enforcement front, the primary incentive to not break the rules is the threat to revoke an agent/broker’s access to data. The MLS is no longer the only entity that has all the listing data. To me, the core question is what is the difference between MLS’ and real estate associations (who control licensing)? Why is the MLS needed to write a set of terms of use related to compensation — and enforce them? Could the associations not handle that?

PS: I’m liking this “RE.net flashback” discussing a topic back and forth with blog posts (rather than tweets). It’s hard discuss anything meaningful in 140 character bursts.

About Drew Meyers

Founder of Geek Estate Blog / Geek Estate Labs. Zillow Alum. Travel addict & co-founder of Horizon. Social entrepreneurship & microfinance advocate. Fan of Red Hot Chili Peppers and Kiva.

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  • Michael Wurzer

    Drew, many (if not most) MLSs are owned and operated by the local Association of REALTORS. Even in regionals, the MLS typically is owned by the local Associations. Associations do lots of things other than MLS, of course, but, for most MLSs, the Association and MLS are intertwined. Of course, this is exactly what Rob and others argue needs to change, where the MLS needs to be divorced from the Association leadership. I certainly understand that argument and agree that having the two intertwined can complicate governance, but it’s not always the case.

  • “It’s complicated” is an unsatisfying answer, I know. State agencies control licensing. Associations control Realtor membership and–sometimes–MLS membership. But MLSs are owned by local associations, conglomerates of associations, are sometimes spun off as separate for-profit entities, and can even be broker-owned cooperatives totally outside the association (like Seattle’s NWMLS).

    So the association itself has to be focused on its advocacy and membership support efforts. The MLS is a product of the Realtor association, or the product of a group of brokers cooperating.

    Listing data is just one value of the MLS, and not the primary value. Cooperation exists in the absence of digital, or even listing books. The ability for a Coldwell Banker agent to drive by a RE/MAX open house with a client, ask the listing agent if it’s listed on the MLS, and know that there will be a fair, transparent offer of compensation for bringing a buyer, is the core of the value.

    The primary threat of compliance, as you’ve referred to, is actually the threat of losing the offer of cooperation in co-brokerage of sales.

    • “Associations control Realtor membership and–sometimes–MLS membership.”

      Right — so from a trust perspective, it’s all really controlled from the same spot. It’s essentially membership in the local association; if you’re a member (and you don’t break the rules), you can belong to the MLS.

      How much do you think the “rules” differ across geographic markets?

      • …if your MLS is owned/run by your local association, then the control might flow downhill, but they still usually have separate boards. And I think “trust” is a tough word to use. Cooperation via structured rules creates value in lieu of trust. If we all enter into an agreement as competitors, we don’t have to trust one another to follow through of our own good will. We just follow the rules or we don’t get paid.

        Rules can vary significantly across geographies. “Coming soon” listings are one of the best examples. They’re explicitly barred here, while they’re specifically categorized in other markets. This is another reason some would like to keep their local MLS for unique local compliance issues. I don’t think that precludes them from sharing data.

        • It seems one “technology” platform could account for all the rules across markets (it would be complicated, but doable) — and the associations could control the rules & membership. Maybe a committee of some sort to vote on rule changes.

          I have to imagine a technology company could more efficiently deal with the data access / customer service issues which are mostly vendors/developers. That app/website/data use approval process & enforcement is probably the most difficult issue to handle.

      • I am a member of two MLS. One is broker owned and the other association owned. Most brokerages in my local area are fearful of the big city MLS because the rules (and enforcement) are quite different between the two. (Enforcement in the smaller MLS is close to zero and bad behavior rampant.)

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