What did the lion mean by that roar?

Following on my post about the Broker/MLS conflict at CMLS, as promised The Realty Alliance (TRA) has published their list of complaints and Gregg Larson, Clareity Consulting has it posted with his commentary on their blog at http://clareity.com/Lion with Big Stick

By far the most commented article is the Inman News coverage of the event. Nearly 100 comments as of this writing and they’re all over the map.

And this morning Greg Robertson posted his take on the whole debate on Vendor Alley.

Most of these authors and comments are focused on the surface issues – complaints about specific MLSs and their practices – while ignoring the underlying reasons that TRA is so angry. The issues run far deeper than MLS public websites or white-labeled iPad apps. The main issues for TRA are fundamental disagreements with the way MLSs and Realtor Associations are structured, not how they’re managed. There are hints at this underlying problem in between many of the superficial nits being picked at in the TRA list.

Here’s my take on the list published by Clareity for TRA.

There were a few things that jumped off the page/screen at me as being Batman/Robin moments: Holy Jumpin Jehoshaphat!

#1, top of the list, first on the hit parade: Tying MLS participation with products/services that should be optional and go beyond the founding MLS principles (data, cooperation/compensation) … unfair, and likely illegal.

Comment: HOLY D-O-J, did someone mention illegal? This one clearly came from the spring discussion about core services (particularly lock boxes and public MLS websites). But there’s more here than just those two. What about tying MLS participation to Realtor Association membership? That has been decoupled in two federal circuit districts but failed similar court tests in others. TRA sees MLSs as protected by the political and financial prowess of NAR but out of control of NAR as evidenced by their expansion into numerous for-profit areas in which TRA feels they should not compete.

#5, Subsidizing associations by over-charging for MLS services and passing extra revenue to associations.

Comment: HOLY SWITCHEROO! Rather than raise board dues and risk backlash from Realtors who don’t see the value of the association’s efforts, they raise MLS fees because agents can’t do business without the MLS, so agents are powerless to complain or resist. This revenue stream is the main reason local Realtor associations maintain their control over the MLS (see #1 above).

#33, Allowing consultants to steer them (MLSs) to being overly entrepreneurial.

Comment: HOLY U-EYLOUIE! Turn the boat around. I’ve worked in two major MLSs and been involved in numerous consultant guided strategic planning sessions over the past decade and the advice from said consultants, across the board, has been pretty consistent: innovate, extend service, be more than just an MLS, provide value, expand, grow, prosper, consolidate, think of the consumer as your customer (because if you don’t, someone else will). As Gregg Larson said in his commentary, ” Clareity and half a dozen other consultants, along with numerous vendors, are guilty of introducing seductive new technology and services that the MLS can license for all its members.” Apparently TRA feels all those consultants at worst were wrong, or at minimum weren’t preaching to the correct choir.

#44, Viewing its customer as the agents or the consumer public.

Comment: HOLY BILLPAYER! Most MLSs would look at the agent as their primary customer because most MLSs charge the agent directly for services. And on behalf of the agents, many MLSs look at services from the vantage point of “What’s good for the consumer is good for the agent.” Apparently the TRA brokers see the relationships slightly differently.

#•, Having a bias against participants that make up a significant percentage of market activity and skewing benefits toward those with a smaller percentage of market activity.

Comment: HOLY LEVEL PLAYING FIELD! This may be the oldest complaint in the book, stemming from the first time an MLS ever considered a service that was thought to be good for all, regardless of whether some could have (or had) paid for it themselves. It stems from the Three Musketeers mentality of a trade association – All for One and One for All – regardless of rank, size, financial prowess or need. That worked OK when the association was handling public relations or government lobbying on behalf of the industry as a whole. It fails when those who benefit are only the ones who cannot afford the tools necessary to compete in the open marketplace, and those tools are paid for by the ones who can afford their own.

And the pièce de résistance: The ideas being tossed around for possible implementation are broad-based, not restricted to The Realty Alliance, but have been incubated by a number of global networks and brands representing firms of all sizes and business models, of which The Realty Alliance is just one segment.

Comment: Global Networks? Like Leading Real Estate Companies of the World? You can’t get much more global than that. Leading RE closed $272 billion in sales in 2012, 36% more than Coldwell Banker ($200 billion).

Those who think TRA is going at this alone are missing the nuanced references buried in the published statements and in the verbal appeal Mr. Cheatham made at CMLS.

