The Future of MLS is Now

Aug 19, 2007  |  Michael Wurzer

If there is a decision to be made about how cyberspace will grow, then that decision will be made. The only question is by whom. We can stand by and do nothing as these choices are made —by others, by those who will not simply stand by. Or we can try to imagine a world where choice can again be made collectively and responsibly,

— Lawrence Lessig, Code Version 2.0

For the past six months, I’ve been writing about the prognosticated death and life death of the MLS. Over a span of about 100 posts, I’ve suggested that:

In writing on this topic, I’ve often felt like web 2.0 and its promoters are rushing ahead of everyone, creating something new destined to destroy the MLS. The speed with which new sites and systems are developed is astonishing and that speed of change can make one feel powerless, as if caught up in a storm that can’t be controlled. Chaotic is a word that describes the feeling well.

Recently, however, I read two books that gave me an interesting perspective on this chaos that is worth sharing. First, Lawrence Lessig’s book Code v2.0, quoted above, makes clear that cyberspace requires us to make choices about our future. One of the central presmises of Lessig’s book is that software “code is law.”

I’ll undoubtedly miss some of the sophistication of this premise by summarizing it as saying that the way in which a system is designed creates the rules for engaging with that system. This is true of everything made in real space, too, but what many seem willing to overlook is that this is especially true in cyberspace. Cyberspace doesn’t exist except as humans create it. The corollary of this is that we have choices to make in creating cyberspace. Cyberspace doesn’t just spring up from nothing, we need to choose to create it and those choices rule what cyberspace is and how we interact with it and each other while there.

Lessig uses an interesting example to make the point that we have choices to make in defining cyberspace. Lessig recounts what at first appears to be a common tale of a disagreement between neighbors. One neighbor was growing poisonous plants and the other neighbor’s dog ate the plants and died, which resulted in the disagreement. The dog owner complained to the gardening neighbor, suggesting she could have grown plants that weren’t poisonous. The gardener responded that the dog owner should have chosen a dog that wouldn’t eat the plants or at least could be re-born after dying. Incredibly, the dog owner didn’t blanch at this suggestion, even though it seems completely bizarre to us. Why? Because these were neighbors in SecondLife, a completely on-line (cyberpsace) community, where you can design your own poisonous plants or dogs that do things not possible in real space. Choices. Lots of choices, in cyberspace.

Now, let’s relate this back to MLS. So much of what I’ve read and discussed with others about MLS “in cyberspace” borders on capitulation. Cyberspace exists and it’s changing or destroying the MLS, the story goes, like cyberspace is some outside force that cannot be controlled. However, that’s only true if we abdicate to others the choices of defining cyberspace for real estate, if we assume that the rules should or need to be made by the technologists or anti-trust regulators or the NAR or someone else other than us.

It’s also tempting to think that cyberspace for real estate is already defined, but it isn’t. Not by a long shot. In fact, cyberspace isn’t defined for much of anything. Seriously. Sure, the web has been evolving for the better part of ten years, and it seems ubiquitous now, a thing or blob that’s just here, there, everywhere. But the truth is that everything about the web and cyberspace generally is just now being defined.

Perhaps the best example is the shift from anonymity to identity occurring right now. In the early days, the wonder of cyberspace was tied closely to the fact that you could be anyone or no one or many people, all that the same time. This anonymity or pseuodonymity, as the case may be, promised freedom to many. Freedom to be someone they were not, such as not this sex or that race, or ugly or fat, or a CEO or a mail worker or anything else they are.

The rise of social networks over the last several years, however, has shifted the focus away from anonymity to “who are you”? First, kids were posting the most intimate details of their lives to their MySpace or Xanga pages and then college students were posting privately to their friends on Facebook, and now business people are trying to figure out how to network on LinkedIn or Facebook or Zillow or Trulia or any of the other many broad or targeted social networking sites. What’s common about all of these sites is that they all have a “profile” of each user and it’s that profile or identity that’s being shared with everyone. For many, the profiles on these sites are who they are.

Think about this for a minute. Facebook has many ways for you to describe yourself. You can share your music, photos, writings, videos and more. But there is a limit. Even though Facebook has opened up its system to allow others to add applications to it, there still is a limit to what can be shared. For those who tie their identity into the social network, those limits constrain who they can be. The limits of the system limit the participants. This was one of the points Lessig is trying to make when he says code is law. Put another way, code constrains or regulates.

So, who is making the rules? Maybe it’s Facebook or maybe it’s Zillow or Trulia or or some other site you’re working on right now. But maybe the rules are just being written or constantly re-written. That’s what I think. Here’s an example from just a few days ago. Brad Fitzpatrick, a 27 year old who helped create LiveJournal, is promoting an idea to standardize the “social graph”, because, in Mr. Fitzpatrick’s words, “People are getting sick of registering and re-declaring their friends on every site., but also: Developing “Social Applications” is too much work.” Brad wants the social network to be portable and not tied into the silos of Facebook or the other social network sites, one of which, LiveJournal, Mr. Fitzpatrick helped create. Here’s more:

While Facebook is an amazing platform and has some amazing technology, there’s a lot of hesitation in the developer / “Web 2.0” community about being slaves to Facebook, dependent on their continued goodwill, availability, future owners, not changing the rules, etc. That hesitation I think is well-founded. A centralized “owner” of the social graph is bad for the Internet.

