[You can consider this Part 2 of an ongoing series that started with my last post about comments on MLS and Upstream, but really this is more like Part 372 of an ongoing series about the future of organized real estate. You can blame my pie-in-the-sky high-level theorizing on my philosophy degree. But anyhow…]
Organized Real Estate faces a fundamental question about its future. The immediate cause is the growing concern over Project Upstream, which certainly looks like it seeks to replace the MLS as the “reference database” of real estate. But the deeper cause is that changes in technology, society, and the industry are finally coming together to force ORE to evolve, one way or another.
Here’s my thesis:
- Organized Real Estate historically has not differentiated between the Association and the MLS. The two were the same, with the MLS being a “member service” provided by the Association.
- Changes in technology, society, legal environment, business environment, etc. — not the least of which is the Internet — have separated the Association and the MLS into two separate, distinct, yet inter-related parts of ORE.
- The MLS is the State, which lays down the rules of the road and enforces them. It’s about rules, policies, violations, compliance, and the creation and operation of a marketplace by, of, and for professionals.
- The Association is the Church, whose charter lays out its core functions as advocacy and professionalism. It’s about aspirations of higher service, transforming a mercantile activity into a profession infused with skill and civic responsibility “beyond ordinary commerce.”
- For most of its history, and still today, the Association is dependent on the MLS for membership and revenues. The Association is like a state church whose members may or may not believe, but attendance is mandatory.
- Technology, however, has driven the concentration of power into large organizations. Brokerages and national franchises have become larger, and national in scope. NAR has become far more than just a gathering of local Associations, and is today an entity unto itself.
- Project Upstream, properly understood, represents an attempt to evolve past the origins of ORE: brokers in a local market coming together to cooperate, then those local groups getting together with other groups to create State and National Associations of REALTORS.
- The vision behind Upstream is for more of a top-down approach which promises economies of scale, uniformity across the country, and a centralized structure that more easily meets the needs of large, national and super-regional companies.
- The fundamental question for ORE, then, is whether it should become more like the Catholic Church or remain closer to its Presbyterian roots. Top-down, or bottoms-up? That’s the big question of the day.
L’affaire d’Upstream is actually about how the real estate industry should be organized and operated. It is ultimately a question of governance, of power, and of structure.
Let’s get into it, for those of you who like to read lengthy, overly-wordy posts. For everyone else, the above summary should serve.
Brief Explanation on Ecclesiastical Polity
For those who are not from the church business, let me offer a very brief overview. If you’re more interested, you can dig deeper with this entry in Wikipedia.
The Catholic Church is an episcopal organization, which is hierarchical and ruled from the top-down. The Pope is the ultimate arbiter of all things in the Catholic Church, and local congregations are parishes with a priest, who answers to the bishop of a diocese, who in turn answers to the archbishop of the archdiocese.
Most Reformed churches are more of a presbyterian organization, and PCUSA (Presbyterian Church USA) is a classic example. Members of a local church elect elders, and those elders govern the church. They meet with elders from other churches nearby to make policy for that region. They then send representatives up to the national General Assembly that governs the entire organization. While some hierarchy exists, the key difference is local control by the local congregation. It is much more of a bottoms-up organization.
There are dozens of variations, but for our purposes, those are the two models.
The Church of REALTOR
There is no denying that the origins of organized real estate in the United States followed a presbyterian model. After all, NAR itself was founded as the National Association of Real Estate Exchanges in 1908:
The National Association of REALTORS® was founded as the National Association of Real Estate Exchanges on May 12, 1908 in Chicago. With 120 founding members, 19 Boards, and one state association, the National Association of Real Estate Exchanges’ objective was “to unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests.”
The Association’s founding boards included the Baltimore; Bellingham, Wash.; Chicago; Cincinnati; Cleveland; Detroit; Duluth, Minn.; Gary, Ind.; Kansas City, Mo.; Los Angeles; Milwaukee; Minneapolis; Omaha, Neb.; Philadelphia; St. Louis; St. Paul, Minn.; Seattle; Sioux City, Iowa; and Tacoma, Wash., boards and the California State Realty Federation (now the California Association of REALTORS®).