Brands of all sizes and models? That could embrace the Realogy brands, Keller WilliamsPrudentialBerkshire/HomeServices and RE/MAX. A coalition of just those five would represent over half the agents in the US, and according to Leading RE’s numbers over 90% of all sales transactions. Now that’s clout. Any association or MLS that thinks this group is just restating the same ol’ same ol’ without any teeth behind the growl is going to be in for a rude awakening. If these five or six groups are in agreement on a course of action and act in unison to preserve their business, anyone who feels they are doomed to failure because the remainder of the industry won’t follow is missing one major point: THEY ARE THE INDUSTRY.

So let’s unveil the threat. What are the consequences of continuing the attitude as usual at all levels of organized real estate?

Realty Alliance CEO Craig Cheatham summarized in broad brush strokes what is being considered.

The Realty Alliance and some other large brokers and franchises have invested money in R&D on a project that could dramatically affect MLS and several vendors that were in the room know the details of this project but are under NDA so they are not talking about it. And no, technology is not a hurdle.

Ingredients: big money (some of it already spent); broad base of support; input from tech vendors/consultants (chosen not only for their knowledge and skill but also for an inordinate ability to keep their mouths shut – there has been absolutely no leak anywhere as a result of the NDAs); dramatic effect on MLS; and no tech hurdles.

I’ll let your imagination fill in the blanks. But whatever it is that’s under consideration as the alternative to the current structure must assuredly incorporate:

  • Broker ownership and control of the listing maintenance and distribution processes
  • Disconnection between Realtor associations at all levels and MLSs (this piece alone is worth another post – coming soon)
  • No disruption in current business pipeline (perhaps a parallel system, at least for some overlapping timeframe?)
  • “…several… options that have never been available before.” Didn’t see that one coming, did ya? That tells me this is going to be BIG. Really BIG. No matter what it turns out to be.

For this post:
Cause:  You’re speaking too softly.
Effect:  I’m carrying the  big stick.

This post also appears on Notorious R.O.B.

The next lion . . . the next hill

lion-zoo

The Council of Multiple Listing Services held its annual conference in Boise, ID this past week. In keeping with the high standards of excellence (which may be redundant, but I liked the phrase) of past conferences, our host, Greg Manship from Intermountain MLS, the local host, and his staff put on a top notch program. Many of the panels actually discussed real industry issues which in the past has not always been the case. That’s not a ding on CMLS. It happens at every industry conference. The panelists talk but ignore the multiple elephants that roam around the room.

Not this time.

One discussion on Friday led to much “chatter” in the halls, an unhealthy level of speculation on what was really being said, and a healthy level of panic and paranoia as MLS CEOs tried to figure out what to do next.

Let me explain.

The panel was titled Eliminating MLS and Broker Conflict, moderated by Bill Yaman of Imprev who did a masterful job of mediating as well as moderating. Panelists were Gregg Larson, CEO Clareity Consulting, Brian Donnellan, COO and CFO of MRIS, and Craig Cheatham, CEO of The Realty Alliance (TRA). Craig’s comments were the most impactful.

Suspicion, suppositions and speculation are the staples of much discussion in the inner circles of MLS leadership. MLSs seem to be overly concerned with identifying the next biggest threat to their continued existence and through that to the prosperity of their broker participants. But as the old adage goes, “Just because you’re paranoid doesn’t mean they aren’t out to get you.”

The Realty Alliance is an affiliation of about 70 major independent-minded brokerages, both non-aligned and franchise affiliated, that meet periodically to exchange views on industry issues and best brokerage practices. There are some huge players in this arena and collectively they represent over 100,000 agents, more than 10% of current NAR membership.

They have been involved in the debate over many MLS rules as modeled by mother NAR. It was impetus from TRA members that caused the MLS policy committee and eventually the NAR board to reconsider and then reverse their policy regarding “recognized search engines” being allowed to index IDX listing displays. Senior executives from both TRA and Realogy, this time working in unison  rather than opposition, served together on the multiple (no pun intended) presidential advisory groups that wrestled (albeit unsuccessfully, due in no part to the herculean efforts of the members) with the nuances of policy surrounding the extension of IDX rules into social media.

So it surprised some in the audience to hear that TRA had a laundry list of grievances they wanted MLSs to address. In uncondensed form Craig said then list ran 48 pages single spaced. My first question to myself was why so many and why now? Hadn’t TRA members aired many of their issues in the usual forums? Certainly not all of their grievances applied to all MLSs, so why we’re they not talking to their local MLSs about particular local issues instead of to a conference in general?

