Everyone likes an underdog. We root for the little guy to take down a Goliath with a single, well-aimed stone’s throw. The little engine that could, often can and does. Spring is not only the time when a young man’s fancy lightly turns to love, it’s also the occasion for your local sports page to be replete with stories of the Cinderella team making waves during the March Madness that is the NCAA basketball tournament. Who could forget Rocky – the likable underdog whose boxing championship was cheered by millions to become the highest grossing film of 1976 when it won the Best Picture Oscar and spawned six sequels. And those of us of a certain age remember one childhood hero who gave us hope with the imperative “Have no fear. Underdog is here.”
But sometimes the roar of the big-guy crowd drowns out the enthusiasm for the underdog. For the past few years, no drumbeat has resonated longer or more loudly than the consolidation theme. Thousands of words have been written about the wisdom of consolidation, both of MLSs and of their parent associations.
The first step was taken back in 2007 when NAR mandated that all association owned MLSs had to adopt the RETS data standard no later than 2009. Mother NAR added fuel to the fire by mandating minimum core standards that associations must meet to retain their charters, giving local boards yet another reason to merge. The larger major MLSs picked up the drumbeat in their quest to become one of the twelve left standing (or one of seven, depending on who is counting) after the wave of consolidation crests. The mother of all mergers was announced in January 2017 when MRIS and Trend MLS revealed they would combine to become Bright MLS, a behemoth of 85,000 agents covering 40,000 square miles. Other new combinations followed, joining the hunt for cute new non-conventional MLS names like Smart MLS in Connecticut.
I had the opportunity recently to engage in an interesting conversation with an industry technology guru about consolidation. He took the position that all the reasons large MLSs give for pushing consolidation were just a smoke screen to disguise a hidden agenda: consolidation of power through control of the data, the new currency. He posited that CMLS and NAR were pushing and promoting consolidation because they were controlled by the leaders of the largest MLSs who wanted to broaden their influence by gobbling up their neighbors. Indeed, NAR and CMLS joined forces in 2016 to push consolidation by creating a toolkit for MLSs to use. Nearly every real estate conference or convention has at least one session on consolidation or mergers. The drumbeat continues. But to what end.
My debate partner felt that these two trade organizations should remain more neutral and support ALL MLS models from the giants down to the boutiques – mostly specialty markets that despite their proximity to mega-MLSs were not modeled on the same customer experience.
Having been on the pro-consolidation side of the debate twice before, once at MRIS and again at ARMLS trying to create a statewide MLS in Arizona, I was familiar with the selling points in favor of consolidation. But as the old saying goes, you really don’t understand the alternate perspective until you’ve walked a mile in their shoes. So, I started walking.
We all know the most cited reasons in favor of consolidation: end overlapping market disorder; lower price through economies of scale purchasing; natural market expansion pressures brokers to join multiple MLSs in a contiguous market; too many data feeds in too many different formats make syndication and aggregation a nightmare; better customer service and more attention from the MLS vendor for larger clients.
But what are the reasons some MLSs resist consolidation and how valid are their objections? Let’s dig a little deeper.
- MY MLS IS DIFFERENT. Yes, says the MegaMLS, but we can accommodate you and all your quirky data fields. Maybe BoutiqueMLS doesn’t want to have its exotic, resort-oriented required fields (distance to ski-lift?) buried in the footnotes or hiding under the “Other criteria” pull-down menu. They work differently, and the MLS should accommodate them as well as it does the agents from MegaMLS.
- WE DON’T WANT THEM COMING IN HERE. Admittedly, the whole purpose of the MLS is to have other participants sell your listings. Why would anyone care where those other participants came from, so long as they bring a buyer with a pulse, a down payment, and a mortgage approval. Well, in a small market it does make a difference. There are a finite number of transactions available each year, and in a small market where only a few thousand homes transact each year (rather than each week in the MegaMLS), one half of one transaction is a much bigger percentage of your potential gross income.
- THEY DON’T UNDERSTAND OUR RULES AND TRADITIONS. MegaMLS says your rules are close enough, we can show you how ours are better. Maybe they can. But traditions? Those don’t change easily. The quirky (there’s that pejorative again) practice, that BoutiqueMLS insists on, of leaving a business card on the kitchen counter when showing a home, MegaMLS calls an advertising infraction bordering on interference in the seller/broker contract. (I’m not making up that example. This dichotomy was the cause of multiple professional standards complaints in the border area north of Chicago when I managed the MLS there. Two contiguous MLSs with two “traditions” gives new meaning to “overlapping market disorder.” Yikes!)
- YOUR FEES WILL BE LOWER. Well, that’s not always true. When Trend MLS in Philly (the smaller of the two) merged with MRIS in Maryland, MRIS user fees went down but Trend user fees actually went up. Research has shown that the twenty-year campaign of price suppression by the MLSs against the major MLS vendors has resulted in stagnant technology and little if any research and development. That resulted in the huge tech lead that the major portals enjoy over the software used by the MLSs giving the consumer a much better user experience than the practitioner. Besides, most high-producing agents encourage higher MLS fees as a way of thinning the herd of part-time or low production competitors. Cheaper is not always better.
There’s something to be said for maintaining a BoutiqueMLS and resisting the efforts (sometimes hostile) by a neighboring MegaMLS to absorb the small markets into the bigger system. Bigger is not always better. A well-run Boutique that offers personalized service, where the helpdesk knows most of its subscribers by voice when they call, and where the leadership (both staff and volunteer) is accessible and receptive to helping with even the most mundane problem inquiry can stand head and shoulders above its neighboring big brother. Service is the name of the game. The Boutique that puts service ahead of size will win the battle in the long run.
If your MLS is facing pressure to merge but you think you can provide a better system with better service resulting in a better overall subscriber experience but are not sure how to do that, give me a call. I can help. I’ll have you chugging “I-think-I can…I-think-I-can” in short order.
For this post:
Cause: Consolidation delusion
Effect: If you think you can, you probably can.