NAR’s Organizational Realignment and Core Standards: Part Deux

MandatoryCoreStandardsHi intrepid readers. Notorious Junior here to do a follow-up report to Notorious Senior’s parsing of the NAR Organizational Realignment and Core Standards project, Part 1. (Part 1 didn’t appear on this site, so if you missed it you’ll need to play catch up by jumping over to Rob’s site and reading the first part.)

So why isn’t Rob handling his own follow-up promises? Well, he’s been kind of busy lately, being chased around by the Audubon Society for talking smack about Black Swans and other aviary oddities.

Plus, I recently attended the certification training for Core Standards Facilitators hosted by NAR in Chicago and came away with a renewed respect for NAR for taking on such a project and for the staff for figuring out all the nitty-gritty details that will need attending to in order to make this thing work. So these are my thoughts.

First, a little background.

NAR president Steve Brown appointed a PAG (presidential advisory group) to study how NAR could make itself, and its state and local associations of Realtors (AORs), better, more targeted to the mission of helping Realtors be successful in their businesses. The PAG report was published this past April and at the May REALTOR® Party Convention (and political rally, congressional lobbying party, and general governance meeting – oh, yes, and trade expo) the NAR board of directors acted on the recommendations by adopting the Core Standards by which all state and local boards will be measured.

The criteria for success are in six categories.

  1. Code of Ethics (strengthen and streamline)
  2. Advocacy (politics and policy influence)
  3. Consumer Outreach (promotion, publicity, charity work, fund-raising, etc)
  4. Unification Efforts (refers to alignment of services at all three levels, rather than unifying boards, i.e. merging them, which was not the intent)
  5. Technology (boards need a website; they’re cheap; get one now)
  6. Financial Solvency (pretty self-explanatory – don’t let your bankruptcy be a surprise)

Most of the criteria are going to fall into the “Duh, don’t we already do that?” category. But there are some sleepers in there that are going to keep some AOR CEOs awake at night. As you toss restlessly, keep in mind the ultimate purposes of this project:

KEY GOALS:

  • Every member receives services they deserve, regardless of geography or structure.
  • Every association contributes to the strength of the whole. Locals, state, national are all working together
  • Every association must be capable of delivering the standard services. Those that cannot now must find a way to do so or else.
  • Every association is highly functional and delivers member value – size is not the issue. Functionality is the goal. Small boards can be highly functional, while some large boards may not necessarily be that functional.

Despite what Dale Stinton told the AEs at their annual institute in Baltimore (as Rob reported his best recollection), the official line is this is not about culling the herd (of crappy boards) through mergers or defenestration. This is not just about getting rid of small boards (although everyone admits that the smaller the board the harder it will be for them to meet the standards tests). It is, instead, all about service to the members. Mergers may be a side effect, but if the service levels can be achieved without mergers at all, the Realtor mission will have been accomplished.

I was surprised to hear that many (hundreds) boards are so small they can’t afford one full-time employee. They exist solely to exchange listing information through an MLS that may be a PC on a modem line in the president’s garage. Those will be the first to die. Those that cannot make the grade on their own because of size, inefficiency, or just plain incompetence will have a number of options available to them short of termination with extreme prejudice.

  • They can fold into another board as a local chapter, thus keeping a portion of their local identity.
  • They can joint venture with other boards to share service costs and jointly present programs that meet the standards.
  • They can hire services to be delivered on their behalf, either from other AORs or outside vendors, although this might entail some increased costs.

What they cannot do is continue to slide by on good looks and charm. The days of the AE or board president cajoling the state AE in order to not have to meet the board’s RPAC quota are over.

Let’s take a closer look at each of the major areas and point out the highlights of the upcoming requirements.

Code of Ethics (COE)Rob's version of COE Justice

My notorious friend jumps on his high horse about the lack of teeth in the Standards around the COE. Rob would like a Judge Dredd to go out and find those desperado Realtors, given them 48 hours to ‘splain themselves (even if their name isn’t Lucy) and then shoot them on the spot if they don’t straighten up, clean up, and fess up.

But the purpose of this section isn’t to force Realtors to be more ethical. It’s to make sure the AORs are doing their best to educate the members that (a) there is a COE, (b) they are expected to follow the COE, and (c) in cases where someone is harmed (whether that’s another Realtor or the general public), try to facilitate a resolution short of a full-blown professional standards marathon inquiry.

Through years of evolution and expansion, the Code of Ethics and Arbitration Manual is now over 250 pages long, chucked full of due process and rigor and quite frankly is a total PAIN to follow.

The three options, of Code of Ethicswhich the boards much pick at least one, all intercept the complaint before it enters the formal ethics process. Mediation can resolve disputes in a short time. An ombudsman can intervene early and get the parties to negotiate a settlement even before mediation. And many states (NAR promises to publish details and examples) have a fine system in place that allows a member, when s/he gets caught with a hand in the cookie jar, to say a couple of hail Mary’s and a mea culpa, pay a fine and get back to business. The fines can be substantial and a couple of them should be a deterrent to further mischief. But if not, the board can still throw the manual at them later (which, at 250 pages, has got to be painful).

Advocacy

Just a couple of comments on this topic because for the most part Rob is right on in his analysis. Advocacy may be the saving grace for Realtor Associations, their raison d’être. Of all the services an association can offer, keeping good politicians in office and bad laws out of the books is the most noble.

NAR has put some substance around the metrics** of Calls for Action. They publish the response rates for each association and the Y-o-Y change so one can easily see the trend. My former state, Arizona, is dead last (8.8% response rate) among les États (there are a couple of territories and one District doing worse, but then there are a couple of territories with fewer members than the Black Hills, SD association with about 300 warm bodies, so we won’t pick on them until they grow up). But other states like IN, OH, NH, and VA  have equally abysmal response rates, all 10% or less. Top dogs in the political arena are North Dakota (surprise) and Iowa (no surprise) with 32% or more responses to CTAs.

