Notorious R.O.B.

See that green pattern on the bark! That's 3.2(b)(iii) of the License!

Once again, I find myself in the curious position of praising the good folks at RPR while at the same time ending up on a negative note.  On the one hand, RPR’s posting their Content License Agreement (complete with redlined corrections) is by far the most transparent thing that I’ve seen a company do in real estate industry thus far.  Kudos not just to Reggie Nicolay, the Social Media director of RPR, but also to Marty Frame and to Dale Ross, the executives in charge of RPR.  These guys talk the talk, and walk the walk of being open and transparent.  Thank you guys, and I really mean that.

If you’d like to look at the entire Agreement, including the Terms of Use for the RPR Website, go to the Google Doc here.

Some of the critiques already on the web may be entirely valid, but I think they largely miss the point.  For example, Mike Wurzer’s post suggesting that the new License Agreement allows RPR to sell listing-level data to various customers may be accurate (or may not be, as Marty Frame points out in the comments), but… this falls into the category of missing the forest because you’re too busy looking at whether the tree is a douglas fir or a pine tree.

There are three major, fundamental issues that the License Agreement does not address — primarily because those issues stem from RPR’s business model and its basic value proposition.  If the goal is to nitpick the language of the Agreement in the hopes of finding a provision on which one can base a future lawsuit, I suppose the detailed analysis being done now is interesting.  If the goal, however, is to understand the fundamental challenge of RPR, then we need to raise our eyes up a bit.

Read the rest of this entry »

Photo: Mick oOo, Flickr

If you’re on the RE.net, then you know that the hottest topic within the community right now is the issue of NAR’s ruling that search engines are no different from scrapers.  Even my post on this blog talking about social media process using just the NAR handling of the issue as an example got enormous traffic and commentary.  I think it’s fair to say that the overwhelming opinion within the RE.net community is one of outrage, anger, and outright rebellion against MIBOR and against NAR.

So it was a surprise when I got an email from a reader who asked for anonymity expressing a contrarian view.  S/he is a REALTOR who actually agrees with MIBOR’s ruling (backed up by NAR) that indexing of IDX listings should be prohibited and MLS members should be forced to block search engines from finding those listings.  I encouraged him/her to post the email as a comment, but got a firm refusal, as s/he was worried (with some justification, I think) about possible negative reaction from the RE.net.

In fact, I ended up chatting with this REALTOR and agreed that instead of posting his/her email, I would just understand his/her point of view then write it up myself.  While I wouldn’t normally bother, the issue is an important one, and the sensitivities are such that I felt it would be helpful to the conversation to present a contrarian opinion without fear of retribution or accusation of bias.

Read the rest of this entry »

So here I am cruising the Interwebs, checking out various posts from around the RE.net, and I run across this jewel of a post from Marc Davison and Brian Boero, then gents behind 1000watt.  The post itself is interesting reading, and I’m not sure if I agree 100% or not, but there’s much food for thought there.

What I find even more interesting is in the comments, where a Greg Tracy (seems, of Blueroof.com) writes (among other things):

Don’t mistake my candor for pure bittnerness- this is about transparency and telling it like it is- from the perspective of someone who pays over $12,000/year to my local MLS (as an agent) to use the data for my website. Think about that- I pay $300/year in dues to the MLS, give them my listing data and then have to pay $12,000/year just to display the MLS data on my website. And I have to jump through all of their stupid restrictions and rules. I can’t show agent remarks on my website even though agents can show them to their own clients. I cannot show sold data, even though agents can show this to clients in a CMA. These are restrictions that the MLS doesn’t have to impose on itself, and does not impose on their “partner” Realtor.com. But there is nothing that I, or anyone can do about it because they are a monopoly. (Emphasis mine)

And I got to wondering… why the heck is this MLS a monopoly?  I mean, as Greg himself points out earlier in his comment, MLS’s are for-profit ventures seeking to make money from membership dues and whatever ancillary revenue streams.  They aren’t governmental entities.  They are not granted — as far as I know — charters by any level of government to operate a monopoly.

The technology involved in a MLS these days is trivial.  A reasonably competent database programmer could probably set it up over a weekend.

Why aren’t we seeing tons of MLS’s popping up all over the place to compete for Greg’s (and other disgruntled current consumers’) business?

Is it a network effect issue, where once all the realtors in a given area are on a particular MLS, the game is over?  (Like eBay?)  Is it a finance issue, where the profits from operating a MLS are so low that entrepreneurs aren’t tempted to offer a better service experience at lower cost?

