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Is It Wrong for the MLS to Make Money?

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Back from almost two weeks solid of being on the road… although it was a truly wonderful time at every stop, there really ain’t no place like home, y’all. šŸ™‚

in any event, a quick question/observation about one aspect of the crazy MLS world.

Is it wrong for the MLS to make money and be profitable?

Let me explain why I’m asking.

Mixed Messages

I just participated in a strat planning session (which was awesome) for a large MLS that is structured as a for-profit entity owned by a bunch of Associations. This is not an uncommon setup for an MLS, particularly larger regional ones.

The overall tone of the conversation suggested that the Board and the staff wanted the MLS to be run like a business, and try to maximize both revenues and profits. The thinking appears to be that when the MLS makes more money, it can reinvest in better products and services, and the Associations that own the MLS can benefit financially (so that they in turn can offer more products and services).

Thing is, there are quite a few MLSs I know of which are setup as non-for-profit entities, where the ownership/equity is meaningless (there are no dividends, and the equity cannot be sold/transferred). What I’ve heard from some of those folks is that they don’t think the MLS ought to make any money at all.

The reasoning of the no-dough crowd isĀ thatĀ the MLS exists as a member benefit, and its primary goal should beĀ to deliver those benefits at the lowest possible cost. Using the listings of its brokers and agents to generateĀ a profit makes the MLS no different than Zillow. (All conversations in real estate eventually end up at Zillow.)

Thing Is…

What’s sort of weird about this line of thinking is that I don’t see this “thou shalt not make any money” mentality anywhere else in the industry. I mean, there isn’t anyone in the real estate business out of the goodness of his heart. No one is offering free brokerage services as a non-profit venture that I know of.

Any vendor that isn’t the MLS gets paid, expects to make money, and when it does, the industry celebrates said vendor. See, e.g., not just the obvious like Zillow, but also Docusign, dotLoop, Boomtown, Placester,Ā or any of the dozens of companies that provide products/services to brokers and agents. Gary Keller is worshipped in some parts for his wisdom, insight, and leadership… and you can bet yer ass that his companies are making money. (It’s sort of a family motto over there: “Lead With Revenue”.)

For that matter, the vendors who provide technology and services to the MLS are expected to be profitable and make as much money as they can.

So I guess I’m a bit puzzled why the MLS is singled out. Why is it so problematic if the MLS tries to maximize its revenues and profits?

I honestly can’t figure this out, so any insight you can provide would be welcome.

-rsh

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Rob Hahn
Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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