Funding Advocacy

RPACThe RPAC requirements are interesting as well. On the one hand AORs must include a voluntary contribution line on their dues statements, and in so doing imply that the payment of the contribution is anything but voluntary. Members can line-out that RPAC item and pay the dues amount only, but there is no requirement in the policy that requires AORs to explain this to the members. It will be interesting to see how those associations who accept only electronic on-line dues remittances handle the option to allow members to remove the RPAC amount from their “shopping cart” before they check out.

Yes, this procedure is an admission that most Realtors don’t understand the importance of strong, well-financed political action by their trade association. That’s the other part of the requirement, that the boards go further to explain, to educate the members why this is such an important part of the Realtor mission.** After all, this is why they changed the name of the spring meeting from Mid-Year Governance Conference to REALTOR® Party Convention. What remains unanswered, and prickly, is that end-around loophole. If the board doesn’t want to include the RPAC line item in the dues statement, they can just write a check on behalf of all of their members. But where does that money come from?

Unless the board has a for-profit subsidiary feeding money into a separate contribution channel, as Notorious #1 conjectured in his modest proposal <here>, then the check the AOR writes is coming from the same bank account into which dues dollars are deposited. And that co-mingling is the basis for separating out the RPAC item as voluntary in the first place. It will be interesting to see where the challenge to this comes from and how loud the screams are, or if the membership will look at this situation with the same laissez-faire “Meh” and yawn that greets most association political efforts.

Then there’s the POWER Thing.

Yes, the plan as first published (or at least first interpreted) smelled like a power grab by state and National, forcing locals into compliance or threatening them with termination either through dissolution or merger.

The truth is, and I saw this first hand in Chicago, the purpose here is not to consolidate power, not to cull the herd of weak Swanepoelian Wildebeests, but to strengthen the associations, and to align them at all levels toward the common purpose and Realtor mission – better, more productive members.**

Cajoling is just one option. Mentoring is preferred. The states can show the locals, and the national show the states, how to mobilize the membership and instill them a sense of pride in supporting the political actions of their PAC.

And therein lies another problem – whom do you support? And do your members agree with your decisions on whom to support? And if not, how do you either (a) do what the members want or (b) quit taking money from the Reds and giving it to the Blues (or vice-versa).

The better solution, in my opinion, would be some variation on Rob’s proposal to raise RPAC money not through voluntary donations but through unlimited corporate contributions allowed by Citizens United v FEC. But NAR isn’t ready to go there yet, so we’ll continue down this path for a bit longer, and work harder to explain it to the members.

These are just two of the six major areas that have detailed requirements for compliance. To quickly touch on the others:

Consumer Outreach

Boards must do four meaningful** consumer engagement activities annually, but can’t do the same thing four times. Examples are promoting market statistics and/or real estate trends and issues (e.g., release through press releases, interviews, etc. of MLS statistics, local market statistics, NAR research reports, local/state analysis of NAR statistics, etc.); promoting the value proposition of using a REALTOR® and/or engaging in community activities which enhance the image of the REALTOR®; engaging the public** in legislative/political issues that impact real estate and related issues; and organizing human assistance like a Habitat for Humanity** project or fundraising for the benefit of charitable/community organizations.

These are all pretty self explanatory and really easy to hit out of the park. Realtor associations love these kinds of activities, so no challenge here.

Technology

If you can believe this, there are some organizations out there that don’t have a website. The bar for what constitutes a website is pretty low (one page with links to state and national websites), so this hurdle should not be much of a problem. The Kansas Association of REALTORS® will sell you a copy of theirs for $45/month. If you don’t know your HTML from your URL or your DNS from your TLD, give them a call. And the AOR must use email (or some other internet channel like Twitter or Facebook) to communicate with members. My advice – stick with email. It’s free (Google) and verifiable.  

Financial Solvency**

There were early concerns that locals would have to show the states their balance sheets to demonstrate solvency. Some locals don’t want the state association to know that much detail about which coffee can in the back yard has the buried cash. Fortunately, they will be able to keep their money under the mattress and free from state level prying eyes. The states will monitor only the reports from the auditors or CPAs about board financial condition and only from boards with $50K in revenue or more. (By the way, if your board has less than $50K in annual revenue, what in the heck are you paying your staff with? Bartered chickens?)

Unification Efforts

Here’s where it gets a bit tricky and where the CEO insomnia syndrome might set in.  Unification refers to alignment of services at all three levels of the association, rather than to unifying boards, i.e. merging them, which is not the intent of this section. The particulars are designed to get the three levels of Realtorism to work in concert with each other, to compliment the other levels, avoid duplicate of efforts and ensure that services to which member are entitled are delivered regardless of which level delivers them.