Greg is a pretty serious tech guy if he created Blueroof.com — why isn’t he just creating a competing, for-profit, MLS premised upon “Better service, at lower price” and stealing the crap-MLS’s lunch?  No politics — Greg owns the damn thing; he’s responsible, and he’ll reap the profits when they come.

This is a serious question.  I just can’t understand why these MLS’s, who are apparently so poor at serving their customers (brokers and agents) and are charging far too much to provide crappy service, aren’t going bankrupt due to nimbler, more customer-friendly competitors.

Anyone know?  What am I missing?

-rsh

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

- Rudyard Kipling, The Gods of the Copybook Headings

Brian Larson, swiftly becoming one of my must-read bloggers, posts a thoughtful argument that I’m far too cynical. Which is entirely possible.

He posits that my observations about what the recent VOW rules mean for an MLS appear correct:

1) An MLS public website is not subject to the VOW signup requirement.

2) An MLS can create truly ridiculous IDX rules, because IDX was not covered by the NAR-DOJ settlement.

3) An MLS cannot not prohibit brokers/agents from sending listings to Trulia/Zillow/etc. as that would violate Sherman Anti-Trust Act. But the MLS is not required to provide Trulia, Zillow with any data either, unless Trulia signs up as a broker subject to VOW rules.

But, Brian goes on to say, the MLSes are not nearly as evil as I presume them to be, nor are the requirements of VOW such a major deal.  His argument (which you should read in full, by the way) is premised upon three assumptions and recent trends:

First, the “VOW signup requirement” is not all that daunting anymore. So many applications folks use online now require registration. The key is to ensure that the consumer trusts you will not bombard her with crap email after she registers. You cannot use Facebook or MySpace without registering…. In the real estate space, I expect we’ll see more applications that rely on registration, or that at least have an “account” mentality. 1000Watt’s post about Dwellicious suggests that it might be an example.

Second, I think the VOW policy gives many MLSs incentives to make their IDX rules more open. By including more fields and statuses in IDX, the MLSs can make it easier for a broker to deliver information through the more-regulated IDX method, rather than encouraging her to use a VOW, which is harder for the MLS to regulate and monitor. I have MLS clients that have already indicated to me their intentions to take this approach. (In fact, I speculate that restrictive IDX rules will actually make it easier for brokers to get consumers to register for their VOWs. “I can show you X more listings if you register….”)

Third, many MLSs have embarked on “listings syndication,” which makes it easy for their brokers to send listings to places like Zillow and Trulia. We did a whitepaper on syndication this last spring (though it seems hopelessly outdated to me now). MLSs recognize the value they can bring to their brokers with syndication. Some still have “protectivist” tendencies, but I think the trend is moving to more syndication.

On this basis, it does indeed appear that I am merely a huge cynic.  Again, I grant the possibility of that.

However, the Gods of the MLS Headings are not so kind.  Thousands of years of human history have taught us not to overestimate the level of charity and goodwill in your average person, nation, or organization.  It is a rare person, and an even rarer company, that forgoes self-interest in the name of community.

Let me delve deeper into each of Brian’s points.

Signup requirement is not daunting

The problem with this analysis, however, is that it takes an objective stance on something that is entirely relative.  While it may be true that the VOW signup requirement is in and of itself not daunting, the real issue is whether it is easier or more difficult relative to other alternatives.

There is no version of Facebook that does not require signup.  There is, however, a version of the VOW website that does not require signup: the one belonging to the MLS.  So faced with two choices — one, a realtor website where I have to signup and provide my email address, and another, a MLS website where I do not — I am going to select the one that puts fewer requirements on me nearly every time.

Furthermore, a requirement’s ease or difficulty stands in relation to the value delivered.  I don’t find it all that daunting that I have to study, take both a written exam and a roadtest, before I am allowed to drive a car.  The value delivered (driving) is sufficient for the requirement.

Facebook and MySpace, in order to deliver its value (personal space to connect with friends) has to have your personal information.  Plus, the value that it delivers is sufficient for consumers to want to signup.

YouTube, on the other hand, will go out of business if it requires signup before a user can view a video — because a competitor will arise (such as Google Vide0) that will drop that requirement.  The personal information is irrelevant to the value delivered: viewing a video.

In real estate web, having to deliver my personal information to a realtor just to view listing information is a pretty large stumbling block.  I know intuitively as a consumer that you don’t need to know my name or my email just to display photos of a house, or show me how many bedrooms and bathrooms it has.  So I deduce (correctly) that the only reason you want my information is to try and sell me something.

Under these factors, I submit to you that the temptation for the MLS to create a public-facing VOW-powered website freed from the signup requirement — that it must place, by law, on every other participant — is rather huge.

