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NextMLS: RPR Upstream/AMP and the Value of the MLS

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I love James Dwiggins, CEO of Nexthome. He’s a really sharp guy who knows the business inside and out, backwards and forwards. And I think his perspective is somewhat representative of the more enlightened brokers who truly get technology, its uses, and its limitations. So when he posts this on Facebook earlier today, I thought it a perfect jumping-off point to reiterate something I just don’t see talked about very much.

RPR Upstream/Amp Diagram
RPR Upstream/Amp

James then commented on the photo:

_2__James_Dwiggins_-_Timeline_Photos

There’s a lot to unpack here, but bottom line is that this view of the MLS will surely lead to the destruction of the MLS one way or another. Strategic planning committees and leadership of MLSs around the country really ought to start examining the core identity/value issue presented here. Let’s dive in.

James and the Giant MLS

James is halfway correct when he says that AMP/Upstream would have to build an interface that takes in all the same data as the MLS. RPR AMP/Upstream is a parcel-centric database, as the graphic shows, which means that no data is entered except for “listing-specific” data such as price, start date, etc. and any edits to the underlying property data. One of the beauties of the RPR system (which Zillow also has) is that listing entry takes a few minutes if the underlying property hasn’t changed dramatically (i.e., additions, new bathrooms, etc.). But that’s a technical detail that actually helps James’s point.

RPR Upstream can indeed serve as the single Add/Edit point for brokerages who are participating in Upstream. RPR would then “push” the data to the local MLS, as well as to any other destination (e.g., Zillow, virtual tour vendors, “RPR-IDX”, etc.) that the brokerage wants to send the listing.

James believes that this naturally leads to a “National MLS” and frankly, he’s correct… IF the MLS is a database and a tech platform for handling data.

One of the biggest pain points for brokerages, especially larger ones who span multiple MLSs, or those on the border between two or more MLSs, is having to deal with multiple systems with multiple user interfaces, multiple databases, etc. If you’re on the border of multiple MLSs, the problem is even worse. Enter the listing in MLS A, then again into MLS B, and if anything changes, make sure you update both MLS A and B. Office ABC has to be trained on MLS A, but Office XYZ on MLS B, and so on and so forth. It’s an awful situation. We all agree on that.

Initiatives like “data sharing” aim to lessen the pain, as MLS A and MLS B will share data with each other, so cross-border transactions don’t require multiple data entry/editing. But data sharing doesn’t completely address the pain.

The answer would be a National MLS — or at least a very large regional MLS — with a single front-end, single database, single system.

Thing is, I regard this entire discussion, this entire line of thinking, as evidence of operational failure on the part of existing MLSs. The systems suck, plain and simple. But I’m not blaming anyone — the reasons for the suckitude of the contemporary MLS system are myriad and complex and it’s not as simple as just accusing the MLS of incompetence. (Though, to be fair, there are MLSs where incompetence is the rule, rather than the exception.)

So the question then becomes, suppose that every MLS in the country gets on AMP, has an awesome parcel centric database with uniform data entry/edit front-ends. Does that make the whole “National MLS” issue go away? The answer is No. Because the MLS is not technology and is not the database.

The Impossibility of a National MLS

I wrote back in 2013 that a National MLS is quite unlikely, because I took a road trip from New York to Houston:

Second, as a result, there is far too much variation between urban/suburban areas and rural/exurban areas. Driving from say Fairfax, VA to Woodstock, VA — a distance of only 80 miles, or an hour-and-a-half of driving — is quite like going from one country to another wholly different country. In fact, I imagine there’s less difference driving from one side of the Canadian border to the other. In Fairfax, you see huge office and shopping complexes, and subdivisions, and apartment complexes, and an hour later, you are driving across miles upon miles of undeveloped forest land or wide open spaces of the American farm.

Third, there really are enormous regional differences between the people. We’re all Americans, sure, but somehow, there’s a real difference psychologically and culturally between the Dunkin Donuts guy in Staten Island and the Iron Skillet ladies somewhere in Alabama. What would pass for friendliness in one would be considered downright rude in the other. The aesthetics are different. The lifestyle is different. Even the language is different in subtle and not-so-subtle ways. The diversity really adds to the fabric of the whole, but it also makes the idea of a one-size-fits-all MLS really seem fanciful.

Even then, I wrote the above because I don’t view the MLS as a technology provider. I view it as a lawgiver, an entity that makes and enforces rules.

So while there could be a national database, a national single-entry system, and a national technology platform, there can’t be a national MLS until and unless one set of rules would work for everyone across the country.

What I wrote in the “What is the MLS, Post-AMP” post is right on point here: “The value of the MLS is in the certainty of behavior and the transparency of the transactions.”

What Is It That Brokers Want?

As we move forward into the strategic discussions that are long overdue, because of the pressure of Upstream and new technologies, there is a frank discussion that needs to happen. And it’s brokers like James who will need to be forthcoming.

What is it, really, that brokers want?

Is it a modern system that allows for single point of entry for Add/Edit for all their listings, across disparate MLS marketplaces? That’s entirely doable, and today. Upstream/AMP is one solution, but others exist, ready to be tapped.

