To Be or Not to Be is Not the Question - The Eventual Demise of the Paralyzed MLS

I have long believed that the root of the majority of the competitive issues in residential real estate can be fundamentally sourced to the antiquated MLS.

Well, OK, so there’s nothing like getting one's opinion out early in the article!

Over the years, there have been an untold number of challenges to the way the MLS operates that actually substantiate my opinion of the current status of the MLS industry. And, these challenges have all been centric to this thing called data. Challenges related to selling data, relicensing data, leaking data, syndicating data, sharing data, cooperating with members or not, compensating members, the need to protect the misuse of the data or not and on and on go the examples.

Now, as Rob very accurately details in this blog post, the challenges to the MLS and its policies and rules have reached an all time high level of both industry and consumer frustration.

Before I detail what I believe led us to the juncture and what needs to be done now, here’s an observation I have made more than 3 years ago relative to the MLS and change. When it comes to retrofitting the MLS, that ship essentially sailed.years ago.

For all those that are frustrated with the inability for the MLS to change and adapt to the needs of the consumer and the industry now, bad news. Your frustrations with the MLS will exist forever.

So why is this the case, why can’t it be adapted to the new market needs? Here’s why.

The MLS was originally created as a resource designed more than 30 years ago by a growing industry made-up of largely small brokers and much fewer agents. Back then, a single broker was not able to represent themselves as having enough market presence to both list and sell a property without the help of others in the industry. Companies were of like size and agreeing to always cooperate and compensate established the desired "level playing field” that today many brokers have ironically grown to criticize and despise.

As a result, the industry has grown in the number of participants and now, in the opinion of many, there are far too many industry participants - brokers and agents - that have basically built their brokerage businesses on the reliance on the MLS and its mandated cooperation and consideration. Remove that mandated policy and their businesses cannot be sustained. In contrast, today the most successful brokers with scale have evolved to become very capable of existing without the MLS. And therein lies the challenge.

Leading brokers have excelled under the management of strong leadership to now have great presence in the market with a multitude of offices and thousands of agents under a single brand,. Such brokers are now capable of serving the needs of the consumer very efficiently WITHOUT the business need to "cooperate or compensate" with some or all of their competitors.

And let me be clear about this dynamic. Being able to be independent of the MLS and to align with consumers who desire to align with brokerages that are able to serve all their needs is not in anyway unfair or illegal. Outside of real estate such practices are called good business and are simply the strategies used to do business.

Hundreds of thousands of businesses outside of real estate throughout the Country outright refuse to provide a means for their competitors to cannibalize their business in order to help in anyway a competitor to exist or thrive. What we do in real estate is so foreign to them and I am certain that somewhere in Harvard Business School there has been a study conducted on the peculiarities of this odd business practice No other business has an MLS and the reason for that has now become apparent to even the brokers in the residential real state industry..

So the bottomline here is that those participants who now depend on the outdated policies and rules of the MLS to sustain their businesses will, for very obvious reasons, NEVER allow them to be changed.

In Rob’s post he suggests a “what if scenario” with regard to those that have made the choice to challenge the mandated cooperation and consideration policies of the MLS and what could happen if certain progressive industry participants refuse to comply. Leave the MLS, form something new, align outside the MLS with others that share like thinking? All crazy talk? I think not. And here’s the reason why.

So what now?

I suggest that those brokers who feel "competitively constrained by the MLS" and want a system of greater choice now seek another source other then the MLS for their data management, distribution and licensing of their data. A new utility, specifically not an MLS, is needed that is untethered from orgainzed real estate and its constant influence to assure a level playing field for all.

I have been saying it for the past three years plus and I will say it again here and now.

When it comes to adapting the MLS to your business needs, it is my opinion that it is truly the time now “to throw the baby out with the bath water.”

So what's next for you, your business and for the MLS? There are a myriad of possibilities and making them a reality is now completely up to you. This is your industry, these are your customers and the world is waiting for your next move. As is the case in all other business decisions, you will decide to lead, follow or get out of the way my friend. You are the sole determining factor to realizing the full potential of your future, and more than ever now, you need to be free to make those choices you require to navigate your company successfully through these very fast-paced times of change.

Time is of the essence.

Have a great day.