Does this sound familiar, sort of like the debate over access to listing data and who can do what with it? But here’s the deal: Mr. Fitzpatrick understands that the world in which he’s living is definable. The rules are not yet written.

Standards are just now being defined for all that matters. Until now, the standards that were being defined were for things like HTML, TCP/IP and other important parts of the Internet and web. But those things are all generic or abstract at a level mostly interesting to technologists. Now, however, what’s being defined are things like who you can be and what you can do with your data and who you can talk to and what you can say or share with them. This is where it gets interesting for you and everyone.

Back to the MLS. The RETS community has been working hard to define standards for exchanging MLS data, including defining what the data should look like. This is the meat as well as the potatoes for the future of MLS. Anyone with interest in real estate should be engaged with the RETS process at some level. More importantly, I think the to-be-formed Real Estate Standards Organization (RESO) has an opportunity to create conversations far beyond the core of listing definitions and data exchange.

One of the areas that needs to be explored is what does being a “member” of the MLS mean, especially in cyberspace. This goes to the core of the MLS portal question. What does it mean to have an MLS portal? Who gets access? What can they do when they get there? Who can they talk to? What are the rules? As noted above, these questions will be answered, the question is who will be answering them and how. I’m suggesting that now is the time for the current MLSs and their members to engage these issues squarely and openly and rationally.

This conclusion — that now is the time to engage these issues, like never before or after — leads directly to the other important book I read recently, The Summer of 1787: The Men Who Invented the Constitution by David O. Stewart. What amazed me most about the recounting of the Constitutional Convention by Mr. Stewart was that the convention lasted nearly four months, with many delegates coming and going throughout that time, and many others staying the entire time.

So, in many ways, the fame of our founders is due to the fact that they were there. They showed up at the time that mattered. On the other hand, the Convention likely would not have been a success had just anyone showed up. From beginning to end, George Washington was there, silent as the leader most of the time, but there, lending legitimacy and urgency and importance to the affair. Many others, Wilson, Rutledge, Madison and Mason, may have had a more direct hand in writing or crafting the Constitution, but it would have been for naught had Washington not been there, too. Everyone played a critical role in the process, with small states battling large states, slave states battling free, farmers battling shippers, and more.

Certainly there were significant compromises in the Consitution (notably slavery) that were poorly reasoned, but the beauty of the remainder of the document is the result of a hard clash of reason. These men discussed the issues of representation, the presidency, the courts, and state rights for months. Very little was just pushed aside. The issues were explored at length. Lessig makes this point, too:

There is a magic in a process where reasons count—not where experts rule or where only smart people have the vote, but where power is set in the face of reason. The magic is in a process where citizens give reasons and understand that power is constrained by these reasons.

My question is, when is the Constitutional Convention for the MLSs going to occur? I attend conference after conference that last two days, at most. Then there may be some calls in between that last an hour or two. This isn’t going to cut it. The questions facing our industry to define the rules of real estate in cyberspace are too difficult to resolve in a few days. We need the clash of the big and small brokers and MLSs, the regulators (NAR and the DOJ), the technologists (vendors of all kinds) and others to participate in this process on a meaningful level. Of course, today, such a convention doesn’t have to occur in real space, but rather can occur in cyberspace. The important point is that the convention occur. That we engage the questions, seriously and deliberatively. Now.

19 Responses to “The Future of MLS is Now”

  1. Robbie says:

    Great post. A reminder to the community that “there is no fate, but what we make”, to quote the Terminator movies.

  2. Erik Hersman says:

    Wow, what a great opening to a worthy conversation!

    I completely agree that nothing is static on the web, least of all within the real estate space. However, it’s the inability to actually move forward that is hindering the true owners of the data in this space. That’s why the “realty.bots” are making progress and stealing the attention of the general consumer. So, there is a very real need to meet and take part in defining the future of the MLS (or the evolution of it) in cyberspace, but there is also the need for action.

    That was my problem with Dale Stinton when he spoke about the big projects on the line at Inman. Sure, they got 900 people in a room to give their blessing to 13 initiatives. My question is will they be able to execute on any of it?

    Further questions come up on this too. You mentioned a need for all parties to start taking part in the discussion – offline isn’t really an option, so online it would be. Where and how does that work? Is it the patched together conversations taking place on multiple blogs? is it a centralized discussion forum? How does it coalesce into a real meeting of the minds?