I don’t know how those local boards were governed in 1908, but I imagine those local boards were entirely independent, recognized no authority over them by anybody else, and governed themselves either through direct democracy of the membership (congregationalist) or through elected leadership (presbyterian) models.
Today, local Associations run much like a presbyterian church: the members elect the Board, and that Board hires the Association Executive and other staff. The local Board makes its own rules, by-laws, etc. Local control and local governance is the norm, not the exception.
However, like PCUSA churches, in order to be an Association of REALTORS, each local Association affiliates with NAR (and the State Association through the 3-way agreement). It must recognize the authority of NAR to create and enforce a variety of rules that it must follow. (The most important of these is the Code of Ethics and the related Standards of Practice.) Refusal to acknowledge the authority of NAR could result in losing the charter, which makes that local Association no longer a REALTOR organization.
NAR itself is governed, in theory, by its Board of Directors, who are sent there by local Associations. (The number and composition of NAR Directors are set by a complicated formula. See Article IV, §6 for detailed description.)
The Local MLS
As we can see, the origins of NAR itself is in a number of local “exchanges” coming together. It makes sense. Brokerages in Duluth, MN weren’t getting together solely for socializing; they were doing deals with each other, and offering cooperation and compensation.
For most of ORE’s history, there was no gap between the Association and the MLS. The two were — and in many markets, still remain — one and the same. The MLS is a member benefit offered by the Association, and created by the members themselves putting listing information into the MLS.
Naturally, then, when these local Associations got together at the REALTOR equivalent of the General Assembly (NAR Board of Directors), they chose to coordinate the rules and policies of their member benefit service (the MLS) with each other. So NAR set policies of the local MLS because there was go gap between the Association and the MLS.
As long as real estate remained almost entirely local, as it has for most of NAR’s existence, this wasn’t a major issue. Pre-computers, pre-Internet, when the MLS was printed into books for distribution amongst local brokerages, why would anyone have cared greatly who governed what when in reality, each local Association operated the MLS according to the needs of local brokerages and the local buyers and sellers? Even large national franchises, such as Coldwell Banker, were really just a conglomeration of local brokerages in each local Association/MLS doing what they do locally.
It just wasn’t a big deal.
Enter the Information Age
Then the Information Age came to real estate. Computerization, digitization of information, and of course, the Internet changed everything. When listing information could be delivered electronically to terminals in brokerage offices, and a computerized database replaced the printed book, consolidation and regionalization became efficient.
At the same time, brokerages and real estate franchises could get larger than they had ever been able to before, because information technology and improved communications made it possible for them to market to consumers as a single entity (disclaimers notwithstanding) and to offer products and services to their agents across wide geographical areas from the central headquarters office. Just think about a company like Keller Williams, which boasts over 110,000 agents: would that company be possible without telecommunications and information technology any more than Walmart is possible without technology?
And of course, the impact of the Internet on real estate continues to reverberate. When consumers were suddenly able to get access to information through the Internet that they could not get before, the industry went through a decade (or more) of turmoil trying to figure out what it should do. The advent of portals like Realtor.com, Trulia, Zillow, and others suddenly made the local market by local market structure of the pre-Information Age MLS incredibly painful and inefficient.
Even locally, the Internet and technological advances meant that local brokers could and needed to service wider and wider areas. Just imagine being a broker in the Washington DC metro area. A client wants to buy a house. You could be looking from DC itself to Maryland to Northern Virginia; three different states (DC has its own licensing law and commission, like a state) and dozens of possible markets.
Consolidation and regionalization are inevitable given those changes. The large regional MLS’s of today, such as CRMLS, MRIS, MRED, ARMLS, MyFloridaMLS, and others are the direct result of technology driving social and business change.
One rarely examined result, however, of those changes — including regionalization — is that they created distance between the MLS and the Association. Quite a few Associations today “belong to” (that is, they are shareholders of) regional MLS’s that are separate entities with its own Board of Directors, its own staff, and its own building. Even single-Association MLS’s are often setup as a separate legal entity with its own separate governance structure.
