ug. 10, 2011 - It's Complicated: MLS Questions
The celebrated (read “Notorious”) blogger Rob Hahn proposed a solution to the problems facing the Multiple Listing Service. In his most recent column, Rob said, “The MLS should cease collecting payment from the agent/member; it should, instead, collect payment directly from the broker, and only from the broker.” No more nickel-and-diming the sales associates and whoever else may have access to the MLS, no more collecting a thousand checks from subscribers when a single check from each broker/owner/Participant will do.
What this means, says Rob, is a more clearly delineated target market for the MLS: “the real issue will become whether the MLS’s own innovations deliver value to the broker, who pays the bills.” After all, the listings belong to the broker, as does the real estate company. Let the brokers decide what products to adopt and fund because the brokers know what makes sense to develop cooperatively and which should be left to individual brokerages to invest in: this way there will be no generalized ‘leveling the playing field’.
Hahn concludes, “I think this relatively simple change would go a long way towards restoring order while lowering conflicts in the real estate industry. Frankly, I don’t see a huge amount of downside. And it would be relatively easy to implement: some changes to billing practices are what’s required.”
A modest proposal indeed! Certainly not as complicated as boiling up a tasty Jonathan Swift stew instead of a constant diet of bland and mealy potatoes, eh Rob?
The question in my mind is, would that simple change in the billing structure really portend massive reforms? I once worked for an MLS that was not only quite small, but also slow to jump on the bandwagon of fads: hence it always billed the brokers for their use of MLS services based on the number of users in each individual brokerage. The Bake Sale Board of Realtors never quite caught on to the trick of billing each subscriber individually. “Too expensive and time consuming,” the business manager sniffed.
The BS Board even put it the issue to the brokers. One large broker thought it a grand idea, but when asked if he would pay a little extra to support salesperson billing, he wasn’t too receptive. Another large broker resented the MLS ‘coming between’ him and his sales staff. “And I don’t want competition for their money,” he said. “Salespeople pay me, and I pay the MLS.”
Oooookay. Changing to billing the individuals was not a good plan, the BS MLS decided. But as I re-read Rob’s article, I thought, “That was then, this is now. Wonder if MLSs today think Notorious Rob has a solution?” So I asked them.
The response was a fairly resounding yawn. One industry analyst wrote, “I did read this (article) earlier, but I didn’t have a lot of interest in commenting on something that the industry talked about quite thoroughly 15 years ago or more.” An MLS manager said, “I wrote an essay on this topic back in 2004…nothing has changed.” A former colleague reminded me: “I’m sure you can remember when many more MLSs were billing brokers rather than agents – we’ve been there, and we’ve done that and I don’t remember it making MLS more complicated when it changed. And brokers putting increasingly more responsibility on the agent for costs has been a trend that has only increased – a trend entirely initiated by brokers.”
Another voice, again an industry observer rather than practitioner or staff person, says the Hahn’s answer is too simple--that asking, “Wouldn’t it be nice if we could simplify the problem of who the customer is? But that question isn’t very useful. Note also that this wouldn’t change anything for many participants – one or two person shops. It would only screw up the cash flow for the largest brokers.”
One of the main reasons for the weakness of the broker-as-customer solution was stated this way:”The ‘Don't Level the Playing Field’ problem requires a process for its solution, not a project. In other words, you need to keep solving the problem over and over again, because it arises from a natural tension between individual brokers and the collective organization working on their behalf. (It's a little like "How much should government do?" The answer depends on the time and place and other factors.)“
Restated, this quotation means that it’s difficult to craft a static solution against the decision-making dynamic of competitors trying to cooperate in the best interests of all. The answer has to be re-invented each time a problem arises.
Bob, an MLS CEO agrees that the problem isn’t easy: “Fiduciary responsibility of an MLS is not as easy an issue to grapple with as it is in a traditional business. An MLS has many masters, all of whom must be served, sometimes to varying degrees at different times.
(1) Most are owned by associations, some of which expect a dividend payment (in a wholly owned subsidiary situation) or at least financial support (in a committee situation) from the MLS so they don’t have to raise dues;
(2) Brokers are the business owners that rely on the MLS to maintain a modicum of arm’s length control in an environment of cooperation between competitors;
(3) Agents on the street are the consumer of the lion’s share of the services the MLS provides; and
(4) Consumers are the beneficiaries of those services since ultimately they are the ones writing the checks (either to buy the house or to pay the commission). “
Bob’s final observation is one that all MLS administrators fully understand:” It’s the brokers who have the capacity to take their ball and bat and go home if they don’t like how the game is going. Because if they don’t like the practices of the MLS and no longer see a benefit but instead a liability, they will find another way to stay in business.”
“Ok,” my friend Matt challenges. “What do you think, Lindenau?” (No fair, Matt. Writers are allowed to hide behind the quotes of others….. )
Well, I’ll summarize my thoughts. Here they are:
1. It doesn’t make any difference who pays the bills, Rob. MLSs will never act as an efficient technology-based business service as long as the decision-makers (i.e., the board of directors) are neither business oriented (as opposed to being guided primarily by the profit and loss statements of their individual companies) nor technology proficient. User groups and technology-based business decision-makers are not the same thing.
2. There are only so many resources in any one organization’s bucket. We’ve spent most of our resources chasing after diversionary issues like this one. Real Estate is an industry in peril. Get used to it and address what we can of the real problems we’re all facing. Examine the dead elephant in the room—the corpse is getting smellier and smellier.
3. The current MLS dependency on single vendor relationships is one of our biggest weaknesses. Our vendors need to stay in business, sometimes at the expense of innovations which members require and technology makes possible. Data collection and information extraction, interpretation, and presentation are different things. It’s best if MLSs are not tied to a one solution provider for all of these functions.
4. As MLSs, some of our most pervasive problems come from the NAR organization itself. The issues of who should be members of the real estate business community is tied to licensing structures and job descriptions which are outdated at best, and NAR’s insistence on antiquated geographical boundaries for servicing members’ professional needs has consumed an inordinate amount of our collective resources.
I wish there were easy answers. I wish we could just change the billing system and solve all the issues. The pure fact of the matter is, most of these problems are very solvable—but maybe it will take an organization which can invent the answers without cumbersome politics and governance.
Hey! Maybe we could just appoint a bipartisan committee, and lay the responsibility in its collective lap….
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Wednesday, August 10, 2011
It's Complicated: MLS Questions : Off Stage