The answer to the latter was “They were talking” – not only at the local level but at the state and particularly the national levels as well. But there was a sense in the air that the time for talk was over, that TRA members had resigned themselves to the realization that talk was not only cheap but ineffective, that trying to have their voices heard and change policy from the top down through the established channels was a fruitless endeavor. How we got to this position requires a bit more explanation.

A Brief History of Chaotic Times

At the spring NAR in Washington DC, NAR modified its definition of “Core Services” (those that can be included in the base monthly fee of all participants whether they use such services or not) to include public facing MLS websites. TRA was not alone in their opposition. They were joined by many franchisors who felt MLS were (a) being unfair in charging all members for service that only served some of the members (listing agents, not buyers agents), (b) competed with similar efforts by brokers to publish compelling content and attract consumers, and (c) generally expanding their charter and mission “which introduces vagueness and inappropriate objectives.”

The process by which this policy was adopted was contorted, contentious, and (in the minds of many, not just big brokers) counterproductive. But it was adopted.

Subsequent to that, TRA published a guidance paper telling MLSs TRA’s Fair Display Guidelines would have to be followed in order for TRA firms (optionally) to allow their listings to be included in such a public website or not. Most industry observers felt these were fair guidance so there was little debate.

But the unexpected consequence of the debate over public websites was a resurrection of a number of grievances that TRA felt were unaddressed. Had there not been the huge turmoil at the national level over the co-issues of franchisor syndication and MLS public websites, perhaps TRA would not have piled on with more, “Oh, and while we’re at it, they do this too . . .” items.

Don’t shoot the messenger

To Mr. Cheatham’s credit, he explained to the audience that he was just the messenger and didn’t have a dog in this hunt except to deliver the message from TRA in unambiguous language. And he almost succeeded in delivering the message in cool, measured carefully crafted statements without interjecting distracting emotional appeals. I say ‘almost’ because as the Q&A session progressed, it was clear from the emotion in his voice that he felt very strongly about the points he was making as he summarized the gist of the 48 pages into a series of quick bullet points.

Among them (and I’m doing this from memory since I can’t type as fast as Craig speaks) MLSs should not site license products that compete with brokers offerings to their own agents; MLSs should not introduce new services without a courtesy notice to (better yet, a discussion with ) the brokers; MLSs should not block data feeds to the brokers or agents (it’s their data and they need it for their businesses); for those MLSs that do provide full data feeds they shouldn’t charge participants a second fee to receive them; MLS CEOs should not take it upon themselves to make decisions for brokers in any regard without proper due diligence and research; and MLSs should consolidate more to eliminate overlapping territories that force brokers to join many MLSs. There were more. CMLS has asked for the list and will publish it if they get chance.

Craig went on to explain that in the months since the public website debate TRA had contributed significant resources into studying these problems and gauging the feasibility of several options should the MLSs not be persuaded to change their tactics. He described in broad concept the “red button” analogous to the one that follows the president around and is connected to the nuclear arsenal.

And in a statement that some saw as a thinly veiled threat, Craig concluded with, “You have 10 days.” (Insert audible audience gasp here!) Subsequently it was proffered that the 10 days referred to the time until TRA meets again to make decisions on next steps, not 10 days until the bomb drops. (Insert audible audience Phew!) Even with that clarification, the “bomb” concerns persisted.

What kind of bomb?

What could that bomb possible be? Rob Hahn, 7DS Associates, posed a question to Craig by reading a comment appended to one of Notorious Rob’s essays on the wisdom (or lack thereof) of MLSs changing their focus away from B2B and toward B2C fearing it may trigger a revisit of the public utility question. He quoted from the blog comment:

And now you know why, when the Realty Alliance met this year, the major topic of conversation was all about finding a path out of the MLS by the largest brokers in the country. . . . and now you know why the largest brokerage firms in the US are all telling NAR the three way agreement needs to end, or at the very least be significantly modified, or they are going to find a way out of NAR completely.

and then asked Craig to comment. Craig did not comment directly, saying only that he could not confirm or deny speculation about the content of debate or discussion of options within the closed meeting room. He wasn’t being coy or playing games.  It was clear that he was under specific instruction from TRA as to what he could discuss and what he could not. However, most in the audience probably felt that was as much a confirmation as they could expect, but a confirmation none the less.