We see this all over the industry today as AE’s of Associations that are shareholders of the regional MLS refer to “them” and “us” all the time. Members do the same, and MLS Directors have to be reminded constantly that they have to take off their “Association hat” and put on their “MLS Director hat” to fulfill their fiduciary duty to the MLS itself.
The Complication that is the MLS
Along the way, the MLS, once the origin of the Association itself, and then the most important member benefit of the Association, became a complicated problem.
It is now widely understood by Association leadership that the vast majority of their members are MINOs (members in name only) who join the Association solely for the purpose of getting access to the MLS. We’re talking in the 80+% range. In markets where the local Association has nothing to do with the MLS (e.g., Seattle area), the membership is roughly half of similar areas where the Association controls the MLS.
In a way, the local Association is somewhat like the churches in Puritan New England where attendance was mandatory. Not all believe, but all participate and pay.
As one can imagine, that leads to quite a few problems.
First, “members” feel extorted to join. It’s hard to get the warm and fuzzies about an organization you have to join.
Second, many who do join don’t care about the Association; they’re just buying a subscription to the MLS, which they need for business, but all that hoo-hah about Code of Ethics and professionalism and all that is just mumbo-jumbo.
Third, because the subscribers are “members” instead of customers, the overwhelming incentive is to pay as little as possible and they make demands of the elected leaders accordingly.
At the same time, the local MLS is rubbing up against the new reality of real estate brokerages and national franchises with operations across the whole country. It really is inefficient and painful for a brokerage to have to belong to 72 local MLSs with their varying rules and policies and fees. And those 72 have different MLS systems as well as differing levels of technical competence, adding to the pain. Setting up a simple IDX website becomes a nightmare of expense, time, and navigating red tape.
Calls for consolidation and regionalization have been loud in the industry for at least the past ten years, but such efforts have been slow, slow, slow and often marked with failure for a variety of reasons. The core reason, however, is above: the Association relies on its MLS for membership and revenues. And given the historical origins of the Association itself as local exchanges built on the presbyterian “local control” model… it’s very, very difficult to get local Associations to give up the MLS.
Which… is why we’re here with l’affaire d’Upstream being the most discussed issue on the circuit today.
Upstream Is About Polity and Governance
I have said time and again that I love the concept of Project Upstream: broker control over data. The problems and pain points that the Upstream people point out, such as multiple data entry, difficulty in getting data out of the MLS, “overlapping market disorder”, etc. etc. are all real. Those do need to be addressed.
But as my last post made clear, I’m deeply uncomfortable with the current incarnation of Upstream for a variety of reasons. I won’t rehash those here. What I realized, however, in thinking through the issue more is that this really isn’t about technology or data management or whatever. It’s actually about how organized real estate is governed today, and how it should be governed tomorrow.
I realized that because I thought more about what I asked in that video: Who makes the rules in the post-Upstream world?
Today, the NAR MLS Policy Committee creates the rules for 70+% of MLSs. I wondered out loud who would make the rules for Upstream, and assumed that it would be the Upstream Board of Managers. The light that went off for me personally — since no one has actually said any of what follows — is that maybe NAR got so heavily involved in Upstream because it wanted a seat at that table. $12 million is a small price to pay if the end result is that NAR continues to have a real voice in how the local MLS is to be governed.
And so we come to the crux of the matter.
Top-Down or Bottoms-Up?
When it comes to the MLS, there is a strong argument to be made for ever-larger MLSs, because the MLS is fundamentally about rules, regulation, and compliance as well as providing actual business services to its subscribers. I don’t think a national MLS is possible due to cultural differences, but I have little doubt that far fewer than 800 or so local MLSs is doable. I am a fan of regionalization, consolidation and even super-regionals.
The ever-larger brokerages and national franchises who are able to leverage technology to get bigger and more efficient as time goes on would welcome such a change. In fact, forcing that change is one of the motivations behind Upstream.
