Beyond Cooperation and Compensation
Following is a reminder – an excerpt from my speech at the Council of Multiple Listing Services 2008 Convention, for which I would like to provide new context.
The long-term relevance of MLS organizations has been questioned at numerous conferences and on Internet sites over the past few years, but I believe these organizations are uniquely qualified and positioned to deliver technology and support needed by the industry. If we determine strategically what the MLSs need to provide to help the real estate professional service the modern consumer and participate in the real estate transaction of the future, and if we work vigilantly toward that end, the relevance of MLS organizations – and the value of real estate professionals – will no longer be questioned.
If the MLS organization is not re-chartered, re-missioned, and re-branded more generically as a provider of information systems for organized real estate, we will continue to see pushback against the MLS organization offering systems that don’t solely address cooperation and compensation.… If our industry doesn’t reposition its MLS organizations or find some other means of improving the toolset and processes of the real estate professional in an organized, consistent manner, our industry will continue to lose its value perception with the consumer.
I don’t believe our industry can afford to fail in redefining and creating an exciting future for itself. I don’t believe we can sit back and let outsiders take control of the real estate conversation and create the future of our industry. The effort wouldn’t be easy, but that’s the leadership challenge I put before you.
Fast forward to 2013
New companies have flourished, raised billions of dollars, and have started to acquire or partner with companies that comprise the technology ecosystem, which I sometimes refer to as the “Agent OS” or “Broker OS.” MLSs are still saying, “They don’t have listing maintenance or data integrity like we do.” Soon, however, those companies may possess everything but that, leaving MLSs to do just listing maintenance, the hardest part of the job and the one that is least appreciated financially or otherwise by subscribers. And it won’t be hard for technology companies to go the last mile, and take over listing maintenance, too. Perhaps they will provide all the technology in the end, leaving REALTOR® associations to police data integrity at no cost, as a matter of ethics. That’s one way for MLSs to disappear: to allow others to continue to erode their value.
These same new companies are taking over the real estate conversation. They are the sponsors of “Hangouts at the White House” with the HUD Secretary, their economists are quoted (where it matters) far more than NAR’s or the local organizations’, consumers flock to their sites for a wide range of information, and these companies are radically outspending traditional real estate in the media. And they aren’t doing this for the common good. They are doing it to solidify their position and interests, so they can make more money for investors. That, I remind you, is the primary goal of a public company.
Most MLSs have not re-missioned and re-branded, as I urged back in 2008, and the broker pushback against “MLS public websites” at 2013 NAR midyear meetings was not met with strong, rigorously reasoned response the way it should have been. Let’s be very clear about this: MLSs have been the brokers’ TRUE technology partner for decades and MLS shareholders are NOT getting rich off the backs of their subscribers. Meanwhile, the “publishers’” offerings grow more numerous, and reach deeper and deeper into the professionals’ pockets. These companies continue to push deeper into what were once sacred broker-affiliated territories like mortgage and title in order to do so. How can they not? Their owners and investors demand a high multiplier return on their investments, and so the “publishers” go where they money is. Meanwhile, some brokers have been working to hamstring their true technology partners, against their own economic interests!
The “publishers” may talk about the great value they provide, but let’s be realistic: if they disappeared today, the consumers would still have a place to go for listings, and it’s a zero-sum game: money goes into their pockets and comes out of the professionals’. They aren’t really increasing the amount of money in real estate, even as their corporate valuations swell into the billions. One would think that, as the largest brokerages have moved from being privately held to being publicly owned on Wall Street, they would take a more rigorous look at their environment. Perhaps sending their lifeblood, listings, and money to those who work against their financial interests is not something they should be doing. Perhaps they will re-examine the MLS and appreciate its potential and what it currently provides. Perhaps that nostalgia will only come to brokers when it is too late. But perhaps MLS leaders can more actively re-mission and re-brand. They can take the message to the brokers and franchises and help them see reason.
Meanwhile, some in the MLS industry are gearing up for battle. They know that organized real estate is going to have to get more organized moving forward. They know that outsiders may be coming in with a package of technologies and services that compete with their own. And they know that the outsiders may come in at a price point far, far below what MLSs charge now – far below what the technology even costs to create and manage – in order to get “first access” to the data. MLSs are regionalizing, looking to provide a solid breadth of service at an economy of scale. MLSs are putting in place Clareity Security’s SSO Portal which, assuming the MLS has put together a robust offering, helps address the perception that the MLS just provides the traditional MLS system. MLSs are implementing the “Clareity Store,” an infrastructure that allows MLSs to narrow their core offerings and control costs while maintaining themselves as the hub for real estate technology. The store provides a great user experience for those professionals purchasing and using other technologies “à la carte.” This has been an important MLS industry strategic initiative put forward by my sister company, Clareity Security: preparing the infrastructure for “MLS core plus MLS store,” which enables MLSs to make the necessary shift in cost structure to prepare for the competitive environment, and at the same time eliminates the “leveling the playing field” argument that many large brokers still complain about.
The context around the MLS continues to evolve, but I’ll stick with what I said in my 2008 speech. There is still tension in many markets surrounding the evolution of the MLS organization to provide more than a system of cooperation and compensation. But I think our industry is up to the challenge. It’s time for us to invent the future we want and take bold steps forward to build that future. Ad astra per aspera – “through adversity, to the stars.”