I like being on panels. I like moderating them too. They’re fun, usually pretty short, and oftentimes the other participants are friends I can joke around with backstage. One downside though is that the panel format doesn’t give you a chance to dive into detailed explanations of complicated concepts. A panel is better for sound bites.
I ran into this problem last week after my panel at Inman Connect called “Are the MLSs Doomed?” I said that most MLSs, as controlled by the Association of Realtors through a broken governance model, cannot be sustained.
Afterwards, a few people expressed… reservations? concerns? dismay? protest? Whatever the right word, I promised to extend and explain myself. So, this post.
The MLS is not doomed unless we fail to doom the vast majority of them. As an industry, we have two choices. We can either cull the weak from the herd. Or we can all perish together.
Nothing I Said Was New
My perspective remains unchanged from a year ago, in which I outlined most of these concepts at my speech at CMLS. Many of you were there in person so none of this comes as a surprise to you. But for the rest, here’s the video — I invite you to watch the whole thing.
The core concepts from that presentation, which are the same core concepts that underly my work with the MLS and the Associations, are as follows.
- Too many, too small, too poor.
- MLS and the Association are stuck in a dysfunctional codependent relationship.
- Governance is broken.
As you see in the presentation, I am not just criticizing. There are real ways forward to save the MLS. But saving the MLS as a whole means that we must get rid of hundreds of tiny poor fiefdoms that are a drag on the industry. Hence, my statement about most MLSs being doomed.
I flirted with the idea of writing 10,000 words explaining that presentation. But thought y’all probably have things to do this afternoon. So, watch the presentation, and let me know if you have any questions or thoughts.
I will explain a couple of things from the Inman panel that I didn’t address at CMLS.
Money Isn’t Everything, But It Isn’t Nothing
Troy Rech of Clareity asked this question on Facebook: “What about the MLS whose 150 members are happy?”
My response: “They’re still doomed.”
The total annual revenues of a 150-person MLS, if they’re charging around the industry average of $30/mo for the MLS, is $54,000. Can it even afford a part-time CEO? Or a couple of paid interns, for that matter?
I mean, seriously, how could that MLS offer anything other than the barest of bare minimums on old, outdated systems with barely any customer support? What about compliance? Web API’s? Mobile access? On some fraction of $54,000 per year? How?
Those 150 members aren’t happy now. If, by some odd twist of happenstance they are, they won’t be for long. So yes, the tiny MLSs are doomed because they don’t make enough money. Therefore, they cannot offer enough value to their customers. They could become a local service center of a larger MLS, but that requires consolidation – not data sharing or whatever else our industry has come up with to preserve fiefdoms.
Cull the Herd… or Else
Too many, too small, and too poor — that’s the status quo. My preferred future is fewer, larger, and richer MLSs that operate as for-profit companies. These MLSs provide products and services that brokers and agents want – and, most importantly, for which they are willing to pay market rate.
That future requires that governance be fixed so the MLS can operate like a normal business, while the Association operates like a nonprofit organization. That, in turn, requires getting a divorce. The dysfunctional and codependent marriage between the MLS and the Association must be resolved so both parties can be happier and healthier.
If we don’t make these changes, if we try to stay the course of protecting micro-fiefdoms and keep believing that the MLS and the Association are somehow irreplaceable and immutable… well… that’s the alternative future. In that future, the MLS is doomed because somebody, whether Upstream, Zillow, Google, or HUD replaces the whole structure with one that makes sense for brokers and agents in the 21st century.
Cull the herd, or perish together.