Since it has become clear that organic consolidation takes far too long and fails far too often, brokerages have decided that it’s time for action. I can hardly blame them. If MLS consolidation cannot happen from the bottom-up by local Associations choosing to merge and regionalize and consolidate… then Upstream will either (a) force them to merge, or (b) replace the whole damn inefficient structure with something new.
As I’ve said again and again, I understand the Why. I sympathize with the pain. I just think going down that path is throwing the baby out with the bathwater and opening the door for government regulation.
Interestingly, though, the Big Question that Upstream poses to the industry isn’t about the MLS itself, but about the local Association, the Church of REALTOR. In the post-Upstream world, with a few super-regional MLSs (or perhaps one national MLS under the auspices of NAR), and MLS policy set by some mix of Upstream’s Board of Managers and NAR/RPR, what does “local control” mean?
If we’re going to be honest about it, the answer has to be “not much”.
Local Control Without the Local MLS
Even though the rise of the regional MLS has created more distance between the local Association and the local MLS, most regionals today are still owned by those Associations and often governed by them indirectly through appointments to the MLS Board of Directors. Push comes to shove, there are powers reserved by law to shareholders of companies, even non-profit companies.
With the current incarnation of Upstream, however, the MLS itself is merely a destination for broker data, which is put into and managed by Upstream via NAR’s RPR. Who governs that project is as yet unclear, but there would be no point in Upstream opening up its Board of Managers to all and sundry local Associations — that simply recreates NAR’s Board of Directors with its 500+ Directors. Plus, Upstream is firmly a large broker initiative, born out of frustration with Organized Real Estate. If ORE is to have a voice in how Upstream is governed, it will be through NAR, the technology partner for Upstream.
Even if the local MLS remains in some form to do (some) compliance work and to do the cooperation and compensation business (which isn’t difficult to replicate), could it have rules and policies and procedures that go against whatever the rules/policies are from Upstream? I suppose that’s theoretically possible, but I can’t see it in reality. Presumably, the data feed from Upstream would come with a license that restricts the recipient’s ability to do whatever it wanted….
Again, NAR may have a voice in those rules and regulations and policies; the local Association would not, except very indirectly through NAR.
So what does “local control” mean in that world? Local control over what, exactly?
Separation of Church and State?
Some of my readers know, because they’ve heard me speak in person, about my belief that the Association and the MLS should be separated as much as possible. I’ve called it the separation of Church and State in some presentations; in others, I’ve called it a divorce, because co-dependency is not healthy, and no happy marriage ends in divorce.
Curiously, if Upstream is successful, we might achieve just that: a real separation between the Church of REALTOR and the State of Real Estate. It won’t be what I imagined, but it will be a separation….
My genuine fear is that once the “State” has been moved to the national level with Upstream/NAR, the actual state — that is, the actual civil government of the United States and its 50 states — would step in and take over regulation. The Association will be left with its own particular rituals and traditions for those who are willing to join and pay dues, but everyone else who couldn’t care less about all the advocacy stuff and the Code of Ethics (which has been incorporated into state real estate laws), would not. Overnight separation, but the industry would no longer be self-regulating in any way whatsoever.
The One True Church
If the government does not step in, however, then the more likely outcome is that organized real estate becomes far more like the Catholic Church.
The “exchange” would be operated by Upstream in partnership with NAR. Any MLS policy of the future would be created by that group.
Enforcement and compliance could be left to the local “MLS” (the name, I’m sure, would stick around) but in reality, that couldn’t happen. What exactly is the stick that the local MLS would hold over the broker/agent to get them to comply? Fines? Refuse to pay. Expulsion from the MLS? I have Upstream.
Unless Upstream agrees to enforce the rules of the local MLS — which then defeats the strategic purpose of creating Upstream in the first place — there is no effective penalty that the MLS can wield to get brokers and agents to comply.
On the Church side, as an Association of REALTORS, the local Association already has precious little control over policy. The only area where there may be value — local government affairs advocacy — is the one area where the benefit of local control is outweighed by being part of a much larger organization. Look, for example, at the national parties. It is far more powerful to be the Chairman of the local chapter of the Democratic Party, then to be the CEO of some small town activist organization.