Let us not forget that MLS organizations these days are not exactly rollin’ in the cash.  Many of them are facing fundamental questions from their membership about the value being delivered to them for their annual dues.  There is a growing trend of real estate agents electing not to be part of the MLS, or paying absolutely the minimum for access to listings, and complaining bitterly about the dues being charged because the MLS doesn’t “do anything for me”.  And companies like Trulia are only helping to accelerate that trend.  No wonder that MLSes are heavily investigating public-facing websites then — being able to deliver consumer leads to its membership may be essential to the very survival of the MLS.

The incentive is large; the tempation is huge.

VOW Improves IDX

Brian’s next point, that the VOW rules may lead MLSes to relax their IDX rules so that their members can manage listings via the controllable IDX feed instead of the uncontrollable (by law) VOW feed simply doesn’t take incentives into account.

The MLS has major incentives to tighten IDX rules (as above) to make it a very unattractive option.

All participants have an incentive to display as much information as possible on their own website, in order to drive leads and conversion.

The listing broker might have incentive to try and control how its listings are displayed on competitor sites via IDX, but no broker is a pure listings broker who doesn’t take buyer inquiries via its own site.  So their incentive to want to control listings is canceled out by their incentive to want not to get controlled by others.

The incentive for brokers is to use IDX as bait to get a consumer to signup, so that they can show them the VOW data.  The trouble is, there’s already a website out there that shows consumers the full VOW data without signup: the MLS public website.  Do brokers truly care, if they are receiving rock-solid leads without charge from the MLS site?  The experience of companies like Houston Association of REALTORS suggests that they do not.

I submit that Brian’s clients who have indicated that they plan to relaxing IDX rules will either (a) swiftly scale back those plans, or (b) go out of business when a competing MLS implements the cash-generating cynical strategy I outline.

Trend is Towards Syndication

I agree with Brian that the trend was towards listings syndication.  It benefited the agents and listings brokers (and their clients) so much to be able to market listings to dozens of websites with the push of a button.  The MLS, in effect, was charging its members dues to provide the syndication service.

However, that was prior to these particular incentives setup by these particular rules.

After these VOW rules are fully implemented, I believe the incentives have changed.  Because now, the MLS can absolutely control third party sites like Trulia, whereas they could not do it effectively beforehand.

First, for third party aggregator sites to take VOW feeds, they have to become a participant in the MLS, subject to all of the rules of that MLS.  This rule now has the force of law.

Second, since the VOW settlement doesn’t address IDX at all, the MLS can provide an incredibly obnoxious IDX feed to the third party syndicators, say they are providing syndication (which is true), but at the same time, really build out its public facing VOW-powered website.

Third, the MLS can simply cease providing syndication to its members.  Instead, it will provide cost-free leads direct from the MLS public site.  Which service is the member more likely to value?  The lead, or the chance to get a lead from a third party aggregator?

Idealism vs. Gods of the MLS Headings

I actually like to think I’m an idealistic fellow.  I care about my fellow man.  I care about this industry.  I care about the many wonderful professionals I’ve had the pleasure and privilege to meet.

But at the same time, I can’t ignore the economic incentives now at play thanks to the DOJ-NAR settlement, which gives the VOW rules the force of law.  I can’t ignore the fact that MLSes are losing membership — partly because of the market, but partly because their value to members has been decreasing for the past several years.

Since MLSes are not government entities run without care for covering costs, but are private companies that must generate enough revenue to pay for its costs, I have to think that making money (through membership or other means) by providing greater value has to take priority over every idealistic principle any MLS executive.

Indeed, even if the MLS executives want desperately not to take advantage of these rules, the economic realities may force them to do so.  It’s hard to be idealistic if you’re dead.  Survival is the first moral principle, after all, and that applies both to individuals and to organizations.

I hope that Brian can continue to be an influence in the industry, and that not all of his clients go down my cynical path.  That would make Brian sad.   Which would make me sad.

On the other hand, is it really such a bad thing for the industry, and for consumers, if there were at least a few websites (all of them owned and operated by MLSes) that provided people with the full VOW listings information without requiring signups, jumping through hoops, and the rest of it?

-rsh

I think I might have fallen in love with Larson/Sobotka.  I haven’t the faintest idea who they are, but it looks like they combine some business consulting with legal work with something else involving MLSes and such.  Bears looking into more.

But they have done a great service for the RE.net by compiling a guide to the new VOW policy.  In fact, they call it a clearinghouse for the new NAR VOW rules, and I think it fits.  There’s a lot of depth here, and a lot of breadth.  Check it out in full.