I’m sure most MLS CEOs in the audience were either confident the bullets weren’t meant for them or were in total denial that such complaints could apply to them. After all, the conference is composed for the most part of CEOs who know what the heck they’re doing or they wouldn’t be there. So I asked the panel whether there was a way to figure out, as an MLS leader, whether this list applied in any way to their individual system. Would Craig be willing to share not just his list of grievances, but the individual MLSs to which each applied if he had that info. Such level of detail was not available, so in the absence of detail Gregg Larson suggested all the MLSs, not just those in the room, call all their largest brokers, especially TRA brokers, on Monday and ask the Ed Koch question, “How am I doing?

So the countdown clock is running. T-minus seven days (perhaps less by the time you read this) and counting toward the next debate and perhaps a decision on what changes MLSs, Association owners, and even NAR need to make to to address avoid potential disruptions in the status quo.

What might that decision be? Speculation ran rampant in the halls, ranging from pulling out of IDX and syndication so their listings wouldn’t be seen on an MLS public site to pulling out of MLS altogether to demonstrate their total frustration with the institution and what they feel it is becoming.

But I can’t imagine all of the TRA brokers pulling listings off all internet marketing sites. Their sellers would revolt. Their agents would revolt. Maybe they’re thinking of interconnecting all of their own broker websites to create a mini-network within the Internetwork, so a consumer could search anywhere in the country where there is a TRA affiliate?

Then again, the answer might be right under our nose if the commenter on Rob’s blog is an informed source.  If there have been discussions between major brokerages and the highest leadership levels at NAR about changes to the three-way agreement or decoupling mandatory NAR membership from participation in what are now all-Realtor MLSs, then all the discussion about public websites and IDX indexing will seem like a bunch of children’s playground nattering.

I don’t know, but I’m looking forward to reading about the results of the meeting.

I mentioned in my inaugural post that I had a feeling something seismic was about to occur in our industry. But honestly, I didn’t think it would happen this soon after making that prediction. (Heck, I haven’t yet finished the full post on what that shock wave might look like.) This might not be “the event” but I’d put money on TRA making some serious moves between now and the annual NAR convention, this year in San Francisco in November, if they don’t see some demonstrable sign that the MLSs, the AORs and mother NAR are willing to open negotiations and address these deficiencies in earnest. Otherwise the descending lion might just be having an MLS sandwich for lunch.

billchee“There is a high probability that the Realtor organization will lose control and direction of the MLS as it currently exists. I view the current MLS situation as a few Chihuahuas fighting over a bone, unaware that a hungry lion is coming over the hill.

– Bill Chee, April 26, 1993 in Washington DC.

In the meantime, tempus fugit MLS execs. Time to start dialing for brokers.

~bb

For this post:
Cause:  A failure to communicate
Effect:  Duck and Cover 50’s style

This post is also available on Notorious R.O.B.

 

Miscellanea 927

Brian Boero, 1000 Watt Consulting, has blasted out his miscellaneous thoughts called Friday Flash for quite a while (highly recommended). I like that name, but since it was already taken, and since I’m cautious about over-committing to a schedule I’m not always able to maintain, I need a new name without a time constraint. Possibilities: Intermittent Items. Sporadic Stuff. Serendipitous Subjects. Random Run-ins. Still thinking on that one.

– – – – – – – –

One of the advantages of working for yourself is you have a lot of time on your hands. Hours and hours spent sitting in an office “at work” pretending to be productive simply by keeping your eyes open and glued to a computer screen are now available to accomplish softer tasks – things like reading and thinking, and imagining. I love it. In reading many news sources, I sometimes hit two or three articles that seemingly on close examination have no relevance to each other, but from the higher level view they might. While none is of sufficient interest to warrant a full blog post, collectively they make for some interesting (I hope) thoughts. As I come across those from time to time, I’ll pass them along here.

In a Washington Post article this week on carbon nanotubes and super-miniature computers, scientists have been successful in creating a working computer so small you could fit 40 CPUs on Franklin Roosevelt’s head on a dime. If you share my wonderment that today’s smartphone has a more powerful computer than the Apollo 11 spacecraft that put Neal Armstrong on the moon, you’re also thinking that our pocket pals couldn’t get any smaller or smarter. You, as am I, would be wrong.

On the Time magazine cover this week is a question – Can Google solve Death? Followed by a subtitle, “the search giant is launching a venture to extend the human lifespan. That would be crazy – if it weren’t Google.” So the progenitor of driverless cars is now striving to become the Ponce de León of cyberspace and not discover but create the fountain of youth.

