NAR Midyear 2016: Rumors, Questions, and Observations

[UPDATE: Please see the Comment below the post, in which Cary Sylvester clarified a couple of things raised in this post.]

I had originally planned on writing a day-by-day diary of sorts for Midyear as I did a while back, but… frankly, things were moving so fast, and I was too busy sitting in meetings that I couldn’t get to any of that. And I’m glad I didn’t, because by the time I left, there were some new developments and things I learned that completely changed what I thought on Day 1.

This is… I don’t know what to call this… I guess it’s a post about my observations as well as questions from things I saw and heard, but there’s an incredibly juicy unconfirmed rumor floating around that might get some folks upset and I’m not entirely sure what to do with that. If I were a journalist, I’d try to get on-the-record confirmation, etc. etc., but… I’m not. So I’ll leave that task up to people like Andrea Brambila at Inman News. The fair thing that I can do as a blogger is to say it’s an unconfirmed rumor and go from there.

Without further ado… let’s get into the swing of things. There may or may not be videos accompanying these rumors, questions, and observations.

1. Beneath Polite, Convivial Front, a Cold War

I was young and new to this country when Ronald Reagan was elected President. So I was a teen when the Berlin Wall came down and the U.S. won the Cold War. But that does mean that I have some memories of living through the Cold War. I remember those televised scenes of summits between Reagan and Gorbachev, where there was much shaking of hands, civil politeness, and so on… while the U.S. and the USSR were pointing nuclear weapons at each other.

That’s sort of the theme of this year’s Midyear for me. Lots and lots of politeness, but underneath, churning waves of discontent, suspicion, distrust, and contempt.

For example, I attended the CMLS Brings It meeting and in the first… 10 minutes? the word “collaboration” was mentioned at least a dozen times. It seems that collaboration is one of the core values of CMLS, as newly formulated by its Board of Directors. And the only word used more than “unity” and “unify” might be the word “MLS” — but maybe not.

And it wasn’t just CMLS people saying that. Everyone from NAR to brokerages to Upstream representatives is talking collaboration, unity, coming together, etc. etc.

Then… the sessions end, people file out into the hallways, and… it’s “fuck them” muttered sotto voce.

I literally had one MLS exec say to me, “You know, I looked up the dictionary definition of “collaborate” — and we’re talking about the second definition here.” For your edification, Merriam-Webster:

Yeah, I’d say there’s a cold war going on.

I think it might be useful for the CMLS Board to survey their members to see if “collaboration” really is a Core Value of that organization.

2. The Rumor… Upstream May Ditch RPR

The single biggest piece of news, if true, is a rumor that was floating around everywhere in DC. It may be completely false and irresponsible rumor, and passing it on might be completely irresponsible of me. But I don’t think so, because there’s a lot of smoke, which suggests the presence of a fire somewhere. Were I a journalist, I’d try to get on-the-record sources to confirm or deny the rumor, but that ain’t my job.

The rumor is that RPR, the technology partner of Upstream RE, LLC., has fallen so far short of technical goals and milestones that the brokers behind Upstream are seriously considering dumping RPR as its vendor/partner. I’ve heard various rumors that Corelogic has been approached, that various MLSs have been approached, that Upstream might build its own (now that Alex Lange has been named as CEO), and other variations on the theme. But they all point to deep dissatisfaction with RPR.

Once again, this might all be total bullshit, but if true, that’s a pretty big f’ing deal considering that NAR has funded the Upstream/RPR/AMP deal to the tune of $12 million just last year.

Now that Alex Lange has taken the job of CEO, I think one of the first things he’ll have to do is either dispel this false rumor immediately, or do some very sophisticated Jesus-Does-Lazarus deal, or get involved in some extra-fancy negotiations. I don’t envy the man. 🙂

3. Speaking of Upstream… A Few New Details

I’ll admit that one of these “new” things is directly because of me. But we’ll get there.

In a previous post, I asked the MLS executives at the Zillow Forum to ask Upstream, “What do you envision as the role of the MLS in a post-Upstream world?” Well, since I had the opportunity, I asked Cary Sylvester, who is one of the key architects of Upstream, that very question. Her response: “cooperation and compensation”.

Two things about that.