For myself, I immediately zeroed in on this:

What a VOW is

For purposes of the DOJ/NAR settlement, a VOW is:

A web site, or feature of a web site, operated by a Broker or for a Broker by another Person through which the Broker is capable of providing real estate brokerage services to consumer with whom the Broker has first established a Broker-consumer relationship (as defined by state law) where the consumer has the opportunity to search MLS data, subject to the Broker’s oversight, supervision, and accountability. (See Policy Section I.1.) [Emphasis mine.]

Interesting.  The law-school training kicks in and I see at least three questions to be resolved, probably through litigation:

1.  What does “providing” mean?

2.  What sorts of activities constitute “real estate brokerage services”?  Is this governed by state regulations?  Or is this to be under some common law agency theories?

3.  If state law defines “Broker-consumer relationship”, then what to make of provisions like this one from Delaware?:

Entering a name and email address on an Internet or World Wide Web site is sufficient to establish a broker-consumer relationship for the use of that system, but does not in of itself create a broker-customer or client relationship for any other purpose.

Especially in light of the clause that reads, “capable of providing real estate services” in the NAR DOJ settlement, under Delaware law, there may be enough of a relationship created by entering a name and email address to use a VOW but not to take advantage of any of the real estate services provided.  Does that even make any sense?  Isn’t the display of property information itself a “provision of real estate services”?

Or does the NAR-DOJ settlement override Delaware law by operation of the Supremacy Clause?  Even when it specifically says state law controls definition of “Broker-consumer relationship”?

Heh.  I love regulations written by lawyers, don’t you?

But Larson/Sobotka has more riches in store for us:

• An IDX site is not a VOW. IDX is an MLS policy under which a brokerage firm participating in MLS grants permission to other brokers participating in MLS to advertise its listings on their web sites, in return for their permission to advertise their listings on its web site. IDX sites are governed by MLS IDX rules, which are entirely unaffected by the settlement. Note that a brokerage firm can operate both an IDX site and a VOW at the same location on the web. (For example, the brokerage can show the consumer some information on its IDX site but then require her to register to see the information available only through its VOW.)
• Zillow, Trulia, and other national aggregators and commercial distributors of listings are generally not VOWs. (Note that these sites are not IDX sites either, and the data feeds that some MLSs provide to them are not “IDX feeds,” as they are sometimes erroneously labeled.) These companies may receive listing data from brokers or MLSs, but display of those listings is subject to the agreements between the brokers or the MLSs and the aggregators. Neither the settlement, nor any of the policies imposed under it, applies to any of these types of sites. Note that if Zillow or one of these other sites were to become licensed as a brokerage firm, become a participant in an MLS, and actively assist consumers in buying or selling real estate (or both), it would be eligible to operate a VOW.
• MLS public consumer-accessible web sites are not VOWs. (Note that these sites are not IDX sites either, as they are sometimes erroneously labeled.) A VOW is by definition the web site of a real estate broker. An MLS could operate a VOW only if it were acting as a real estate broker – we are aware of no MLS that claims the right to do so.

If for nothing else, Larson/Sobotka deserves some sort of award for spelling these things out so clearly.  Now, to be sure, these should be construed as opinions of one law firm until litigation gives us definitive court rulings, but they strike me as being largely correct.

Assuming that Larson/Sobotka’s interpretations are correct, there are many implications that flow from the above three observations.

One, if IDX is entirely ungoverned by the settlement, then as Brian Larson points out, one can expect that the industry will begin to move towards VOW websites and away from IDX sites.  That could, in theory, be a Very Bad Thing for brokers and agents, however, as the plain fact is that imposing a “signup requirement” to consumers (especially if defined under state law, and that state law is onerous) will drive consumers away from such websites to those that are far more user-friendly.  How that will play out is wholly unknown.  Perhaps MLSes start relaxing IDX rules in response; perhaps brokers start working through their Real Estate Boards to change state regulations; perhaps something else altogether.  But this could be huge.

Two, if Zillow, et. al. are not VOW sites, then they do not fall under the protections (if that’s what they are) of the NAR-DOJ settlement.  So brokers or MLSes can explicitly prohibit its agents or members from giving data to these national aggregators without running afoul of the Settlement. Now, before you shrug, I happen to think there’s a fairly high likelihood of this happening.  Why?  Because of #3 –>

Three, if public-facing MLS websites (such as www.har.com) are not covered under the Settlement in any way, then they also don’t have to follow the “Broker-consumer relationship” rule either.  Which means that of all of the possible websites out there, only the MLS or Realtor Association websites can have all of the property info on every single listing without being subject to IDX rules, and without having to share any of those privileges with anyone else.