Lastly, news from the University of Washington that Microsoft co-founder Paul Allen is funding a project to advance computers that connect brain to spine in paralysis victims. The device could recharge wirelessly at night (sleeping on a coil-imbedded mattress). How big? See item #1 above.

Ear on mouseI’ve long been convinced that if I live just ten more years I will live forever. Between replacement parts (knees, hips, shoulders), growing new body parts in petri dishes or on mouseback , and robotics (Afghanistan and Iraq wars may not have done much for world peace or the national debt, but they did accelerate research into replacement parts for limb blown away by hidden explosives), about the only thing we couldn’t survive would be the proverbial ‘hit by a bus’ problem.

Based on these three stories, I’m starting to rethink my 10-year time horizon. Could be less.

– – – – – – – –

Speaking of cars, this article over on the Tech Dirt blog is worth noting. Consider this opening paragraph, which I have altered (three yellow highlights) to remove the identity of the players or the industry:

MLSs have been dealing with disruption just about as well as any other legacy industry has. Instead of attempting to compete, MLSs have chosen to respond to web portals refusal to cut them in on the middleman action by throwing up as many regulatory roadblocks as possible. Sadly, this antagonistic attitude toward both their competition and the home-buying public somehow makes sense to them, and they seem very willing to bury both the upstart and their last remaining shreds of goodwill at the same time.

The article is NOT about real estate brokers or MLSs. But it seems that the protectionist philosophy is not unique to the world of real estate data managers. Check out the link to see who they’re really talking about. And then ask yourself, where on the “most trusted professions” list do those folks rank relative to your position? And where should you rank?

– – – – – – – –

And lastly, keep this Tundra© cartoon in mind the next time someone says that your MLS or Association needs to be nimble, make quick decisions, and develop new ideas with the dexterity of an internet startup.

Wolves eat deer by committee action

Even with all good intentions, you’re still running by committee.


For this post:
Cause: Odds and ends hanging around
Effect: Three ideas do a blog post make

 

 

What is a Listing?

I’ve been invited to speak at CMLS on the topic of what MLSs should do to help brokers make smart decisions about syndication.

The invitation is surprising for a couple of reasons:  I’m no longer in the MLS business nor do I work for a recipient of said broker syndication efforts and decisions.  Also, after I left Zillow I swore to myself (out loud this time) that I wouldn’t get involved in rehashing this old topic yet another time. I personally have attended multiple funerals for that dead horse (Cause of death:  multiple beatings) and do not look forward to waking another.

deadhorse1

But of course I accepted the invitation because I’m a glutton for punishment.  And lately some thoughts have occurred to me, more often now that I’m no longer under the influence (figuratively as well as literally speaking) of either of the two polar opposite positions in this debate – MLS gatekeeper or national real estate portal.

In an uncanny coincidence of timing, details of the long awaited SourceMLS™ branding initiative from the Council of Multiple Listing Services (www.cmls.org) was unofficially unveiled this past week through a posting by Victor Lund on the WAV Group blog. I say “unofficially” since there was no similar announcement on the CMLS or SourceMLS websites, but since Marilyn Wilson (the “W” in WAV) serves on the CMLS board I presume this post had CMLS blessing.

SourceMSourceMLS LogoLS has been over a year in the making and members have been receiving updates on its developmental progress since early in 2012.  SourceMLS was developed by MRED and Russ Bergeron and licensed to CMLS for their exclusive use with their membership and selected vendors. SourceMLS intends to identify listings and websites, either broker or third-party, who receive listing data directly from an MLS and who agree to treat that data according to the guidelines established by CMLS.  The intent, of course, is to rid the web of stale, outdated, old listings that are no longer active but appear to be so because the source of the listing hasn’t keep up with the recommended maintenance.

 

In comparing the WAV post, the CMLS Guidelines document, and the Trademark License, I found some significant differences and have multiple questions about which version is actually applicable.  But in trying to compare and contrast them for this post so I could properly relate the concern back to the applicable language that generated it, totally I confused myself.  So I’ll hold those questions for another time and another post.

Looking at the program in general, most of the provisions and requirements are pretty benign, but some of them seem to be designed specifically to get national websites to change not just their display practices but their core business practices.