  1. AOR must have access to legal counsel**. This can be the state association in-house counsel or an outside attorney. But if you use an outside attorney, be sure it’s someone who understands your business. Realtor Associations are unique creations, unlike other businesses or trade groups. Representing one is not for the faint of heart. There is no requirement that you use the lawyer but if you need one you better have his/her phone number close by. There are firms that represent multiple associations across wide geographies. Contact me if you want some names.
  2. AOR CEO, President (or Chair), and Treasurer must certify in writing they have been filed all necessary corporate docs, reports, and tax returns.Alice meets the Cheshire Cat
  3. Board must have a business or strategic plan in place, including advocacy component.** The BoD must sign off each year that plan is in place (even if plan is for multiple years). This makes sense. As the Cheshire Cat once said, If you don’t know where you’re going “it really does not matter which way you go.” NAR has certified a whole cadre of strategic planners ready to help you put your plan together. <Click Here for the Roster>
  4. Chief staff person must have minimum six hours of professional development each year. (Hold on to your passports small board CEOs – you don’t necessarily have to travel for this.) The state AOR must provide these opportunities which can be virtual web-based online classes that you can take in your jammies.**
  5. NAR will survey members as to their understanding of the value provided by their associations at all three levels. Locals MUST promote these surveys.**
  6. Locals maintain a list of LFROs and may solicit them for voluntary contributions to PACs.** What’s an LFRO you ask? That’s the acronym du jour for Limited Function Referral Organizations, those holding companies that brokers set up for their part-timers so they don’t have to pay REALTOR® dues. NAR would still like them to contribute to the RPAC even if they aren’t members.
  7. State AORs must provide locals list of non-member licensees twice each year. The implication here is that the locals will then chase down the brokers of these agents to impose the dues formula on their non-member agents or force them to move the licenses to a non-Realtor holding or referral company. But the standard doesn’t require the locals to do anything more than they already are. It only requires that the state give them the list, not that they act on it. **

By now you have noticed a few provisions with double-stars appended and some of you have been sent looking for the footnote to which those stars refer. This is that footnote. Those provisions of the standards that are *starred* currently have no teeth. There is no measure of success, or of progress, against which to measure compliance. How does the state know if the local met the standard if there isn’t any scale by which to pass or fail?

That’s because there is yet one more missing piece to this puzzle. The PAG report tantalized you. The standards adopted by the NAR BoD enlightened you. The FAQs prepared by NAR staff enlightened you and clarified things. Now the missing fourth piece sure to raise your resistance if not your ire: the measurement criteria. NAR staff is still working on that. There are six squads of staffers putting together the “how much” to go with the “what” and the “why” and we hope to see their report soon.

Examples of missing measurement details:

  1. What if you hold a town hall meeting to engage the public in political dialog, but one person shows up? Have you met the requirement of “meaningful” consumer engagement?
  2. Yes, NAR publishes the Call to Action response rates, but what rate is sufficient for a state to pass the test?
  3. If an AOR pours its heart and soul into educating the members about RPAC, and they still think it’s a lousy idea, has the AOR met the test of “explaining the importance” of the program? Explaining is not the same as persuading or convincing.
  4. A bake sale to raise charitable donations is not the same effort as building a Habitat for Humanity house. Do they count the same under the community involvement test?
  5. The financial solvency test has no guidelines. Will there be minimum reserves required? What happens if the AOR depends on MLS revenue more than it should? Is that acceptable in the eyes of the auditor?
  6. Merely certifying that the AOR has a strategic plan in lace does not require the board to actually follow it. Does a ‘shelf registration’ count in meeting this test?
  7. What constitutes professional development for the association CEO? Would a self-directed online Power-point lecture on Facebook for Dummies qualify?

That will surely be the fodder for Part 3 of this series, which I will probably bounce back to Notorious the Elder since by that time I hope to be on the road facilitating understanding and compliance. Either that or traipsing around in a shroud like Dr. Jack Kevorkian at Halloween passing out cyanide capsules to those miniature associations who are sounding the death knell after just reading the requirements and finding they don’t have much to offer beyond MLS. Don’t fret, small board AE or president. Instead of dying, you can become a Chapter of your larger neighbor and keep your name – just as soon as NAR defines what a Chapter is and the process for becoming one (coming soon, they promise).

I’m working on a website geared toward shameless self-promotion as an approved Association Merger Facilitator to guide associations and their MLSs through the process. I’ve got the shell and some bare bones information posted now. If you just can’t wait to get started and are interested in a quick one-day outside audit of your current status and what areas  you might have to work on to pass inspection, give me a call. Contact info is found at www.NARCoreStandards.com. There’s also a link there for the current FAQ list from NAR that goes into more detail. That should get you started.

For this post:
Cause – Our organizations are out of alignment
Effect – We must hang together or we will surely hang separately.

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

The other shoe . . .

other_shoe_drops on MOVE The biggest rumble in California Monday was not just the 4.4 Richter strength earthquakes that hit between Westwood and Encino and were felt in four surrounding counties despite being five miles underground.

No!

Rather it was the explosion, the eruption in the halls of Move, Inc. headquarters when it was announced that Curt Beardsley, recently promoted to fill one of the two shoes left empty by the departure two weeks ago of president Errol Samuelson, was joining his former boss at Zillow in the same department and with nearly the same job description.

The tremor you thought was an earthquake was actually the sound of the other shoe dropping. (It actually could have been the fourth shoe since both of these relocations were preceded by the resignation of ListHub Industry Relations VP John Whitney and Move Chief Product Officer Scott Boecker some weeks earlier. Shoe-wise, compared to Samuelson-Beardsley, the Boecker-Whitney moves were more like bunny slippers than combat boots. Collectively, however, they are approaching a medium sized Zappos order being dropped on your doorstep by UPS. The “Thud Factor” is formidable. )

When Samuelson departed, I opined that this could be the beginning of the end for Realtor.com in the form we have always known it – that of a split personality website trying to serve two masters: the shareholders of public corporation Move, Inc and the stakeholders of the private organization NAR, Inc. I have previously suggested that the smartest move for Move (sorry, couldn’t resist) was to increase the value of the corporation in a rather non-intuitive way – by giving back their biggest asset, the Realtor.com URL, to its trademark owner NAR.