    (obviously you’ve given me too much to think about – I’m retiring to my cave now…)

  3. Great post, Michael. These issues are fast rising to the top of many people’s minds as more new companies enter the space. Would love to have you join the discussion and debate at the next Real Estate Connect event in New York. The future of MLS tracks we had last month in San Francisco were standing-room only, but we need more voices.

  4. Jim Duncan says:

    Jessica –

    Were any of those tracks posted on InmanTV?

  5. Joshua Harris says:

    Have we passed the point of no return???

    Using your Constitution formation example, was there a time when the meeting of all of these great men wouldn’t have mattered? If they had waited or postponed these crucial meetings because of their own agendas would we have the same results today?

    My point being this… Has the real estate industry waited too long to correct and mold the MLS into what will work for the future? At this point it seems easier to simply create a national database of listings without the MLS or NAR’s involvement. The technology, Internet, and consumers have all reached a point that is, what I believe, beyond the capacity of the real estate industry.

  6. Joshua, I don’t think we’ve passed the point of no return. More specifically, although “it seems easier to simply create a national database of listings without the MLS or NAR’s involvement”, this really begs the question posed in the post: How do we preserve the cooperation that allows for the aggregation in the first instance? Technology alone cannot do that, as shown by the many models out there right now, none of which has anywhere near a complete aggregation. My point is that the aggregation, to be complete, requires a process like the MLS, or you’ll end up with fragments here and there but the entire compilation will be nowhere.

  7. Erik, we’re working on putting up a wiki with a draft constitution to which all can contribute and see if we can get the conversation going. Hopefully we’ll have something up in a week or two.

  8. Erik Hersman says:

    A wiki is a great idea. Hopefully it’s one that everyone can figure out how to edit, not just us tech guys. 🙂

    I know you’ll fill us in on when it goes live.

  9. Anonymous says:

    Hey guys, I’ve been doing some research on the MLS industry because I’ve been offered a position in one regional MLS. You seem to know more about that system then anyone else…..:) All I can figure out for sure is that its in a state of flux.

    I have two questions that I can’t find the answer to.

    1. What effect do you think will a market downturn have on a MLS? I am following the logic that as real estate sales slow down, some people who became brokers to make a quick buck will leave the industry. That will mean less members and less revenue. Am I missing something?

    2. What are the risks of an MLS being swallowed by a neighbor MLS? There are 600+ of them and a lot of them seem to be merging.

    Any help is definitely appreciated.


  10. Michael, I see your point… and ask why does there have to be cooperation to have aggregation? (hey, that’s kind of fun to say) Google is aggregating w/out cooperation? Why is there this need to “play nice in the sandbox” when it comes to real estate. As if playing nice is the only way to get listings or data, which leads to consumers. I think we need a big kid to come into the “real estate sand box” and bully some of these big real estate companies around! Maybe the problem is in the word “aggregate”, we should begin a trend to replace aggregate with “crawl”.

  11. […] response to my post The Future of MLS Is Now, Joshua Harris commented: Michael,  I see your point… and ask why does there have to be […]

  12. Anonymous:

    1. Yes, your general logic is on target. Fewer sales mean fewer agents, eventually. That being said, I’m not aware of any MLSs that have ever gone away for lack of membership. Moreover, the “eventually” in my first sentence is key, because the many MLS executives I’ve spoken with over the last six months are not predicting dramatic declines in membership. Membership growth has slowed, if not stopped, but major declines do not appear to be imminent. I’ve been predicting for years that a re-trenchment in membership is around the corner, and I still think so, but so far I’ve been wrong.

    2. Regarding merger risk, that’s really dependent on where you’ll be going. In some places, it’s the only topic of discussion. In others, it’s not yet on the radar.

  13. Anonymous says:

    Thank you for the reply Michael. How familiar are you with with market in Southern California? Would be able to take a guess which MLS associations might be at risk there? I know that there was a recent merger that formed SoCalMLS, which is one of the biggest in the country now.

    Thanks again.

  14. Well, Greater South Bay just merged with MRMLS. There also is the CAR’s business plan that calls for — but doesn’t realistically stand a chance of — creating a statewide MLS. And then there is the Common Database Utility project that is seeking to combine the data from all the MLSs south of Los Angeles (if not more) into one database, but that plan doesn’t contemplate the merger of the individual MLSs, just the data. And, in the northern part of the state, you have NCREX and Quattro. Generally, of all the places in the country, California is at the leading edge of MLS consolidation activity.

  15. […] I’ll try to post more later, but if you have anything to contribute to the wiki, please do. I hope this becomes an easy for everyone interested to exchange ideas on this important topic. […]

  16. […] let me start with a more recent post,  The Future of MLS Is Now, which makes the case that this time in the history of the MLS and the web is crucial, that the […]

  17. […] other “objects” are happening all over the world.  This is what I was writing about in The Future of MLS Is Now.   Just like other industries and social concerns, the real estate industry is being modeled for […]

  18. […] do we have the broad and intensive debate that seems necessary? I’ve written previously that the future of MLS is now and I’m wondering who will be the designers of that […]