One item which caught my eye was the provision that CMLS would have approval authority over any vendor who applied for licensure under the SourceMLS program. The language in the official guidelines document reads as follows:  “The Listing is displayed on or through a real estate information site or service that is reasonably acceptable to CMLS.”  (emphasis added)

While this may on its surface seem innocuous, it does offer CMLS literal veto power over any application that it feels is not in keeping with the high standards set by CMLS for listing display. Those standards are not identified or enumerated.  I’m sure CMLS will use this authority judiciously, but the fact that this provision is included in the guidelines and thus embodied in the license agreement by reference gives one pause to consider whether CMLS is either (a) overstepping the authority granted to it by the MLS or (b) creating an opportunity for arbitrary and capricious disapproval of any application by any website that CMLS feels is not acceptable but can’t find a specific rule that would justify denying the application.  Such an action may run afoul of regulations or even law since the protocols for such a review and decision have not yet been established.  Given the contemporary mood in MLS circles to want to “take back our data” this provision should raise questions in the halls of those non-broker websites who want to continue to use listing data from an MLS, but who must now conform to some unpublished standard of conduct to be “reasonably acceptable.”

The other interesting item is the requirement that states upon expiration or sale of a property the displaying website must remove that listing from the website (and potentially, or at least implied, from its database).  From the SourceMLS guidelines document:

If the Listing has been removed from active status, all listing content including but not limited to images, video and property descriptions have been removed from display within twenty four (24) hours of the Listing being removed from active status. If such Listing continues to be displayed, the listing broker name is displayed with the Listing.

(Let’s set aside for the moment the internal inconsistency between the first and second sentences of this paragraph.  In the first, one must remove the listing. In the second, if you can’t comply with the first – removing the listing – then show the broker’s name when you display it in contravention to the first sentence.  Huh?)

In order to comply with the requirement to remove the listing, it seems necessary to agree on a definition of what a listing is. We in the industry have used” listing” rather generically over the years to describe a property data record within the MLS database, as in the whine, “They’re taking our listings and selling us our own leads.”  In fact, a listing is technically a contract between the seller and the broker retained to sell that property. When a broker or agent says, “I have a new listing” she doesn’t mean I just created data record. She means I have a contract granting me new authority and responsibility to market this property for sale.  Yet we use “Listing” as it was used in the second sentence of the quoted text above:  “If such Listing continues to be displayed…” does not refer to the contract being displayed, but instead to the listing data record.

So what is it that’s to be removed when a listing comes down?  The price and pictures, and prose.  Three p’s.

What is a listing?

CMLS, and they’re not alone in this interpretation, sees “listing” as something physical, an object that can be passed from one person or site to another, perhaps something that can potentially be monetized because it has value (although the value is debatable and difficult to quantify, as Todd Carpenter noted recently).

But a listing record is not a singular object.  The listing record is composed of two essential elements:  the facts and the fiction.  Facts remain unaltered by virtue of a contract to sell a property.  CoreLogic has them.  Data Quick has them.  RED has them.  The facts include size, age, rooms, bath and bed count, property size, taxes, school district, nearly every physical description of the property.  The fiction, those parts made up by the broker and the seller to flesh out the offering of the property would include list price, agent’s remarks, and photos, perhaps virtual tours, special offers, bonus commission offering.  All are subject to change and updating without affecting the core elements of the property record.

So what does CMLS mean when they say remove the “listing content?” The intent of this provision is to require that a website no longer display data from the listing record that it received as part of its syndication feed. However, as has been noted in a couple of recent nationally prominent copyright lawsuits currently pending in various federal circuit courts, most of the information contained in an MLS data record is public knowledge, public information, or public records – facts, which are not copyrightable, rather than creative works which are.

What the agent adds in creating the listing record is minimal. Certainly there is a requirement to state that this property is for sale, and what status it is in.  There’s the list price, considered in some quarters to be the most copyrightable work of creative art in a listing record.  There’s some poetic narrative of original prose called Realtor Remarks (or Agent Remarks in those MLSs that allow non-Realtors to participate) which couldn’t be more worthless after a listing contract expires, so we shan’t waste any breath on its debate, now shan’t we?  And, of course, photographs.

On most national websites, nearly all of the data elements that are contained in what the industry perceives as a listing record are already maintained in a master database of property information. That database is populated with public records information AND with information about previous sales activity on that property – yes previous listings, from agents, brokers, or even homeowners who posted that data on the portal without the requirement to remove it when the house was no longer for sale.  So when a website receives a new listing record, much of the content in that record merely duplicates data elements that the website already has collected in its database.