In other words, unless I’m totally misreading this, it seems to me that we now have a situation in which HAR (just to use an example; not that they would do this) could

1. display all of the listings info on HAR.com without limitation, and without the “signup” requirement;
2. prohibit all members of HAR from sending any data to Trulia, Zillow, or any national aggregator; and
3. force brokerages to use either shut-from-the-public VOW requirements, or ass-backwards IDX rules filled with purposely inane requirements to discourage the use of IDX.

Wow.  Just wow.

If this is a correct reading, then I differ with Brian Larson only in that even if there are 10,000 VOW’s by 2010, there will only be 50 websites by 2010 that any consumer goes to.

And how does this impact Realtor.com?  As Brian points out, nothing in the Settlement even mentions Realtor.com at all:

The settlement between DOJ and NAR makes no reference whatsoever to Realtor.com, either in the settlement agreement, in the attached VOW policy, or in the attached policy regarding the definition of “participant” in MLS. (In fact, the DOJ press release makes no mention of Realtor.com, either.) The DOJ lawsuit, and its settlement, deal almost exclusively with “virtual office web sites” which are by definition web sites of brokers participating in MLS offering brokerage services to their customers/clients. Realtor.com is not a VOW.

So Realtor.com is not a VOW.  Does its special relationship with NAR give it the same access that all of the local associations and MLSes now have? Will it be the sole national real estate website that can offer all of the information on a listing without requiring a consumer-broker relationship?

I’m thinking the answer might be Yes.

Talk about a seismic shift in the online real estate world.

Am I missing something crucial here?  Am I misinterpreting things?

-rsh

PS: I’m definitely adding the MLSTesseract to the blogroll.  A great site if you’re into some of the details of this stuff.

You mean MLS does not stand for Massive Large Shotgun?

The conversations continue. It appears there are a whole bunch of folks who want to talk about the future of listings. And rightfully so — listings are important to the modern practice of real estate.

The latest salvo marks the return of David Harris of Geek Estate to blogging, and it’s a good one. Read the whole thing.

David begins with a brief overview of the major points over the past couple of years on what the “MLS of the Future” might look like. Then he points out a very important fact — what he calls the “elephant in the room”:

The “MLS” exists for the benefit of its dues paying members, drifting from that core concept will get you confused with the Zillow / Trulia gang (an exciting party until the money runs out).

And those dues paying members want what? To make more money faster by using the MLS. And if you look at it from that perspective, almost everything from listing data quality, system security/reliability, IDX, etc either play to the speed or value aspect.

This is, in a way, an important fact that has been somewhat overlooked in all the futurism talk — including, by me: an “MLS” has to make money.

It seems so obvious now that David has mentioned it, but I’m sorry to say I overlooked the whole thing in my enthusiasm for and starry-eyed vision for some MLS of the Future.  He’s right — an MLS exists because people think the service it provides is valuable.  They express that value through their wallets — they pay for it.  David calls it “dues” but generically speaking, it’s a subscription fee of some sort.

The rest of David’s post is concerned with the speed/value question, and thoughts on what features and benefits the MLS of the Future (hereafter, “MOF“) could offer.  I will take things in a different direction, by looking at the implications of “must provide value to subscribers”.

The MOF Will Be A Monopoly

Once I start thinking about money, the elephant in the room, I am more convinced than ever that the MOF will be a monopoly or an oligopoly.  Either we will have a single national MLS operated by a single entity (e.g., FBI fingerprint database), or we will have a national system comprised of two or three major players (e.g., NYSE, NASDAQ, CBOT).

The reason is economies of scale.

Technology development is very expensive. Even the most seemingly trivial feature could take weeks or months of expensive developer time to make reality. You may need to hire dozens of developers, software and hardware engineers, systems architects, and all the support staff to keep them productive and happy. But creating technology is in some ways the easier task.

Since the MOF like any MLS is financed primarily through subscription fees, and the subscribers see value in terms of “help me make money faster”, the MOF has to continually invest in technology to help its subscribers make money faster.  Note that this precise business relationship is what a number of subscription based “web tools vendors” have with their subscribers.  If an MLS does not invest, because of a lack of funds or lack of skill or lack of will, someone else will.

Today, each “MLS ” is simply far too small to sustain the sort of technology development necessary for breakthroughs.  Even a large and powerful MLS such as HAR only has about 25,000 members.  Given that revenue base, even HAR is limited on how much it can invest into new innovations.

Bigger budgets mean bigger cigars

A monopolistic or oligopolistic MOF, however, that specifically intends to capture the entire national market has a much larger pool of “buyers”.  Its market is simply larger, and can justify and sustain a larger investment into the product.  Spending $25m on a new social-networking feature is much easier if your customer base is 500,000 realtors in all 50 states, vs. 25,000 realtors in one state.  It’s the difference between having to charge each subscriber $50 or $1,000 for the feature.

