antitrust

The court has issued a ruling in the Zillow v. MRED lawsuit, and it’s a big one. There are real consequences to this decision.

[I have a business relationship with some of the entities mentioned herein. As always, none of them have or had any input into my thoughts here.]

Late yesterday, I got news that the court in Illinois handed down its decision on the preliminary injunction (PI) motion in the Zillow v MRED lawsuit. I skimmed it, then read it over again.

When Zillow won its PI motion against Compass, I called it a total victory. Well, in this case, the term that keeps coming to mind is Fatality! from the old Mortal Kombat video game.

Briefly put, Zillow lost every single argument it made. It wasn’t particularly close. At no point did it appear that the court had to really struggle to balance the equities, or really parse the antitrust laws. And at a few points, it appeared that the court was actually annoyed at Zillow for making some of the arguments that it made.

This is a major ruling and will change the overall environment for Zillow and for the industry as a whole.

Now, let’s be clear that this is just the PI motion, not the trial itself. Zillow could win at trial, in theory, though practically speaking… that almost never happens. In theory, Zillow could appeal this ruling or the trial itself to an appellate court and could get a different outcome. Anything is possible. But that don’t mean it’s likely, or that Zillow would be wise to spend further millions going down this legal rabbit hole.

So let’s look at the ruling together, then let me give you my thoughts and takeaways and what I see as the likely result of this litigation and this ruling. As always, I am not your lawyer and none of this is legal advice. It is edutainment and industry analysis.

Let’s get into it.

Brokerage Issues

Maybe it’s time to reconsider fiduciary duty as the default for real estate agents…

Something fairly interesting happened to me at Inman San Diego. Well, it happened near me and I happened to overhear the conversation.

An agent was speaking to a friend of mine about her practice, what she’s seeing on the ground, and what she’s really working on. Turns out, what she’s really focusing on right now is setting up affiliate relationships in title, escrow, and mortgage so that her team can more directly monetize her client relationships. It’s a smart business move, and one that other agent teams and even solo agents have already pioneered. There are companies that offer programs specifically geared towards the agent, not the broker.

The agent said something I have heard from brokerage owners for over a decade: real estate is a loss leader and the real profits are in affiliated services. It was always true for brokers, who are paying out the lion’s share of commissions to agents (if not 100% of it), but this was the first time I heard an agent say the same thing.

That conversation made me wonder if it is not time for the industry to reconsider making fiduciary agency the default for real estate agents. Perhaps the default for all real estate agents should be transactional agency. Perhaps it is time for us to consider whether the real estate agent really should be an agent who owes fiduciary duties to her clients or a facilitator who owes no duties to either the buyer or the seller but merely ensures that the transaction itself happens as smoothly and as trouble-free as possible.

Given how central fiduciary duty is to the self-identity of real estate agents everywhere, and to REALTORS specifically since it is Article 1 of the Code of Ethics, I understand even questioning whether it is still fit for purpose could be controversial. But hey, that’s kind of what I do here: ask questions and re-examine assumptions to see if they remain valid.

If you’re into questioning deeply held beliefs, continue on. If you are in leadership positions, especially at a REALTOR Association, definitely continue on. If neither of those things, then have a great day taking care of business.

Brokerage Issues

How to fix MLS governance, with realism thrown out the window.

Those newer to Notorious ROB and to me likely do not know that I have been working to reform MLS governance for… oh… over a decade now. Maybe longer. Some of those efforts have borne some fruit for clients over the years.

I want to revisit this topic, but from an “Idea Factory” perspective. What do I mean by that? I mean that given the MLS is all over the news these days, given the turmoil centered around the MLS, and given all of the changes over the years, I want to throw out realism.

Years ago, when I was newer to the whole consulting thing, Stefan Swanepoel once told me that I was recommending things to my clients that they couldn’t even wrap their brains around, never mind implement. He suggested that I give them something possible to do. I really appreciated that advice, and Stefan is a very very wise man. Sadly, I could not take his advice because I am not all that wise in many ways (Sunny can back me up on this) and prefer brutal honesty to palatable 10% measures.

Governance remains broken across most of the 480ish MLSs in the country today. That broken governance contributes enormously to the dysfunction in and around the MLS and in the industry itself. I have spent years and years trying to diagnose the problem, and come up with solutions. Most of them are quite unpalatable to those in charge of the MLS today. I get it.

But perhaps for the sake of posterity, for those leaders who will come after whatever comes next, or maybe just for a selfish intellectual exercise, allow me to offer some unrealistic ideas for how to fix MLS governance. This post is not likely relevant to many of you, but for some of you, especially those who are VIP members, it might trigger some thinking and that is the goal.