When CMLS asks the website to remove the listing content when it is no longer on the market are they requiring that the website remove factual information that it had prior to receiving listing record? In discussing this with one MLS, with which I was negotiating a data license, the answer to that question was “If you got the information from the MLS, you must remove it.” But how can they prove that the bedroom count, the current taxes, and the lot size are all data fields that came from the MLS and not from public records?

Even with regard to photographs, some real estate websites combine photos from a separate data feed into the display of an active property listed for sale. These photos may be of higher resolution or more numerous and may be coming from a franchise or the agent herself.  They are offered because in many cases the MLS is not capable of storing and displaying extremely high-resolution photos, or restricts the number of photos it will distribute to syndicated websites under the delusion that a consumer will click over to the MLS or broker site to see the rest of the photos when in practice the consumer will just move on to the next property that has more photos. Often the outside-sourced photos are exactly the same picture, but sent in a hi-res format rather than the lo-res version the MLS vendor created to be able to store them efficiently.  So are those photos the portal received separately from the broker, not from the MLS, part of the “listing” or not? Indeed the mere act of substituting one set of photos for another may be in direct violation of another provision which prohibits the website from altering the listing data it receives from the MLS in order to qualify under the SourceMLS license.

Pictures and prose are part of the historical record and despite being removed from the active display they probably live somewhere in perpetuity on some archiving website like the Wayback machine.  Example from 1997: http://web.archive.org/web/19970102155412/http:/www.realtorads.com/

So back to the original question – what’s the meaning of “take down the listing?” It depends entirely on the definition of “listing.”  And even if we agree it means those portions of a property record that are original to and singularly associated with the listing contract in question, then taking down the list price (done anyway since the property is no longer for sale), any pictures that didn’t come directly from the MLS, and the Remarks should be sufficient.

So what’s the hubbub about?

I applaud the efforts of CMLS to address the ongoing issue of stale data and outdated listing displays.  It’s a formidable task, one that cannot be easily accomplished to the satisfaction of all quarters.  As with most new brainstorms, the devil is in the details. But I would encourage CMLS to examine the guidelines and license provisions that it has created for the SourceMLS program and make sure that they are (a) lucidly clear as to their definitions and intentions; (b) clearly understood and consistently explained to all parties to whom the SourceMLS program is being offered, and; (c) that the program is true to its mission of improving the quality of the data displayed on all websites and not subconsciously designed to undermine any particular website by making the rules of participation so onerous that no one will sign up.

I will be joining the CMLS panel at the upcoming conference in Boise, as planned.  I hope to see you there and hear your opinions on the SourceMLS™ project.

For this post:
Cause?  myomymyheadshurts
Effect?  Perhaps not the one intended

A Slight Tremor or Foreshock?

This post also appears on Notorious R.O.B.

An interesting article appeared in Inman News back in early July.  It might have gone unnoticed but for a reminder video they posted this past week.

It was coverage of a new brokerage, Suitey.com (pronounced “sweetie”), that opened this year in Manhattan.  In the video, one of the founders David Walker gave one of their reasons for trying a new brokerage model, one that not only offers discounts to sellers and rebates to buyers but also helps “consumers avoid some of the headaches that its founders say come with using a traditional broker.”

In the video, Walker states (0:44 seconds in), “One of the major problems with clients when they’re buying a home is their agent is actually incentivized get them into the most expensive apartment [that’s New York speak for “condo” or “coop”] possible.  Their compensation is higher when they (the buyers) pay more for their apartment.”

Brian Larson on Ending Cooperation and Compensation

In making this statement, David has resurrected an argument that has been bubbling on and off for years, going back to as early as 2006 when Brian Larson, noted former MLS CEO and now esteemed attorney in Minneapolis, penned a three part series entitled, “End of MLS as we know it” for Inman News.  (The links to parts 2 and 3 on Inman.com were broken, so if you want to read the entire series, go to LarsonSobotka.com.)  There were only a few comments from hard core blog readers and devoted MLS rules junkies.  After all, the MLS is an institution, as important a pillar of Realtorism as the three-way agreement and RPAC. How could MLS possibly end?  His redux publication of the series in 2010 got more notice. Perhaps more people had RSS readers by then.