One, I find it interesting that she didn’t mention “compliance” — but maybe that was just an oversight, and she meant to include compliance as one of the roles of the MLS. Or, you could think it a Freudian slip. That’s up to you, depending on your personal level of paranoia. I’ll regard it as a mere oversight while on stage.

Two, one MLS exec said during the session that Dale Ross, CEO of RPR, suggested at some event or another in the past year something along the lines of “It wouldn’t be hard at all to add cooperation and compensation to RPR/Upstream”. That’s total hearsay, of course, so maybe Ross never said such a thing. But if we’re not gonna bullshit ourselves, we have to admit that adding cooperation and compensation to just about any group/system/organization isn’t exactly difficult. It’s just a contractual terms of use/membership requirement. Hell, I could add “cooperation and compensation” as a condition of reading this blog.

Another new, small, yet important piece of information is that Upstream membership (or at least access to the listing-related parts of Upstream) will be contingent on that broker/agent being a member in good standing with his/her local MLS. This is absolutely critical. Let me explain, since I’m the guy that asked Cary that question at the panel….

My question, basically, was that one of the key functions of the local MLS is compliance, which leads to the “gold standard of data accuracy”. But compliance is accomplished by imposing penalties on violators. Those penalties — whether nasty emails or fines — can be enforced only because there is a “death penalty” in the MLS: expulsion. Say you get a $200 fine for violating an MLS’s rules. Refuse to pay, and the penalty increases; keep refusing to comply, and the MLS boots you out, taking away the most important tool to be in the brokerage business.

If Upstream membership were independent of MLS membership, then the “death penalty” goes away. You fined me? I ignore it. You expel me? No big deal — I’m a member of Upstream, and so have access to listings that way.

What Cary made clear is that Upstream will compare rosters with the local MLS to ensure that anyone accessing the listings-side of Upstream will have to be a member in good standing with the local MLS. If the local MLS expels you, then Upstream will expel you (or at least suspend you, or shut down your access to the listings-related stuff on Upstream).

That’s a pretty big deal in my book, since it keeps the enforcement powers of the MLS at the same level as today.

An interesting question that arises, naturally, is whether the rules/policies of the local MLS will be honored by Upstream without question, or whether Upstream itself will determine which rules/policies it will and will not honor. Let me give you an extreme example:

Suppose some local MLS passes a rule that says members must utilize the MLS’s own data distribution facility to send listing content, even their own, to third-party vendors. Obviously, that negates the value of Upstream itself in being the distribution mechanism. Would Upstream still honor that MLS suspending a broker for using Upstream to distribute data? Seems like a stretch, but it does raise the question of how the local MLS policy and Upstream member discipline will interact.

4. That Whole Realtor.com Special Relationship…

https://youtu.be/bAJ_74tDZzU

One of the less comfortable moments of the conference came during the MLS Executives session when Suzanne Mueller, the new SVP of Industry Relations for Move (parent company of Realtor.com), was on stage talking about the new stuff from Realtor.com.

Cameron Paine, the CEO of CTMLS, got up and basically grilled her in a… memorable… way, which began with, “Wasn’t Realtor.com bought by News Corp a couple of years ago?” He then asked why she was on stage making a sales pitch to MLS executives when Realtor.com is now just a third-party website like any other. It was a bit of a tense moment, but Mueller handled herself admirably, saying that this wasn’t a sales pitch since everything she talked about was free, and we went on. (In fact, that exchange led to a moment of levity when Chris Bennett from Corelogic got on stage immediately following and opened with, “This is a sales pitch.”)

However inelegantly or undiplomatically or politically incorrectly Cameron might have phrased things, he does raise an interesting point. (Most people I spoke to thought he should have addressed the question to Brian Donnellan, the Chair, who organized the session rather than to Suzanne Mueller, who was invited to present, while conceding that Paine did have a point.) Realtor.com is in fact a subsidiary of Rupert Murdoch’s News Corp conglomerate. Yes, there is a management agreement in place between News Corp and NAR, but it’s nowhere near as strong as the one between Move as an independent company and NAR. I understand that Move pays a few million dollars each year to license the REALTOR trademark and domain from NAR as well.

But in this day and age, I’ve heard far too many people suggest that Realtor.com should enjoy no special relationship with NAR, because it isn’t “owned by the industry”. Now, part of that is nonsense since NAR hasn’t owned a piece of Move, Inc. in years, prior to News Corp entering the picture. But politics doesn’t have to be logical and rational, as we are reminded every single day in 2016.