Plus, as we discussed above, a local Association without an MLS would lose between 50-80% of its membership. So the funding to do local activities would dry up as well.
In this scenario, it would be better for all local Associations to become chapters of a larger entity — either NAR, or the State Association. Staff, budgets, resources, etc. would be set by the Mothership and allocated according to need. On the flipside, the local chapters wouldn’t have those costs on their books, and could potentially offer far more in terms of services and local advocacy than small Associations can today.
That’s not necessarily a bad thing, and maybe that’s what the rank-and-file REALTORS (and I mean REALTORS, the people who are active in the Association, rather than MINOS who just want the MLS) actually want. I honestly do not know.
But that’s the question.
The Vision of Episcopalian Organized Real Estate
If organized real estate should be more like the Catholic Church, I think this is what that vision entails:
- All local Associations become chapters of NAR, with the State Association serving as something like an archdiocese, but they are all part of NAR, the one catholic universal Association.
- Rules and policies are created by NAR and pushed down through the State and to each local Association.
- Revenues and expenses would be shared throughout NAR, or at least within each “archdiocese”, such that local staff might be paid by NAR (or CAR, TAR, etc.)
- The local MLS becomes a local service center of a national MLS, whose core is the joint venture between UpstreamRE, LLC. and NAR, with one uniform set of rules created and enforced from the top down.
- Organized real estate becomes far more staff-driven, since the bishops are all professional clergy. Similarly, professionals in various areas, whether MLS or lobbying, drive policy and action from the top down.
- We should replace the fiction that Associations are governed by volunteer “leadership” and acknowledge that the AE is for all intents and purposes the leader. Continuing with the church analogy, the local AE becomes the parish priest, the state AE becomes the bishop, and the CEO of NAR becomes the Pope.
The benefits are greater unity as NAR and possibly cost savings (e.g., putting all local staff on NAR payroll might result in savings) and uniformity of rules and policy across the board.
The downside is loss of local control which may or may not be important to REALTORS. I don’t know right now.
The Vision of Presbyterian Organized Real Estate
If, on the other hand, organized real estate should be more like the presbyterian church, I think this is what that vision entails:
- State Associations become the presbyteries of local Associations, and NAR in turn becomes the “General Assembly” of the states. (I could see some large locals become their own “presbytery” — for example, the Miami Association of REALTORS is large enough to warrant direct representation.)
- The fundamental building block, however, is the local Association; the State Association and above that, NAR, become gatherings of local Associations for joint policymaking.
- I don’t know right now whether REALTORS do or do not want to acknowledge the authority of “higher up” councils, such as the State or National Association of REALTORS, to control the local Association. If so, to what extent?
- Instead of a single national MLS, local Associations decide what they do or do not want to do with their MLS. Some may choose regionalization, others might merge, and still others might not. But that’s the decision of the local brokers in that local market.
- The key governing body becomes the local Board of Directors, not a national body of any kind, whether Upstream or NAR/RPR or anybody else.
- One implication here is that the industry has to move past the tradition of annual elections. One year in office is simply not enough time for anyone to do anything. By the time you barely understand what’s going on and what to do, it’s time for the next person to step in. Some Elders in a church serve for decades, building up institutional knowledge and competence.
The benefits are greater local control and preservation of the historical conventions of organized real estate — that is, brokers in a local market got together to form the local MLS and the local Association, and they will continue to govern themselves with whatever authority they choose to grant to larger associations above them.
The downside is inefficiency and lack of uniformity and slower decision making that comes with a democratic process. Again, I don’t know whether that’s important to REALTORS or not.
A Third Path?
It may be that there is a third path out there where organized real estate can split the difference somehow, preserving local control for those things that benefit from local control, while creating more of a staff-driven, top-down approach for those things that benefit more from unified control. I’m thinking about such possibilities, but would love to get any ideas/suggestions on that front.
Back to Upstream/RPR and Wrapping Up
This is getting way long, but then again, that’s sort of how I figure out what I think so… thank you for making the journey with me.