Let’s get into it.

Brokerage Issues

The settlement between NWMLS and Compass suggests a direction of travel for the industry moving forward.

[I have a business relationship with Compass. They are not involved with my thoughts here, and I have taken pains to refer to only publicly available information for this and all posts.]

Inman reports with a needlessly provocative headline and language that the lawsuit between Compass and NWMLS has been settled. If there had been any doubts about Inman’s bias, those can now be removed.

Compass declared victory in Washington on Monday, as it announced it had reached a settlement agreement with the region’s multiple listing service that will allow agents to market coming-soon listings for the first time.

The settlement agreement comes in the case Compass filed against the Northwest MLS (NWMLS) in April 2025, shortly after the brokerage briefly lost its access to the MLS data feed when a dispute over coming-soon listings boiled over.

The agreement is the latest major policy change by an MLS in response to action by Compass, the megabrokerage that has sought to use its massive size to shape the real estate policies governing the industry into a mold that more closely aligns with its goals.

Compare to the reporting in Real Estate News for a contrast:

Compass and the Washington state-based Northwest Multiple Listing Service (NWMLS) have settled their year-plus-long lawsuit, Compass announced on Monday.

The first is psyop, the second is reporting. Perhaps Inman’s new CEO should take a look at how his publication is doing things?

Plus, speaking of bias, I disclose my conflicts of interest. My clients buy my time, not my thoughts or analysis, and this issue is something I’ve been commenting on independently for quite some time now. But you can make up your own mind.

I waited a bit to see if any court filings appeared, but I could not find any publicly available source. So I am unable to look through the nitty gritty details, which is what I was hoping to get before writing this. Still, I didn’t want to wait much longer.

The important takeaway from the settlement, and we will need to rely solely on media coverage of it, is that it points to a direction of travel. This one settlement is not all that important in the grand scope of things. NWMLS after all is a private, non-NAR MLS and it has long been unique in some of its rules. But what this settlement suggests about trends is worth thinking about.

So let’s do that together, shall we?

This is a public post, because it is me simply musing on some developments and ideas around AI. The hype is real, after all.

A post on Inman promoting yet another “artificial intelligence-powered real estate search platform” is what sent me down this path. I’m certain that HouseMe.ai is very cool, and the fact that the co-founders are three luxury agents instead of Silicon Valley tech bros is a good sign. But reading through that article made me wonder if real estate is not pursuing the wrong goals with AI and not yet quite understanding what AI is good at doing and what it’s less-good at doing.

So while I will reference the write-up in Inman, this is by no means a review of HouseMe.ai or a criticism of it at all. HouseMe.ai is merely the jumping off point for considering ideas I have knocking around my head, because what it claims to do is something I have noticed a lot of “AI tools” in the industry also attempt to do.

Lifestyle Search

I clicked into the article because it mentioned “lifestyle search” right in the title. And that’s a topic I’ve engaged with in the past, long before AI was a thing. From the article:

“No one has ever been able to search for real estate this way,” Coombe said in a statement. “This is a fundamentally new category, using AI and real data to let buyers, sellers and agents customize their search around exactly what they need.”

Coombe added that “buyers don’t just want a listing anymore, they want to search for the lifestyle they seek.”

This has been a recurring theme in real estate for ages now. In fact, I was personally involved with something called “lifestyle listings engine” back in 2009. The idea then was the same: buyers don’t want houses, but a lifestyle. Then over the years, there has been numerous efforts to offer lifestyle search by a lot of companies like planetRE, Local Logic, URBAN4M, and others.

I don’t know that “lifestyle search” ever really worked out like people thought it would. Turns out, consumers do kinda know how to search for the lifestyle they seek and are now just looking for properties that fit it. Remember that most people move within 15 miles, so they already know the area; they’re just looking to upgrade the home. So very few people are going to a computer and asking, “Where should I live?” They already know; they just want to know what’s for sale.

Of course there are gaps, especially if you’re moving into a new town or state; ask me how I know. But… if there are those gaps, I don’t know that people want to go ask a computer.

In my case, when I first moved to Las Vegas, we rented for a year specifically because we didn’t know what it was like to live here, and didn’t know what areas and neighborhoods would fit our lifestyle. We asked agents for ideas, but even then, we wanted to experience it firsthand before buying a house.

In other cases, maybe people can’t rent while living/looking so they really need guidance on where to live and what house to buy based on their lifestyle. In such a case, I submit to you that AI is the wrong thing to ask. A human being is the right fit for purpose.

