MLS Cooperation Creates Value for All Brokers, Not Just One

Jan 23, 2017  |  Michael Wurzer

I attended the Inman Connect Conference in New York City last week, where there was yet another panel posing the so-tired question, “Is the MLS Doomed?” I’m not going to dive into the panel itself, which did a fine job, but rather I want to comment on two blog posts from Rob Hahn and Drew Meyers over the weekend that followed-up on the panel.

Both blog posts are great examples of what leads so many down the well-worn path of predicting the death of the MLS, namely a fundamental misunderstanding of the value MLS delivers. MLS creates value through cooperation of competing brokers. The mistake so many make in analyzing the future of the MLS is they misunderstand either the source of MLS cooperation or the nature of it.

For example, the analysis in Drew Meyers’ post suggests a few technology tweaks could replace the MLS. However, as I explained in my post MLS Is More Than Technology about ten years ago (yikes, 10 years flies), cooperation is based on trust, not technology. The simple reason Zillow Group (ZG) could not replace the MLS is that, as a competitive advertising entity, they won’t get all the competitors to cooperate.

In fact, ZG’s very public strategy to focus only on Premier Agents makes it very clear that they have no interest in working with all brokers, they understandably just want to work with those willing to pay them the big bucks. Of course, one could argue that, eventually, ZG’s Premier Agents some day will be the only agents left, creating a de facto “MLS,” but that ignores the diminishing returns of an advertising platform like ZG in any given market. Competing brokers automatically will seek out alternative platforms in order to compete in a less bloody ocean and that competition naturally lessens the cooperation. The bottom line is that competitive advertising portals like ZG are not designed to create cooperation, and so they will not replace MLS, regardless of the technology involved.

Let’s move on to Rob Hahn’s post. Rob says, “The core value proposition of the MLS is that it is the lawgiver which regulates the behavior of real estate professionals to each other.” Again, the core value of the MLS is cooperation, not the rules themselves. The rules are the agreement that comes from and creates the cooperation, but that doesn’t mean the value of the MLS is from the rules themselves. I think the failure to make this fundamental distinction results in people thinking of the MLS as a burden instead of a value.

Next, I’ll address the point in the title of this post: “MLS Cooperation Creates Value for All Brokers (and Agents and Consumers), Not Just One.” Distinguishing between the value of cooperation (all brokers) and the needs of one broker (competition) is critical to any analysis regarding the future of the MLS. Typically when folks like Drew and Rob analyze the value proposition of the MLS, they do so from the perspective of a single broker or agent, but that ignores the core value of the MLS, which is the cooperation among the individual brokers and agents.

A simple example might make this point more clear. Many in the industry express concern or confusion about how Upstream is going to the impact MLS organizations, but Upstream, by definition, will not reduce the value of the MLS because it is an individual broker product and not a product that provides aggregated data from all the brokers in the MLS. Undoubtedly, many individual brokers will benefit from Upstream and Upstream will be integrated with the MLS for those individual brokers, but the product is not intended to and cannot replace the MLS itself because it only deals with the data for each individual broker, not the entire MLS. Again, as ZG found out following its blow-up with Listhub, the MLS aggregation is fundamentally different and more valuable than the listings of any one broker. Thus, by serving all brokers through cooperation, the MLS creates value that doesn’t exist anywhere else and is not replaceable by serving anything less than all brokers.

Let me wrap up by calling for an end to all conference panels prognosticating about the death of the MLS. I think we’ve all heard that debate enough and what’s a lot more interesting is what MLSs are doing to improve the incredible value created by cooperation. I’ll write more about that in the coming months, but, for now, let me proclaim once and for all, “The MLS is Dead, Long Live the MLS!”

4 Responses to “MLS Cooperation Creates Value for All Brokers, Not Just One”

  1. Mike, this a great analysis and logical argument. Well said and thanks for sharing. As another great writer once said, “Reports of my death have been greatly exaggerated”, Mark Twain.

  2. Ray Elser says:

    I couldn’t agree more you and think many brokers and agents are distracted by the next shiny geegaw and don’t think about the value proposition of the next big thing, just get it before my competitors. Though NAR for years has stated there is no interest in a national MLS, I sense that is the direction they’re moving, which I disagree with completely. Another trend in my market is the diminishing number of reported sales to the MLS. Historically the MLS reported 70+% of deed transfers that has reduced to about 50% and some Realtors crow about that fact, like it is a badge of honor to claim a larger number of closings unreported to the MLS. In addition to cooperation, data is the other important facet of the MLS to its members.

  3. ron stephan says:

    Great article……as I sat there and kept hearing about 12 mls’s, the death of MLS, and how everyone else can do it better…….I thought back to 1993 when I first got into this business and began the task of upgrading our MLS value, things like email, a public website…..a web based mls system….all designed to assist members in producing leads to generate more visibility and sales……while at the same time operating within a set of rules that fosters cooperation I truly believe it still boils down to brokers and agents working together in natural local markets to close deals. Yes some purchases can be remote, but when it gets down to the average buyer (old or young) laying out the cash or putting their name on a 30 year mortgage they still want to walk through the property and understand all of the paperwork (electronic) that they are committing to.
    MLS’s that provide service are not going to disappear !!!!!

  4. John Coley says:

    Agreed. If, as Hahn suggests, the MLS is merely the lawgiver that regulates behavior, then why isn’t everyone’s behavior perfect according to the MLS law? Why isn’t there 100% compliance by 100% of agents in 100% of the > 700 MLSs?

    E.g., let’s say a MLS board notices that lazy agents are posting only one poorly taken picture per listing. If the MLS’ members vote to change the law to require that all listings must have at least 10 pictures, why is it that those same lazy agent simply increase the number of poorly taken pictures? The underlying behavior (lazy photo taking) was not influenced by the law.

    More often than not the behavior is more effectively influenced by cooperation (a fellow MLS agent calls listing agent and asks, “hey, I have a buyer really interested in that property, but can you post some better pics? We can’t tell much about the home.” At least, that’s the way I see it commonly play out as an agent / broker.