Move, of course, ignored my suggestions (wouldn’t you?) and after Samuelson left issued statements hoping to minimize the impact of that loss. ‘Move won’t miss a beat,’ said CEO Steve Berkowitz, seemingly unperturbed by the abruptness of Samuelson’s departure or the lack of notice that preceded it. Later Berkowitz admitted to a high degree of pique in his interview with Rob Hahn, but held to the company line that other product leads acquired with recently purchased companies were more than capable of continuing the work without oversight from Samuelson. He even admitted that he missed being in the product trenches himself and would be taking over the strategic responsibilities (the second big shoe to fill) abandoned by Samuelson. NAR confirmed that position reiterating their staunch support of Move and its management of their trademarked brand’s site.

NAR leaders said the association’s relationship with realtor.com is deeper than any one person and expressed excitement for the opportunity the change creates for Beardsley, who has been with realtor.com for seven years, most recently as their vice president of product marketing, and has a strong track record of being proactive and getting things done.

Now with Beardsley’s departure, Mr. Berkowitz may be spreading himself a bit too thinly if he tries to cover all those open bases without acquiring senior leadership reinforcements. Losing four major officers, three with “Chief” in their title, all within a month, is not just the sign of a leaky boat, it’s an indication that torpedoes have been launched, the sonar warning signals are sounding, and the battleship is about to be broadsided.

Lani Rosales, COO AGBeat, in an editorial the day after Samuelson resigned said, “Losing Samuelson to Zillow and Whitney to Trulia is being praised as wins for realtor.com competitors, but this could actually be a huge win if realtor.com takes advantage of the opportunity to bring in new blood.” If losing two senior executives is an opportunity for a transfusion, then losing four is more like a bloodbath of Texas Chainsaw Massacre proportions.

So, now what? Surely as adept as Steve Berkowitz is at multi-tasking (or he would not be CEO), he can only do so much in a 24-hour day. With vacancies in strategic management, senior product management, revenue management, executive leadership (of its major subsidiary) and technical oversight (some of Curt’s lesser known involvements included Move’s ongoing campaign against data scrapers, and if you have ever seen his presentation on this topic you know how formidable that campaign is), it would be folly to think that one person could fill all of those slots with anything approaching proficiency let alone expertise.

So it’s time for the new blood. Here’s the problem. There are no donors.

Anyone who applies for the job, any of the jobs, has to ask the questions about what caused Errol, Curt, John, and Scott to leave, and all within 30 days of each other. What is the underlying problem that keeps Realtor.com from making progress and is apparently so serious that major leadership personnel are defecting to the competition? And if the interviewees at Move can’t/won’t answer it, the applicant will surely ask one or more of the defectors.

I’ll save all of you the time and trouble. The answer, as I have stated before, is not traffic, not product, not website design, not user interface, not even good or bad listing data. It’s politics! It’s the irreconcilable discrepancy between two opposite and competing goals: Move strives for profits to serve its shareholders, and NAR strives for influence to serve its members. Those two goals cannot both be met, By dividing resources, constraining the website, and spreading muddled messaging in lukewarm support of both, unfortunately neither is clearly articulated.

There is a parallel story being covered in the press simultaneously with the investigation of the continuing staff migration northward from Silicon Valley to Emerald City. That story is the lawsuit filed March 17 by Move (and NAR) against Zillow and Samuelson. [Disclaimer: I am not an attorney, have no degree in law, and my layman’s understanding of this subject comes from five minutes of research on Google. Caveat lector.] Charges in the suit include breach of contract, breach of fiduciary duty, and misappropriation of trade secrets. I’ll leave the legal analysis of the merits of each charge to those better able to discuss such nuances. Instead, let me comment on the second item – fiduciary duty.

Fiduciary duty, defined as the duty of trust, from the Latin fiducia, “trust,” most often relates to the management of property or money. The Cornell University law school defines it as follows:

A fiduciary duty is a legal duty to act solely in another party’s interests. Parties owing this duty are called fiduciaries. The individuals to whom they owe a duty are called principals. Fiduciaries may not profit from their relationship with their principals unless they have the principals’ express informed consent. A fiduciary duty is the strictest duty of care recognized by the US legal system.

Examples of fiduciary relationships include those between a lawyer and her client, a guardian and her ward, and a director and her shareholders.

Nuance aside, officers and directors of corporations are required to act solely in the interest of the shareholders of that corporation. In the case of most for-profit corporations, “the interest of the shareholders” is usually profits. It could also be dividends, depending on corporate policy. But profit comes almost immediately to mind when one is asked why they bought a given stock.

The Move lawsuit claims, “Mr. Samuelson’s breaches of fiduciary duty have harmed and will continue to harm because they provide Zillow with a competitive advantage it would not have had in the absence of the breaches. This advantage damages Move’s reputation, goodwill, relationships with customers and vendors, and damages Move financially.” (Emphasis mine.)

The financial damage to Move claimed by the suit is mentioned in the recitation about breach of fiduciary duty almost as an afterthought. “He did all these bad things and made us look bad and OH, yeah, and we almost forgot – he cost us money.”

Let me humbly suggest that Move and its remaining officers are likewise charged with a fiduciary responsibility to the shareholders. Let me further suggest that long term interests of the corporation and its shareholders will not be best served by filing lawsuits against competitors who make your employees a better offer than the deal they are getting from you. Nor will they be well served by the pending and continuing expense of the legal representation needed to adequately pursue such lawsuits.

Instead, the fiduciary duty of the directors and officers of Move would be met and the stockholders better served by seizing this opportunity to rid the corporation of the boat anchor that keeps it from attracting larger audiences, making more money, generating more profits and thus producing a sound return on shareholders’ investments. THAT’s what Move should be doing. And now is the time.