While it is important to recognize that rulemaking is a key value to some of the participants at an MLS, as David wrote, I don’t believe the politicking, sitting on boards and committees, and writing up rules is as high up on the value chain as “make more money faster” for most of the members.  Even if a hardcore cadre of realtors want to preserve the local independent MLS for the sake of controlling the local market, the MOF will simply take all of their non-political (meaning, not interested in association/MLS governance) realtors away by offering a superior product/service at a far lower price point.

We already see examples of this.  Trulia, Zillow, HomeGain, Roost, Estately, and others roll out innovative UI, innovations in search, innovative tools (like the iPhone search tool), that individual MLSes simply cannot.  Because those companies have a much larger market base than a local MLS with 350 members, they can afford to hire the engineers, to buy the big servers, and to put in the time to develop cool new tools.

Barring government interference (which is unfortunately far too real in our industry), it is simply a matter of economic law that the MOF will be large, national in scope, and be one to three major companies that provide the highest caliber of tools and service to every realtor in the country.  I personally believe it will be three players, simply because so many other data-driven industries seem to top out at three, maybe four, big players.  For example, credit reporting (Experian, Equifax, and Trans-Union), or title insurance (First American, Fidelity, LandAmerica), etc.  They all compete, but also cooperate in many ways to form a single industry.

A corollary effect will be that the local MLS as we know them today will go away.  They may become regional interest groups, social networks, business referral networks, etc. within the larger MOF construct that provides the data, the technology, and the tools.  But the laws of economics dictate that the small, low-value, low-investment organizations must give way to large, high-value, high-investment groups.

MOF Will Be A Company, Not a Membership Organization

I further believe that the MOF will not be a membership organization, like NAR, or a local Realtor association.  Rather, it will be a company — either for-profit or a nonprofit — but a company, run like a company with executive management, salaried staff, and customers.  The reason is that you must have executive power in order to cope with the challenges of providing a technology-based solution to a wide base of subscribers.

On my command, unleash social networking!

Committees are great for some things, but for getting things done quickly, for being nimble, they’re probably not the vehicle you want to choose.  You need leadership that is able to get things done — cajoling and politicking with hundreds of thousands of individual members is simply too unwieldy.

The company may be nonprofit, and may be owned by a membership organization, such as NAR.  But it cannot be run like one if it is to be successful.  Any wannabe MOF that is run as a collective will soon have its head handed to it by the competitors who can make decisions faster, bring products to market faster, and execute on strategies faster.

The example of OSCRE in commercial real estate and RETS in residential are provocative here, especially as compared to industries where a standard arose because of a single dominant company that satisfied the needs of a huge base of customers.  Although both OSCRE and RETS are doing some good work, even those deeply involved with both “membership-driven” programs will admit that oftentimes, it’s taking two steps forward, and one back — and sometimes, two steps back.  After years and years of work, consultations, working group meetings, and the like, both commercial and residential real estate industries still do not have a single common standard.

In contrast, after a period of competition, Microsoft Word has become a de facto standard for electronic documentation.  Word processing software must provide a way to save in Word format, or face rejection by the marketplace.  Most of them must offer a way to read the popular Word formats, such as Word 97/2003, or face rejection by the marketplace.

It is possible to contemplate a situation in which a company like Move, Inc. ends up becoming more important as a MOF than as a consumer portal, simply because they provide value to its national customer base, and provide a single, working data standard.  You can easily substitute Trulia, Zillow, HomeGain, or Realogy, or Re/Max, or whoever else for Move in that previous sentence.

An enterprise MOF must, of course, continue to work with the industry — it is, after all, providing a service to members of the real estate industry.  Microsoft is involved with all manner of industry groups, for example.  But there is a substantial difference between an organization with a CEO who can make decisions and move things forward, and a membership group that needs to convince at least a majority of its members to do X, Y, or Z.

Big Guns for Big Game

The issue of data standardization, of providing value to real estate professionals who work in a highly competitive industry themselves, of creating and maintaining technology that makes processes more efficient and provides useful consumer benefit — these things are all major tasks and major challenges.  They cannot be solved adequately by amateurs playing at “working it out”.

It will require the vision, the dedication, and the hard work of professionals working to get paid, to make a profit, by satisfying the needs of as many realtor customers as possible to bring about the MLS of the Future.  Because of money, the elephant in the room.

And when you go to hunt the elephant, you do not bring a .22 with you.  You bring the big gun.