As I see things now, while there are a number of questions and a number of unknowns, there are a few things I can conclude:
- If you believe in a presbyterian model of governance in which local control and local independence are more important than national unity, then you cannot support Upstream in its present form.
- If you believe in an episcopal model of governance in which national uniformity is more important than local control and local independence, then you cannot support the local MLS and the local Association as it exists today.
- These two things are incompatible and in direct conflict with each other.
- There may be a third path in which these two conflicting desires for local control on the one hand and national uniformity on the other hand could be harmonized. I just haven’t figured out what that looks like… yet.
In wrapping up, for now at least since I’m sure I’ll revisit this issue later, I know that the surface debates over the next few months will be about technology, about data management, about compliance, about all of the details… but the deeper debate, I think, will be about this issue: the future polity of organized real estate. Should it be top down and catholic? Or bottoms-up and presbyterian?
‘Tis a big topic. If I’m sure about anything at all, it’s that: this is a big topic.
18 thoughts on “The Church of REALTOR Faces A Fundamental Question”
Do you find that conversations about the future among rank & file churchgoers (practicing Realtor® contractors) are virtually non-existent? In our region the vast majority are oblivious to the fact that their MLS is about to merge with one much larger, let alone have they wasted a single thought on the potential implications of Upstream. Am I correct in assuming this apathy is mirrored across the country? Barely a mention on Facebook, Active Rain or other forums.
You are absolutely correct, apathy is destroying our business and our country,but recent events give me hope for our country, I wonder what we can do to sound the alarm in our industry.
I agree with Ronald and here’s my analogy:
Until the age of 16 I had to go to church…my Dad was a “devout” Catholic. That meant he went to Church every Sunday and Holiday, got on his knees and prayed before bed and put money into the basket whenever it was passed. I had my own envelopes and also put money in the basket each week.
What I learned over the years was that my Dad’s strong religious base was really not as deep as he lead on. I pressed him a few times and never got a straight answer, but I’m pretty convinced he never read the Bible. He was a “conditioned” Catholic…do this (put money in the basket), do that (live by the Commandments) and voila…you’re a member.
I think most agents are “conditioned” agents. Pay your MLS/Association dues (the basket), see available listings for sale (the Church) and follow the Code of Ethics (The Bible).
That would make the agents, parishioners and visa versa. Do the parishioners really care about the hierarchy structure of the Church? If a new Church was built to replace the old one, would they still continue to go?
Like you, I’m interested in the big picture. But I think that something so very simple at its core is trying to appear complex…just for the sake of it and because the inflow of capital allows it.
The simple version: parishioners want a place to worship (a building). Agents want to see what’s for sale (a database). How that happens doesn’t really matter to the Church goers or salespeople, and IMO, it’s the shear volume of incoming cash that gives both the Church and real estate industry the opportunity to over complicate the simple.
Upstream, Downstream, MLS, SMLS….just give the agents some data and they’ll use it. They’ll also use some of their own. They’ll connect a buyer and seller, make a buck and move on.
Throw enough money in that basket and it’s possible to become the largest real estate holder in the World…the Catholic Church. Pay enough dues and the powers that be can create anything they want…..unfortunately, for the real estate industry the Internet is the problem not the solution. Unlike the Church whose assets are sound, the lasting value of creating a database…..not so much.
Peace be with you….and with your spirit 🙂
Have a nice weekend.
When and where is the Church of R.O.B. holding Choir Auditions/Practice?
This broker has never been involved in any form of organized religion,but after reading this article I think I am going to start going to church,this blog is very scary it is the future of the RE business, a business model where RE Agents hand over to the corrupt nar and the lousy mls’s, and the associations,control of our businesses,soon we will all be working for the govt,say at $1.00 over minimum wage but with free obamacare, a company car, our ceo will be a failed re agent,commonly referred to as the “managing broker” ,yes I am going to sign up for church.
Hi Rob -I belong to NAR, state assn and local assn only because I have to pay the extortion to use the MLS.