Brian argues eloquently that “Interbroker compensation is an anachronism, and … should be eliminated.”  He summarizes all the good reasons for doing so, as follows:

Getting rid of interbroker compensation improves the market in several areas:

  1. Buyers and their brokers have more options for structuring their relationships and the compensation that will flow between them.
  2. Buyer broker fees can be commensurate with the skill and experience of the broker and with the buyer’s needs.
  3. Brokers do not have to fuss with the accounting details and conflicts associated with paying each other.
  4. The market benefits from price competition for buyer broker services.
  5. Buyer brokers working in transactions with FSBO or unrepresented sellers can obtain additional compensation for the additional work and risk they assume.
  6. The question of buyer’s brokers “rebating” commissions to the buyers becomes moot. There will be no compensation from the listing broker out of which any rebate could be made.
  7. The dangers of price-fixing, and the claims by industry watchdogs that it exists now, will largely be addressed. Brokers will really be unable to tell what their competitors are charging for services, and there will be no incentive for commissions to be “standard.”
  8. Buyer’s brokers can achieve the type of relationship of trust with brokers that support a claim to being “professionals.” When the buyer knows what she is paying for broker services and what she is getting in return, buyer expectations and broker performance are both likely to be more refined.

But Brian’s title belies the underlying contention that if we did away with offers of cooperative compensation, the MLS itself, at least in the form we now know it, would die or soon be replaced by something else.  It’s often been said that a large national consumer-facing real estate portal is “just one field away from being an MLS.”  But most are afraid to name that field, perhaps fearing that saying the words aloud would somehow make something horrible happen.  “Beetlejuice, Beetlejuice, Beetlejuice!

Why? Surely the MLS offers something besides compensation offers that make it unique and absolutely essential to the transaction of real estate purchases, doesn’t it?

Suppose an MLS wanted to structure a data agreement with a website, but saw that website as a potential competitor. So they included language that specifically voided the contract if the website competed with the MLS. What would that language look like?

A good starting point would be the MLS definition from the NAR Model rules, which specifies that a multiple listing service is:

  • a facility for the orderly correlation and dissemination of listing information
  • a means by which authorized participants make blanket unilateral offers of compensation to other participants
  • a means of enhancing cooperation among participants
  • a means by which information is accumulated and disseminated to enable authorized participants to prepare appraisals, analyses, and other valuations of real property
  • a means by which participants engaging in real estate appraisal contribute to common databases

Many (most?) national websites exhibit many of these characteristics already.  They correlate and disseminate listing information (and other info too); they enhance cooperation among parties (tools for agents and consumers); they offer means of valuing property (AVM or RVM), and they collect information from users for the common good (agent ratings).  The one thing they don’t do is convey offers of compensation between brokers.  That’s the unspoken missing field:  compensation; compensation; compensation!

Without it, the MLS becomes just another listing aggregator, no better and no worse than the others.  And without MLS, NAR has a much more difficult time defining its value proposition as anything other than a government lobbying organization with no compelling reason to induce practitioners to join, particularly if they are of the alternate political persuasion.

Cooperation and Compensation Hurts the Consumer

Carrying that theme to its logical conclusion, albeit with a healthy dose of hyperbole along the way, Greg Swann of Bloodhound Blog fame authored and collected a series of articles advocating the demise of inter-broker compensation and its associated MLS as a way of ending the tyrannical rule of the NAR.  But in doing so he clearly identified the core problem: coop compensation screws both the buyer AND the seller.

This is actually doubly insane. The person paying your agent to get you the lowest possible price for the home is the same person who is being paid by the seller to get the highest possible price for the home. You may start to think that you are getting screwed, having discovered that “your” agent is being compensated by the listing broker, but think about the poor seller: He is paying two brokers to pursue — at least in the abstract — antithetical goals. If you did a good job picking your agent, the seller will have paid the listing broker to pay your broker to pay your agent to frustrate the seller’s objective.

How could this possibly make sense?

The answer: It doesn’t make sense.

Over the course of the next year, others joined the chorus, from real estate broker to learned academician.  But as we know, in the end nothing changed.

Until perhaps now.

Here we have a broker, not an MLS executive, not a lawyer, not an academic, not a consultant, an ACTUAL broker working within the system, saying aloud what until now has been mentioned only in hallway conversations at MLS conferences and on blogs mostly written by insiders: cooperative compensation through the MLS hurts the consumer.

And we have seen with the rise of the national portals who built their enormous followings by delivering to the consumer something that the industry was unable or unwilling to deliver. Consumers speak volumes and will eventually get what they want, because someone will give it to them.  What remains to be seen is whether they will be equally vocal in demanding an end to the pain – the aforementioned “headaches that… come with using a traditional broker.“

For this post:
Cause:  My head aches just thinking about it.
Effect: Take two aspirin and call me in the morning.

-bb