-rsh

I went to post a lengthy comment on FOREM regarding this excellent post, but something went wacky with Joel’s Captcha system (socket not found or something?) and I lost it all.   Argh.  So I’ll just respond to Joel here.  But do read his whole post, as it is excellent.

My comment, which I attempt to reconstruct, had to do with this:

Agents should be syndicating their listings across the Net, taking dozens of high quality photos of the home, creating single property sites, doing video tours, blogging about their listings’ key selling features. Any or all of these approaches can add value (either real or perceived) to the bottom line of the transaction.

While Joel is absolutely correct on suggesting all of these steps, I can’t bring myself to blame agents at least for their failure to syndicate listings.  They are the victims, not the perps, at least as far as this issue goes.

Consider that in the 21st century, the real estate industry still lacks a common data standard for sharing listings data.  Consider that we still have hundreds of local MLS systems, each of which has its own data scheme and its own business rules.  Consider that we have dozens, if not hundreds, of websites each of which has its own data scheme and its own business rules.

As I’ve mentioned before, some agents are putting their listing into as many as a dozen different systems.  Even at 5 minutes per entry, that’s a full hour of the day that the agent is not spending actually practicing real estate.  If you have 8 listings, that is a full day’s worth of work where the agent has done literally nothing but put listings into websites.

Joel talks about taking dozens of high quality photos — great idea.  But how many photos can be displayed on any particular website or MLS?  In one site, it’s unlimited; in another, it’s one photo; in yet another, it’s three photos.  Is there any common way of designating photos so exterior shots and interior shots can be distinguished?

Data standards NOW! Woo-hoo!

So who are the perps?  Who is to blame?  As the great sage Michael Jackson once said, “I’m looking at the man in the mirror / I’m asking him to change his ways.”

The perp is all of us in the real estate industry.  For whatever reason, we have failed to deliver on the promise of the computer era, the Internet age, and the networked world.  Without question, syndication of listings was in the best interests of home sellers and buyers everywhere.  Brokers, industry associations, MLS, technology providers — we all failed to implement a common data standard for easily and quickly sharing listings data.  In some cases, parts of the industry actually fought against sharing data.

Rather than trying to reduce the amount of work that an agent has to do to properly market her client’s property, we have put barrier upon barrier in her way.  The wildly disparate IDX rules are just one example of such a barrier.

I know progress is being made.  But that project has been a classic story of one step forward and two steps back.  And no matter what data standard we come up with, we still need to deal with obnoxiously complex IDX rules by a couple of hundred MLS organizations.  We still need to deal with common standards for photos (size, quality, number, labelling, etc. etc.).  There are business rules that need to be worked out — mixing FSBO with MLS listings, for example.  There are laws and regulations that need to be reexamined in light of the new technology and customer environment.

In any event, at least as far as syndication of listings goes, I am willing to give a pass to agents for now.  They are the victims of a system that has, and is continuing to, fail them.

-rsh

Whatever do you suppose this is?

Zillow is a living, growing database of all homes — not just homes for sale (we currently have data on more than 80 million homes). More than 1.3 million owners have claimed their homes on Zillow and many have updated their home facts.

Kudos to Zillow for opening up their API’s.  One can quibble with Zillow (for example, their neighborhood data, which appears to be… let’s say odd…) but the decision as a whole is brilliant.

Just add Offers of Compensation and what do you get?

-rsh

I’ve been thinking a bit about the whole MLS 5.0 issue ever since Saul Klein’s post appeared. The reactions have been interesting. Greg Swann of BHB was somewhat cool to the idea, as evidenced by the title of his blogpost: The “MLS 5.0″ Manifesto: Everyone working in hi-tech real estate must oppose this vicious plan with every fiber in your being. Don’t be shy, Greg — tell us how you really feel. And now, Danilo Bogdanovic has posted a serious of questions (most of them rhetorical, I think) in which he “peels the onion of MLS 5.0” as it were.

Because I’m not an expert in MLS issues, some of the topics they bring up are beyond my ken. However, some of the questions and opinions are, to say the least, interesting.

Let us start with Greg’s take:

Here is the naked essence of Saul Klein’s so-called “MLS 5.0″ proposal:

The MLS of the future will bring a marketing service and benefit to the industry by being the single point of entry for listing data and then, based upon the election of the broker, distribute that information to web portals, newspapers, even radio and television, handheld devices and applications.

The emphasis was in the original, which is a nice illustration of how much Klein trusts you not to see what he’s up to.

What does that sentence actually say?

It says that Klein’s idealized “MLS of the Future” will be a national monopoly system controlled by real estate brokers and the NAR — to the immediate and permanent detriment of independent MLS systems and vendors, Web 2.0 listings aggregators and — most especially — individual real estate agents.