It’s time to get rid of the relationship with NAR, time to dump the Realtor.com name because Move can’t decide if that name should mean “salesperson” or “information cache” to the consumer.

Inman News reported in late February that “Realtor.com operator Move Inc. announced plans to launch its first-ever national TV ad campaign later this month to raise the portal’s visibility. (Emphasis mine.) Take a look at these latest Realtor.com ads. There is one called “Hesitation.” (There are a couple of 15-second versions called “Haircut” and “Prom” but they’re just shorter versions of the same message.)

Here’s the entire script:   There are things in life that cause us to hesitate. But once we do them, we’re overjoyed that we did. Markets are changing. Interest rates are still low. If you’re thinking of getting into the real estate market, now may be the time to make your move. Every market’s different. Call a REALTOR today and visit Realtor.com. (Emphasis mine.)

Much like the section on fiduciary breach in the Move lawsuit mentions financial loss as an afterthought, it seems that visiting Realtor.com is a similar afterthought in the television commercials supposedly promoting that very website, commercials that are being paid for by Realtor.com, not by the REALTOR association that seems to benefit more from the airtime than does the sponsor.

Meeting ones fiduciary responsibility to ones’ shareholders is a primary responsibility of the all officers and directors of every corporation. Move has an opportunity to do just that by cutting the final strings that tie it to the NAR, changing the name at the top of the homepage of its flagship website to the corporate name, and pursuing the competition with vigor, enthusiasm, and freedom that had they existed earlier might have retained the talents of Errol Samuelson and Curt Beardsley.

The bottom line here is Move needs to make money. They cannot do it with their current business plan. They don’t need the direct relationships with 800 MLSs to get listing data. Zillow and Trulia have proven that and have been eating Move’s lunch for the past couple of years despite not having such a benefit. (Rob Hahn posted a great article today speculating that Zillow does not need organized real estate [i.e. MLS or NAR] to succeed. Well, if Zillow doesn’t need MLS/NAR, certainly neither do Trulia or Move.)

If Move wants to compete directly and with full force and vigor of a half-billion dollar corporation, they need to recognize that continuing the affiliation with NAR and the REALTOR organizations isn’t going to work. As Sherlock Holmes once said, “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”

The truth for Move, however improbable, is that in order to succeed it must cut the ties with NAR, launch Move.com as the flagship and start doing what they have long claimed they could do best – regain the number one position in the battle of the real estate portals.

It’s time for Move to take advice from their own advertising:  There are things in life that cause us to hesitate. But once we do them, we’re overjoyed that we did.

Or they can sit back and wait for the next Zappos shipment to drop.

For this post only:
Cause: The plot thickens as shoes start dropping.
Effect: The road not taken may well be the only way out. 

The start of the end for Realtor.com?

Well, if you haven’t seen the late afternoon news wires yet, let me be the first to tell you Zillow just hired Errol Samuelson, president of Realtor.com and chief strategy officer for parent company Move, Inc.  Errol will take on the role of Chief Industry Development Officer and will report to Zillow CEO Spencer Rascoff.

A Mask Sounds the Death Knell - To Edgar Poe 1882

A Mask Sounds the Death Knell – To Edgar Poe 1882

Some of you may recall that I once held a similar industry relations position at Zillow. Some of you may recall that I was charged with improving the business to business ties between MLSs and Zillow, particularly the effort to secure direct data feeds from MLSs to improve the quality and timeliness of the listing content on Zillow. Still others may reflect on the disappointment I expressed in being unable to accomplish that mission when I left last summer. So now some of you are likely drooling in anticipation of my advice to Errol upon taking up a similar charge. Dream on, dreamers. The road ahead will still be challenging, and will still require compromises from both sides of the MLS/Data/Zillow equation. But there isn’t a smarter strategist in the industry than Errol Samuelson. If anyone can navigate those treacherous waters, he can. And I wish him nothing but success in his efforts. (And my compliments to Spencer Rascoff and Greg Schwartz at Zillow for pulling off this coup. Well played, gentlemen. Well played.)

If this executive switch doesn’t sound the death knell for Realtor.com, I can’t imagine what it would take. Rcom has been slipping in the traffic totals for months and in some measurement services is now fourth behind Zillow, Trulia, and Homes. But traffic isn’t the problem at Realtor.com. It’s politics. Errol has been an ardent champion and exemplary spokesperson for the Rcom effort. Errol has now seen the light and made the decision to change allegiances.  That cannot portend well for Move’s chances for success if it stays on the current path with the current fence-straddling strategies guided by mother NAR.

As I pointed out in a previous post back in December, it really is time for both Move and NAR to reconsider the purpose of Realtor.com and the ongoing strained relationship between the two. If NAR isn’t ready to take back Rcom and operate it as a member service and public relations website supporting its political activities, then maybe Move should force the decision by just giving the website back to NAR and going its own way with Move.com as the lead URL and without all the continuing restraints that keep it from being truly competitive with the top players.

I’ve got a few other thoughts on some things Move might try. But I think I’ll keep them in reserve just in case Steve Berkowitz calls and wants to invite me in for a chat.

For this post:
Cause: Sometimes a man’s got to do what a man’s got to do.
Effect: Holy ship jumping, Batman

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

Put the Deck Chairs here, please!