That special relationship became far more interesting in my mind when I thought about Upstream. (Yes, it does feel that Upstream is lurking behind every single conversation in real estate these days — a position that Zillow used to enjoy once upon a time.) Upstream’s main principle is broker control over data; the broker, not the MLS, decides who should get his listing information. Realtor.com has always enjoyed a special relationship with the MLS via NAR’s control over the local Association-owned MLS, which let Realtor.com do enormous consumer marketing campaigns around #AccuracyMatters.

Will that still be the case post-Upstream? If the rumors above prove to be unfounded and RPR remains the technology partner to Upstream, will NAR be enabling brokers to circumvent its own special relationship? Would Rupert Murdoch just shrug his shoulders and go, “Well, dems the breaks!” and move on?

5. The Unspoken Reality That Needs Addressing

https://youtu.be/sVkv42PHXKo

One relatively amusing (if you’re a real estate and MLS nerd like me) thing was how little speakers and panelists wanted to talk about the unspoken reality that absolutely drives so much of what’s going on today.

That reality is that there are just far too many local MLSs still in existence. Sure, progress is being made, slowly… oh, every so slowly… as is customary in real estate. Kevin McQueen, who has been all about consolidation, mentioned that we were down to some 750 MLS from 850 or so a couple of years ago. But that’s probably 700 too many MLSs for most of the attendees, and all of the power players in the industry.

For example, Rick Harris, the Chair of the MLS Policy Committee, announced a partnership with CMLS (which was later announced at various other meetings) in which CMLS would help NAR organize and run “roundtables” for small, midsize, and large MLSs. I thought that amusing since just about every large MLS in the country would like to see the small MLS go the way of the dodo bird.

Even Upstream, if you get down to it, wants to drive consolidation and make the small little pain-in-the-ass local MLS history. We all know this, because of conversations between brokers and large MLS that go something like, “We have no problems with you, because you’re professionally operated and sane rational people; it’s those other small crappy MLSs that we have a problem with.”

Something as simple, rational, and logical as RESO standards had the same subtext. Jeremy Crawford, the CEO of RESO, made impassioned plea after another for MLSs to get RESO certified — as they’re required to do under NAR mandate. Obviously, every large MLS in the country is already certified and will probably re-certify every single year. So who the hell is Crawford appealing to if not to the hundreds of small MLSs?

CMLS self-identifies as the “voice of the MLS industry” and puts in a great deal of effort into its “Best Practices” work. Here’s their 2016 Best Practices checklist, for example. But if we’re going to be honest about it, shouldn’t #1 on Best Practices be: “If you have fewer than X members, merge with the nearest large MLS”? Do large, well-run organizations CRMLS, MRIS, MRED, MyFloridaRegional, ARMLS, etc. etc. really want to be in “council” with some 150-member MLS from Nowheresville, USA?

As a wise sage once said, “C’mon, man!”

Wrapping Up…

I wish I could have seen more old and new friends in DC, but it was great to see the people I did get to see. I’ll say this in the way of wrap-up: we live in interesting times.

Diplomatic efforts are, I’m certain, underway in various halls of power across the industry. Who but the participants themselves knows what’s being discussed and negotiated? But it is clear to me that there is a cold war within the industry, and one of two things will happen. Either the conflict will break out into the open, or some sort of diplomatic effort will resolve things behind the scenes.

At the core, I really do think that the conflict is due to the fact that there simply are too many small local MLSs, which is connected to the fact that there are thousands of local Associations of REALTORS. It’s almost like looking at folks who would be partners otherwise argue with each other on how to achieve what they both want to achieve, and being at odds with one another because of certain political realities.

This cannot last forever. And that which can’t last forever, won’t. The question then isn’t whether the present order can be preserved, because it cannot; the question is what replaces the present order, and whether that is a net positive or a net negative.

Once again, if you’re a hardworking REALTOR on the ground trying to get a listing or help a buyer buy a house, not one of these things will be immediately relevant to you. So relax and go about your business. But if your job is to think strategically and worry about the shape of the industry in order to support those REALTORS on the ground… well, then yeah, you probably should be paying close attention to what’s going on.

There were some important things that happened on the Association front, and I’ll be addressing that in future posts. But let me sign off for now and get to some real work.

Your thoughts, as always, are welcome.

-rsh