I read somewhere that NAR has 400 people on the payroll. Just what do those hundreds do every day for me? Not a damned thing.
We have a separate local Board and MLS. I Ioften wonder what they do every day? Duplication and wasted money and a building three times what is actually needed. But, what’s a million here and a million there?
The Boards of directors do as they please and rarely ask for member’s input.
Is NAR “too big to fail”?
If some like NAR and all the incestuous assns., that’s fine with me. But, I feel they have outlived their reason for continuing. Yep, we still need the MLS system – until something better comes along.
I wonder if the Federal Trade Commission has looked at this close assn being a monopoly or in restraint of trade – incestuous as it is.
Marvin,I talked to the FTC the DOJ and the Right To Work people but no one was interested,I think as long as we have this group of corrupt politicians in Washington nothing will change, I suggest to RE Agents that they do not donate to nar’s and the local associations pacs,the money is “contributed” to politicians at the local and Federal level to perpetuate the present lousy system.
VA RE – I have never contributed to a RE PAC.
Great post Rob. As always. I believe the true “church and State” example here is more about the true and underlying objectives of the parties. ORE has only one objective – getting more members to pay more dues. That revenue allows ORE to do things that have historically neutered and limited the fundamental competitive nature of the brokerage business. If that suits your needs as a member of such ORE – then great. And if you are the masses of the industry that do little business and enjoy the benefit of joining ORE and being provided everything you need to compete for free – I guess you are happy. But there are those that believe the membership objectives do not fit or foster a true competitive business environment. When in doubt turn to all there businesses. Few allow “members” unlimited access to their valued product and agree to surrender as much as 50% of their revenue if they bring a buyer. ORE has done its best to assure that this mandated cooperation and consideration continue to support their clear membership objectives. But they fly in the face of the creation and maintenance of a true competitive marketplace. No there business on Earth that has such crazy rules and policies designed to foster incompetence and to limit competition that are mandated by a professional Association. Does that tell you anything about what is at stake here? Big stuff. And as for those who don’t agree with such membership-driven objectives and instead support a more competitive sales environment – I guess it might be time to consider changing religions or maybe even simply not going the “church” any longer. Church or State? A level playing field created by ORE or a more competitive playing field created by some new alternative. The brokers need to get ORE out of the business of real estate brokerage, it’s that plain and it is not that simple. I think that is the real mandate here.
Ronald I concur, there does not seem to be any interest by the rank and file in what is happening in the upper realms of Organized Real Estate. I work as an outsider of sorts, a Buyer Broker, so I pay keen attention to all of this because I feel it will impact my business model – and I am pretty sure not in it’s favor. When I chat with other Agents and Brokers their main focus is on the state of the current real estate market, lead generation, getting the listing, closing the deal. I understand that preoccupation – it is our livelihood. But when I bring up Upstream, Broker Portal Project and Zillow Group as harbingers of huge change; I do not get much of a rise other than – “it won’t effect me, I can keep doing business as usual”. ZG and these initiatives are orchestrating changes that are of vital importance to every “real estate professional” and will impact they way they do business – they should care.
He who controls the listings, controls the industry. It’s not chicken and egg as in which came first; buyers or sellers? Listings drive the real estate brokerage business. You recently noted in a blog post that the BoD of Upstream is dominated by large brokerages or large affiliated entities. Those large brokerages control a disproportionalte portion of the listing inventory in their respective markets. Obviously, they have an interest in protecting their business model built around large listing inventories. At the NAR, State Association and local Board of Realtors level it is the small brokerages that dominate the organizational and governance structure. If you’re a large broker with many listings, you don’t have much in common with this body politic. So…you start your own MLS, i.e., Upstream (and even induce NAR to subsidize its’ development) for the display of listings, the way and places you want them displayed. So what it may not be good business practice for the 80% of firms and/or agents whose numbers predominate the head count in NAR or the MLS…I’m a big firm…and I have the listings.
t matters not to me how large your brokerage is,you may control nar but the RE business is bigger than the both of you,the other 80% will choose other forms of advertising which is all the mls’s do,they advertise,but really, no one controls the internet, your point that the 80% is cannon fodder,in the present circumstances, is well taken.