Am I the only one, while watching Leonardo DiCaprio and Kate Winslet in the titanic blockbuster movie Titanic, who thought “All these people are about to drown and they don’t know it yet?”DeckChairTitanic

That’s kind of what it felt like during the MLS Issues and Policies Committee meeting this past Saturday in San Francisco. Assembled before the standing room only audience was an august panel of industry thought leaders discussing the crumbling relationships between the brokers of The Realty Alliance (and other large firms) and their Realtor Association MLSs. After about a half hour of listening to repeated platitudes heard ad nauseam in the past I was eagerly anticipating the announcement of Peace in Our Time! Would there be a breakthrough in the shuttle diplomacy that must surely have been going on in the back rooms? Would NAR CEO Dale Stinton tip his hand and let us know that mother NAR was riding to the rescue with a new MLS model of inclusion in governance and a noncompetitive product/service policy?

Alas, it wasn’t to be. Instead we heard, ‘Yes, we talk to large brokerages regularly, but they haven’t told us what they’re planning,’ and ‘No, it isn’t NAR’s place to get involved in the local issues between brokers and their MLS(s).’ (Both of those are paraphrases as I heard them, not direct quotes.)

<Sigh!!!>

I could almost hear the arctic waves washing over the feet of the band members accompanying the frenzied hustle of the ship’s mates as they rearranged the deck chairs on the doomed ocean liner.

Everyone in the room either heard firsthand or read accounts of the presentation by Realty Alliance CEO Craig Cheatham at the CMLS meeting in October. Everyone knew the deadline (imaginary as it turned out to be) ten days later when TRA was to meet and decide what to do next and with whom. Everyone in this room expected something to happen or to be discussed at this meeting. Nothing happened.

The general forum ended and the official committee meeting began. Surely now the sparks would fly. Someone from the major broker contingent must have prepared the motion to rescind the policy adopted in May that allowed MLSs to decide whether to treat their public facing website as a basic service, paid for by general funds rather than individually based on usage. In what may have been the fastest and shortest meeting in recorded NAR history, the matter was dealt with in a matter of seconds, referring the question back to a task force for more study, with nary a comment from the floor for or against before a rather lopsided voice vote.

<Double Sigh!!!>

Admittedly NAR is between a rock and a hard place in this drama. They have the most to lose if either of the two most popular guesses about TRA’s ultimate detection proves to be true. If (a) TRA brokers opt out of IDX and syndication by mounting their own web portal, thereby undermining one of the most productive tools for both listing and selling brokers, or (b) go all the way and withdraw from MLS altogether, the cornerstone of NAR’s local associations, the singular most attractive value proposition that associations have – access to and participation by all in MLS services – goes away, and with it any reason to belong to a Realtor board.

Without MLS, and all the benefits attendant to it, NAR stands to lose a significant portion of its membership and with that goes a similar portion of dues dollars and political clout. By my rough count, the five largest brokerage firms account for nearly half of NAR’s million members. Without the big brokers, NAR becomes a second tier lobbyist with small, disorganized members who are focused more on day-to-day survival than on the long-term prosperity of the industry as a whole. I cannot imagine that they are deferring responsibility to their local MLSs with just advice to “Talk to your brokers and see what they want.”

Yet, NAR walks a thin line in the aftermath of the DOJ settlement, being constantly careful not to be seen as trying to dictate business practices that might be anti-competitive or guiding the MLSs to do so. Still, I have to believe some conversations with some of the major players are happening somewhere, sometime, leading hopefully to something.

If not, then we might indeed have witnessed the rearrangement of the deck chairs on a sinking ship. I, for one, certainly hope not, because I know how that movie ends.

For this post
Cause – Invisible iceberg!
Effect – Glub, glub, glub.

 

The Impossible Dream or a Glorious Quest?

This “thought” by Steve Murray of RealTrends appeared in his October 31 email newsletter and was posted on his website the next day.

State of Unrest

Why is there so much angst between Realtor associations, MLSs and brokerage firms?

By Steve Murray

“The whole is festering with unhappy souls. The French hate the Germans, the Germans hate the Poles. Italians hate Yugoslavs and South Africans hate the Dutch. And I don’t like anybody very much.” -Kingston Trio “They’re Rioting in Africa” lyrics

Sounds like the current state of our industry, doesn’t it? The level of angst between local, state and national Realtor associations, MLSs, brokerage firms and national realty chains has risen to new heights. Everyone is unhappy with everyone else in some fashion. Of course, there are exceptions (though hard to find).

It occurs to us that this is what happens when the pie shrinks (revenues generated by the industry and the lack of growth in membership). The fight becomes one where everyone invades someone else’s turf (mission creep). It happens in other industries as well.

What is needed is a group of wise people from the various constituencies to gather and come up with a way to co-exist. A new road map is needed. A map that lays out how the market place can be made clearer and more efficient. That would be a worthy goal. It behooves these leaders to find some solutions before external forces develop their own path (pocket listings anyone?).

We may be wrong, but it seems like we are creating fixes on the run when what is needed is a full examination of how we are organized, whether that still works as intended and are there new structures and rules that are needed that reflect today’s reality.

Just a thought.

quixote-windmillI agree with Steve that left unaddressed these problems will merely create an environment ripe for invasion by yet other “external forces” that can send the industry in directions no one wants to see it go.

I was reaching for the phone to call Steve and offer my assistance in assembling the right people in the right room at the right time to try to solve these issues. But then I stopped.

My pitch to Steve was going to be, “You bring the brokers. I’ll bring the MLSs.  We both know a couple of influential association executives who could bring the Realtor organizations at all levels. Let’s get everyone in the same room at a large round table (think either King Arthur or Paris Peace Talks – no “sides” so everyone is equal) and hash this thing out. Sounds easy. But the doubts crept in as I put down the phone.

What would we talk about? Well, for starters, there’s the list of grievances prepared by The Realty Alliance and aimed at the MLSs and their Realtor Association owners. Many are superficial or apply to only a few isolated situations and could easily be fixed by taking a couple of people out to the wood shed. Others are but the tip of the iceberg and the most recent artifact of a much deeper malaise.