And Danilo’s take:

Call it what you will…MLS 5.0, Gateway, TREC, the greatest thing since sliced bread…I believe that this could potentially be the single worse thing to ever happen to the real estate industry (except for the very few elite at the top of the food chain and those that get into bed with them). If you’re an agent or small to medium-sized broker like most of us, then you should be seriously worried about your livelihood and future should this project materialize.

My take/question: What’s the problem exactly? Is it NAR’s involvement in this “MLS of the Future”, and the dislike that folks (and for the record, as a Hayekian Friedman acolyte, I’m very sympathetic to Greg’s principled position) have for NAR? Read the rest of this entry »

The NAR-DOJ settlement is the gift that keeps on giving.  To a blogger at least.  Well, to a blogger that happens to be interested in such an obscure and unimportant topic.

The latest piece of information is throwing me from confusion directly into bizarro-land.  NAR released a “Special Report” in which it announced that it and the DOJ has agreed on MLS policy.  The relevant part is this:

NAR has reached a favorable settlement with the U.S. Department of Justice, resolving the litigation between them over the display of listings from the MLS on brokers’ virtual office Web (VOW) sites. The final order, to be filed with the federal district court in Chicago today, validates NAR’s long-standing Internet data exchange (IDX) policy and strengthens the membership rules governing multiple listing services.

Say what now?

Here’s section (V) of the Proposed Final Order, entitled “Required Conduct”:

A.  Within five business days after entry of this Final Judgment, NAR shall repeal the ILD Policy and direct each Member Board that adopted Rules implementing the ILD Policy to repeal such Rules at the next meeting of the Member Board’s decisionmaking body that occurs more than ten days after receipt of the directive, but no later than ninety days after entry of this Final Judgment.

Section V goes on to talk about implementing the new Modified VOW Policy (which was attached, and described as a Revised VOW Policy), setting up an Antitrust Compliance Officer at NAR, etc.  It never mentions ILD or IDX ever again in the document.

The Revised VOW Policy mentions the term IDX exactly once, under section I. Definitions and Scope of Policy:

Participants’ Internet websites, including those operated for Participants by AVP’s [Affiliate VOW Partner], may also provide other features, information, or services in addition to VOWs (including the Internet Data Exchange (“IDX”) function). Section I(a)(3), Revised VOW Policy.

Nowhere else is “IDX” mentioned.

Now… about NAR’s “longstanding Internet data exchange (IDX) policy”… here’s NAR in 2005:

NAR has adopted a new policy to govern the display of MLS listings on the Internet. This new policy, Internet Listing Display (ILD),replaces NAR’s Internet Data Exchange (IDX) and Virtual Office Website (VOW) policies, and is effective immediately. MLSs have until July 1, 2006, to adopt the new policy.

This Internet Listing Display policy was specifically repealed by the Final Order.

So… NAR’s “Special Report” basically says this:

The Final Order validates NAR’s longstanding IDX policies by repealing them specifically, by name.

Lest anyone thinks this is just an unimportant little piece of legal trivia, we’re already hearing very confused things at OnBoard (my employer).  While I don’t like to mix the day job and blogging, in this case, it’s extremely relevant.  We’re hearing from clients that they believe this settlement affects them, despite the fact that they do not operate a VOW.  We’re getting questions on whether this settlement affects them, and in one case, we have a client who believes he is now completely freed of all IDX rules.

I went searching for the old IDX Policy, circa 2000, and couldn’t locate it.  But I did find ARMLS (Arizona MLS) IDX Policy of 2006 online, and there are provisions like these:
 

11.  The name of the real estate brokerage that has the property listed must be displayed on the screen and in printed reports for each property where the property information is presented in a “Full View.” The real estate brokerage name must be displayed in the same font size as the listing information. For purposes of this policy, “Full View” means the display of listing information that includes seven or more data fields.

12. An IDX Broker may not modify, enhance or manipulate a Shared Listing. In addition, listing information from other sources may not be combined with IDX Listings. For instance, property listings from other multiple listing services, for sale by owner properties and properties not in the MLS may not be combined with the IDX Database.

Right now, it is not at all clear to me that someone taking an IDX feed from ARMLS has to obey these rules.  Maybe I can decide not to display the name of the listing brokerage.  Maybe I can modify or enhance a Shared Listing, and mix FSBO listings with the IDX listings.  Even if the Revised VOW Policy says I can’t do those things, that only covers VOW’s, not IDX websites.

Here’s hoping that NAR acts swiftly to correct this serious gap in policy, because I can nearly guarantee that our client who thinks he is no longer bound by IDX rules is NOT alone.

-rsh