Hi Mike – Curious: What is the listing average per agent?
The NWMLS, Northwest Multiple Listing Service, accomplished consolidation of most all small parish MLS ‘s in WA. State sometime ago. NWMLS is independent of the Catholic Church, NAR. Some companies choose to join the local, state and national REALTOR associations others do not. Bottom line, agents get an excellent MLS provider system at a very reasonable cost for (about $35.00 per month) per agent payable monthly and companies can choose whether or not to join the big church. If the company chooses (most all larger companies are members of the big church) to join they will make it mandatory that the agent join also. Most all franchise type companies in WA State have joining the big church in their franchise agreements. Thus, all affiliates and their agents must also join. So, if your an agent and want to escape the big church, chances are you will end up joining a medium size to smaller size company who is not a member of the big church.
The average Realtor is oblivious to what is happening. It is too complex, the technology too convoluted, the ripple effects too far-reaching. Most have just said “uncle” and are doing the best they can. Many seasoned brokers have stepped down from their former positions of authority because the technology comes at them to fast, and changes to frequently. They used to be the ones that had the answers – now they just don’t get technology and don’t like being so uncomfortable. There has been a “brain drain” from the regulatory side of our industry.
In the local MLS, the holy grail is not the listing itself, it is the history of the listing. The MLS’s hold the key to this information. Yes – it can be derived from other sources – but most Realtors simply want to go to one place where it is all nicely packaged – consistent with their local customs and unique pressures. The local MLS has that upper hand. As the governance of that data gets further away from the source, the quality of the data and the data management is diluted. Look at Zillow for the best example. Try and get something fixed on Zillow. “I’ll have to get back with you on that” is their corporate mantra.
The problem with real estate in general, as Realogy CEO Richard Smith so eloquently stated, is the dysfunctional nature of it. This dysfunctional nature can be a good thing – it insulates the industry. Real estate cannot be “Uber’d” – although many are trying. It is far to complex and dysfunctional than a quick ride from point A to point B. What happens in Savannah, GA is different than what happens in Las Vegas. How the data is collected, market pressures, commissions, local practices, state laws, disclosure, agency practice – everything is different. There is no one size fits all. Some states have title companies, some are attorney closing… Tell a Realtor that howls at the moon daily they must conform to a detached Board of Directors in another state, and they will tell them where to go. They already tell their local Board of Directors where to go!
Real estate is a collection of Fiefdoms. Some big, some small, but fiefdoms nonetheless. I like your Catholic Church analogy – but human nature says some won’t like the Catholic interpretation and Viola! you will have Lutherans, Baptists, Muslims, Pagans – the list goes on and on… Like the tech industry – where we once had main frames, then moved to “personal computing” and now we are back to main frames(ish). We have come full circle – we are now doing main frame computing with a different architecture, with a smattering of personal computing. Consolidate the MLS under Upstream or what have you, and the nature of the local MLS will re-emerge eventually – just with a different architecture.
Until a force comes along that is so powerful, so compelling, so easy, and so useful local moon howlers will magically conform and jump in feet first, then happily pay enough to keep the distant bureaucracy happy, real estate will continue to be insulated by its own dysfunctionality. And I am not sure that is a bad thing.
If the sun is setting on MLS what will come next? Sites that will likely take all the business like Zillow and Trulia get all of their data directly from MLS.
Without MLS Zillow wouldn’t even exist.
In any case if you are to remain successful you have to be willing to change and adjust along with the times and technology.
Hi Jason – I’m an old broker – one man band – There is so much new stuff Rob brings to the table.
I have no idea what “Upstream” is. And, I am in a fog about lots of the new techy stuff. I am too old to learn the new stuff. I don’t like NAR and I keep paying their extortion just to get on the MLS so I can find comps.
I don’t know what Mobile is. I do not publicize my cell number/ Call the office phone and leave a message.
Rob is about 2 light years ahead of me so far as industry stuff and new tech.
Toshiba and Windows 10 were designed by Satan himself.
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