There’s an underlying current of doubt, mistrust, and apprehension that courses through these discussions. It sits like a mastodon in the room, ancient is his repose and invisible to any and all who choose to look around or through the hulking question that challenges every professional in the business: “How do we make this industry better?”

How do we elevate the practice of real estate to a level of professionalism that will foster trust from our clientele and confidence from our fellow practitioners?

How do we reform our trade associations into support organizations that work to the benefit of ALL parties in the transaction – buyer, seller, agent, broker – and not just two or three of the participants?

How do we construct a matrix of interrelationships where all of the pieces not only connect but support all the others and through those connections make the whole of the structure stronger?

How do we build a platform from which to lobby for laws, policies and regulations that promote and sustain the concept of home ownership as a cornerstone of economic prosperity where one’s home is one’s castle and in most cases the basis of one’s family wealth? Could such a platform be supported by both red and blue ends of the spectrum, left and right wings of the parties, and all shades and wings in between?

How do we stop the bickering between the parties which seems to be consuming far more energy and effort than could possibly be justified by the results? There seem to be no results – just continuing misunderstanding, finger-pointing, and ill feelings.

Could any of this be done at a level (national, state, local) and with enough support from all quarters to truly make a difference in how real estate brokerage framework is structured? Or are we too far gone, too deeply mired in our current morass to come up for air long enough to have civil discourse about these problems?

What is needed here is far more than just another real estate conference with panel discussions and break-out sessions where lots of platitudes are spoken but nothing is accomplished. We need something more akin to a constitutional convention with delegations from each of the constituent “states.”

we-the-people-9The assembly would need more than just a couple of days, but certainly less than the nearly four months it took the founding fathers to draft, debate, and adopt the new structure of an entire nation.

But the next step would be the trickier one. How do we ratify such a new structure? In 1787 it was fairly easy, even with 13 independent minded states joining together for the common good. On a simple yes or no vote, each state decided could it go it alone or would it be better off joining with its confederates to become stronger through union and common purpose. This time it’s trickier. One no vote by one vital “state” would/could undermine the entire effort. This truly needs to be all for one and one for all.

In the end, all the states joined. They joined for purposes similar to those which the real estate convention would be asked to address: to form a more perfect industry union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the benefits of home ownership to ourselves and our posterity.

Is this the impossible dream? Or are we as an industry up to the task? And if so, when can we start the quest?

For this post:
The Cause: an impossible dream?
The Effect: a glorious quest!

A few questions about SourceMLS

The post entitled What is a Listing? that went online 9/17 both on my blog and on Notorious R.O.B. drew a few public comments and more than a few private email messages.  Most of the email started off with variations of, “Don’t use my name or even mention you received this message, but . . .”  It seems there are a lot of people out there who have comments and ideas on this topic, but are afraid to voice them in a public forum.  Gosh, I wonder why.SourceMLS Logo

However one brave soul allowed me to use his letter so long as I didn’t identify the source.  I think I cleansed it enough to erase any trace back info.  Here it is.

I want to comment on SourceMLS. I’m relatively new and uninformed on many of these topics especially when compared to the veterans of CMLS, so to say I had to read and reread this multiple times to grasp the concepts is an understatement; which I found ironic itself, understanding the confusion. It is very possible I’m missing something which will make what I’m about to say sound very stupid but since this isn’t a public forum I’m going to risk embarrassment.

My question doesn’t actually pertain to the details and definition you discussed but rather what doesn’t make any sense to me is how this program/badge and initiative is going to be a catalyst for change and awareness for stale data and outdated listings? My understanding is if a site WANTS (perceived incentives to follow) to display this badge they need to, among other things, make adjustments to how they display and update listing data to try and comply with the terms of the program, some of which sound seemingly arbitrary. At this point, as you stated, CMLS decides if the website in question is “reasonably acceptable” to join the program. After going through that process, congratulations, you can display the (rather uninspiring) SourceMLS badge? The description of which (as it appears on the WAV Group site) is

“In effect, the SourceMLS initiative will act similarly to the way that the IDX disclaimer works today on your broker website. The principal difference is that your participation will play a role in supporting the industry with developing a professional real estate branded seal that consumers will grow to recognize and trust. Moreover, third party websites will not be able to display the seal unless they conform to the Terms of Use for participation.”

They compare it to IDX disclaimers displayed on websites. I’m just guessing now but I would be shocked if you asked 100 people who have looked at real estate online if they have read or even noticed the IDX disclaimer. It appears to me that the success of this program rests on websites applying to this program and updating their websites. The incentive for doing this, aside from having a better functioning website, is to be able to display a badge to users on your site, presumably you can also advertise that your site now has the badge and is compliant to this program vowing to only show fresh listings to attract more users to your site. Will the average user ever notice, care, or even understand what the badge means enough to dissuade them from using sites that don’t display it? Is this badge more meant to be symbolic like a yellow “live strong” braceletLivestrongBracelet that raises money and awareness for cancer, in this case brokerage websites standing together raise awareness and hopefully abolish stale listing data? I don’t see how this will help brokerage and MLS sites become more competitive? This is confusing on so many levels but I don’t want to start rambling in my email, hopefully I haven’t done that yet and my confusion/question is coming across clearly.