Is it, as James wrote later in a comment, “control and leverage over MLS policy and anyone else for that matter?” If it’s control and leverage over MLS policy, then the situation is different. If it’s control and leverage over “anyone else”, then we need to ask who those anyone elses are, and what is the control/leverage sought, and why.

As longtime readers know, my opinion is that Upstream is about power, about brokerages feeling as if they don’t have as much control as they want over the MLS itself. The larger brokerages particularly resent the fact that they have no more votes over the MLS and its decisions than does a two-agent ma-n-pa shop.

That feeling, that motive, is at odds with the core mission of the MLS, as the lawgiver. If the real conflict here is that big brokers want to rule the MLS and shape the rules and policies in such a way so as to advantage them over smaller competitors, then the effort will be a bloody — and I think ultimately — unsuccessful one. Because a marketplace cannot function only for the benefit of the largest players. A marketplace has to have rules that apply to and work for every participant; a very large brokerage might indeed benefit, in the short-term, by creating rules that advantage them. But over a fairly short period of time, everyone else would see how the rules are stacked against them, and create/find a different marketplace with fair rules.

The Solution: Equality of Opportunity, Not Equality of Results

I believe that there is a compromise solution for both the large brokerages and the MLS community. I wrote about it earlier when discussing the Modular MLS:

The Modular MLS fundamentally transforms the relationship between the MLS and the brokerage, of any and every size. I’ll have to dig deeper into this topic in a future post, but for now, think of it as the difference between providing equality of results (what we have today) vs. providing equality of opportunity (what we’ll have tomorrow).

Upstream/AMP and other technologies now available make it possible for the MLS to get rid of the distraction that shrouds its core identity. The technology platform, the Add/Edit module, the single point of entry, liberated data, and brokerages able to do what they want with their listing data — all of these things are possible.

The days of a brokerage not being able to get its own listing data out of an MLS system, or having to train seventeen different offices in seventeen different MLS “platforms” are numbered. Those are problems that technology can and will solve.

The problems that technology cannot solve are things like whether cooperation and compensation should be universal or not. They’re things like whether a listing should have a start date (when the listing agreement is signed) and a display date (when the listing should be publicized), and when a listing should be considered “off-market” (verbal acceptance? contract signed? close of escrow?) Those are policy issues, and marketplace issues.

To solve those kinds of problems, the large brokerages have to compromise some level of control in order to create a market environment in which others want to participate. That market environment, that mechanism, already exists in the MLS.

But… two things have to happen for such a compromise to make sense.

First, the MLS has to embrace the concept of equality of opportunity, rather than equality of results. Advances in technology, like AMP, like Upstream, like Modular MLS, make that possible. Instead of being forced into one Add/Edit module, or one CMA that comes packaged with the MLS platform, or one tax system, or offering out a transaction management system for all subscribers, each broker can pick and choose which product it wants its agents to use. Or, if the broker is a very large one (like say the NRT, which owns the ZipRealty platform) and it wants to build its own, it can do so easily.

But possibility is not reality, until the MLS itself decides to make it reality. That means embracing the idea, and stopping practices like “site licenses” for all subscribers for things that not all subscribers need or want. Under this ideal, every participant, every subscriber, has the same opportunity to use the MLS, use the data, use the technology, but the MLS is no longer in the business of providing actual products themselves.

This is the compromise to me. Larger brokers with more resources and money might feel they have the advantage, but smaller brokers can be more nimble and more creative. Both have the same opportunity to make and build what they will, but the MLS does not dictate to either one the products they must use. The rules themselves need to start reflecting this “equality of opportunity, not equality of results” concept as well.

Second, the MLS has to take a hard look at its governance model. Big brokerages might compromise for the sake of an equal and transparent marketplace with equal access to all. They’re not going to compromise just for the sake of compromise, nor are they going to be happy with feeling disadvantaged because they don’t have a larger say in governance matters.

That means MLS Boards and leadership have to take a very strong look at their governance models going forward. What works? What doesn’t work? What could be done to help the larger brokerages feel more involved, more in control, but without trampling on the rights of their smaller competitors? There are a whole lot of things that can be done, but the MLS has to want to at least look at those options. It cannot just dig its heels in and get into a war of wills with the brokerages.

TL;DR Conclusion and Summary (and tiny sales pitch)

So, for those who didn’t want to wade through 2K words… or for those that did and just need a summary…

  • National MLS is impossible, because the MLS is neither technology nor data
  • The MLS is the lawgiver: it makes rules and enforces them
  • The rules, and the MLS as a whole, must embrace the concept of “equality of opportunity” rather than “equality of results”
  • Technology enables that concept through things like RPR AMP, Upstream, and the Modular MSL in general
  • If Upstream is really about power and control and governance, then the big brokerages have to accept some compromises in order to create a fair and transparent marketplace that all participants want to be part of.
  • For that to happen, the MLS needs to take a look at its governance model to ensure that it is fair for everyone involved.

There. Not to promote my business interests too much but um, yeah, if you’re an MLS at that crossroad, give me a call. 🙂

-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.