Apologies for the long email but I figured I would share the thoughts your blog posts elicit. (end)

Sue Adler and Rob Hahn created the event series Hear it Direct which stages panel discussions with consumers to give “real estate industry professionals stunning insight into the mind of their clients.”  If you haven’t been to one, I’d highly recommend it.  Often we “insiders” spend so much time talking to each other that we forget there’s a whole world of “outsiders” who often have the clarity of thought to pose tough questions we totally overlooked by being so deep in the weeds we can’t get out of the swamp.  This email was a prime example.  The author is not an MLS CEO, not a broker, or agent, or mortgage officer.  The author is engaged with all of those types of people and is a keen observer of the industry into which he has cast his fate.

So, to the planners of the project and authors of the rules of the program, I paraphrase the following questions from a member of your observing public:

  1. What is the real purpose of SourceMLS?
  2. How this will help brokerage and MLS sites become more competitive?
  3. Is SourceMLS more symbolic than literal?
  4. If you achieve the mission of creating a “branded seal that consumers will grow to recognize and trust” what do you expect the consumer to trust that brand to mean?
  5. And the $64,000 question, do the MLSs promoting SourceMLS really expect the badge will achieve enough notoriety and reach hallmark status so as to dissuade consumers from using sites that don’t display it?
  6. And if the answer to 5 is yes, what’s the budget and the anticipated schedule for that promotion? (More than $$64,000 I suspect.)

If there are no solid answers for these questions, perhaps someone should send them to Sue Adler and ask her to query her next panel for their thoughts.  I look forward to hearing those answers.

For this post:
Cause: 
Inquiring minds want to know
Effect: 
Out of the mouths of babes

So where’s the next post?

When I started this blog 10 days ago, I had a specific first major post in mind.  It was a piece I started to write over two years ago while still in Arizona.  It was an overall assessment of the state of the industry, focused primarily on how the MLS system might evolve in coming years.  It started like this:

There is a seismic shift coming, and coming soon.  I don’t know where it will come from, what form it will take, or who will initiate it.  I can feel it in my bones.  I feel like one of those earthquake-predicting animals that get credit for a sixth sense about natural disasters and flee to higher ground before the quake hits.

My sense of foreboding comes from a series of developments that when taken individually might be interpreted as just business cycles in flux.  But if one steps back and looks at the bigger picture, a pattern of motion starts to develop, a fluid dynamic of interconnected but constantly changing parts and participants, a pattern that we have not seen before, not in this magnitude. 

What followed was about 20,000 words of overview and insight, at least from my perspective, on the then current state of the industry and how the MLS might fit into its future state.  When it was nearly done, I asked a couple of key staff people to read it and react.  They read.  They overreacted.  But they reacted just as the leadership of that organization might have reacted had I delivered this report in its then current form, full of gloom and doom.

Fortunately, I was wrong.  In the two years since I wrote that introduction the world of real estate did not meet an untimely demise.  No earthquake.  No tsunami.  Perhaps a ripple or two was felt in the force as one wandered to the dark side only to return somewhat older and much the wiser.

So what will follow in the days to come is a rewrite of that assessment, updated with developments from the past two years and cut into easily digestible bite-sized pieces/chapters.  (I could never challenge Rob Hahn to a contest of longest run-on-sentence or wordiest post.)

So while I’m working on that piece, I will offer a couple of observations along the way.  The first is curating now and should be ready to post tomorrow.  Sorry for the suspense.

For this post:
Cause: 
Procrastination frustration
Effect:  Teasing preview

Why this blog?

On July 29, I left the employ of Zillow.  As I told Paul Hagey at Inman News, the task of soliciting direct data feeds from MLSs turned out to be more daunting than either I or Zillow had expected.  While I had detected some significant movement in the industry as a whole, particularly a lessening in the stridency of the complaints I heard when I first joined Zillow in early 2012, I could point to no compelling value proposition that the MLSs wanted, and that Zillow was willing to offer in exchange, that would lead me to believe the results would change in the near future.  We both recognized that reality, frustrating as it might be, and decided it was time for me to move on.

In the two weeks since, I have fielded no end of questions about where I want to go next.  My phone has rung with callers looking for advice on new ventures they are starting up, or have already begun.  Believe it or not, many of them start with questions about how to get data out of the MLSs, or what they can do with that data once they have it.  It seems I’m not the only one frustrated with the state of data licensing in this industry.  The confusion is rampant.

So what does an out of work former MLS CEO and former Zillow VP with nearly 25 years of industry experience to reflect on and draw from?  Why, he starts a blog and a consulting service, of course!  It gives me a platform from which to comment on happenings in our business, and to offer opinions that I might not have been able to offer previously for fear they would be attributed to the company for which I worked rather than recognized as strictly personal observations.

Please don’t expect any acerbic retribution on my part against any of my former employers.  That’s not my style.  And besides, even though I don’t work there any longer, I have the utmost respect for Spencer Rascoff and the team he has assembled at Zillow.  One had only to watch the interview with President Obama earlier this week to see the culmination of weeks, months of hard work by an entire team of public relations and marketing professionals to have a feeling of utter awe for that achievement and for the company.  As Greg Robertson put it, “Well played, sir.  Well played.

So where do I go from here?  Frankly, the paths are many but the choices few.  I am looking for the next calling, but have no preconceived notions about what that might be.  The most interesting career changes I’ve made have almost always been unexpected, spontaneous, and surprising.  Some of them worked.  Some did not.  But the roads taken have always been interesting.  I’m looking forward to what’s around the next bend and to sharing my adventure with you.

For this post:
Cause: Unexpected unemployment
Effect: Unassisted outplacement

Welcome

I’ve had a lot on my mind lately.  Most of it having been bottled up for months, years, decades, not published either because of lack of time, lack of energy, or an abundance of self restraint.

Short comments, medium essays, or long (some will say too long) diatribes, they will all dribble onto these pages as the feeling moves me.

I hope you enjoy the read.