Limitations of AI

I am no AI expert. I just vibe code a lot. And use AI every single day.

Over time, my experience with AI is that it is wonderful at some things, but really not that good at other things. For example, AI is really not good at pushing back, at disagreeing, and at correcting mistakes. I think all of them are programmed to be Yes Men. I literally have to tell my AI to stop kissing my ass.

Frontier AI like Claude Fable 5 or GPT 5.6 also tend to overcomplicate shit and overthink everything. That’s a great trait when you’re looking to code up a web app, but it’s not that great for something like, “I enjoy biking; where should I live?”

I literally just tried this experiment. I asked Kimi K3 (near-peer to Fable 5) where I should live in the Las Vegas Metro area if I enjoy competitive shooting. Which I do.

It did a very very respectable and impressive job. It identified three main shooting ranges that host competitions, mentioned other quality-of-life factors like state gun laws, no state income tax, even the availability of BLM land. Very respectable. Then it asked me a bunch of questions to “clarify” things so it can help me more.

However, the AI did not know some important details that affect competitive shooters like me. For example, it left out Pro Gun which hosts a match every weekend, or ease of getting to highways for travel to Arizona or Utah (St. George has a very active scene). It ignored how difficult it is to get memberships at some of the private ranges. It did not know anything (how could it?) about the quality of competition across the Las Vegas valley.

You know who would have known all of those things and could have advised me far better for my “lifestyle search”? A real estate agent I know who happens to be a competitive shooter.

This is just a limitation of AI. It has been trained on a ton of data, and it knows a lot about a lot of topics. And maybe in the future, with some super AI that tech bros are dreaming up, we’ll get the real-deal Wintermute. But today, AI isn’t great at “lifestyle search” because it is not a human and does not have a lifestyle. It can offer fact-based “advice” but miss out on so much that is important to a person’s actual lifestyle. Because it isn’t a person.

I genuinely don’t think this is because my hobby is such a unique and weird niche. If I asked Kimi or ChatGPT or Claude about fine dining, it can look up all the reviews, look at stars on Yelp or Google, search through forums and such… but I do not believe AI can come close to a human who loves fine dining. Because Claude has never enjoyed xiaolongbao or dined at Sparrow + Wolf.

As I said, I work with AI every single day. It is great at some things. It’s not great at others, and the thing it is most not good at doing is being human. Lifestyle is inherently and essentially human.

The “Intelligence Report”

Now… one thing AI is really good at doing is compiling a huge amount of information and data and generating reports. So I found this passage very interesting:

HouseMe.ai searches also generate an “Intelligence Report.” At its foundation is the True Cost Calculator, which breaks down the full cost to close. The AI Investment Thesis builds on that with broker-level analysis of each property, including financial summaries, key highlights and a plain-language read on potential risks.

This, AI can do and do very well.

The report also includes the AI Valuation Score, a public 0-10 fair-value rating assigned to every active listing. Paired with a Negotiation Strategy tool that generates data-backed offer recommendations based on days on market, comparable sales and local conditions, HouseMe.ai says it gives buyers an edge in how they evaluate and approach each opportunity.

Valuation Score? Negotiation Strategy tool? Data-backed offer recommendations eh?

Rounding out the report is the Area Market Pulse, with neighborhood data on pricing trends, inventory and market conditions, plus a conversational AI interface that answers questions about any listing in 97 languages.

Neighborhood data on pricing trends, inventory and market conditions that can be delivered over “conversational AI interface” that answers questions, eh?

So if HouseMe.ai can do all of that… I have a question for the buyer agent that HouseMe.ai will eventually connect me to: What would you say you do around here?

The AI can give me a True Cost Calculator, and give me a deep analysis of each property, including financials, and potential risks. It can help me negotiate with Negotiation Strategy that generates data-based offers. And AI can give me market conditions, inventory, and answer all my questions.

What do you do? Open doors? What if the home has a smart-lock that the AI can work with the homeowner or listing agent to let me tour it? When we are touring, what can you tell me that the AI hasn’t already told me? Once we are done, and I want to make an offer, what is that you do when the AI is giving me the full negotiation strategy and data-backed offers?

I know my friend Greg Robertson would say, “AI can’t smell the cat.” But I can. I don’t need a human buyer agent to smell the cat for me.

Oh, that’s right… real estate is an intensely stressful and emotional transaction and you will be there to console and soothe me like a psychologist, although you are not licensed to be one and certainly not qualified to be a psychologist. Why don’t I just pay my actual licensed therapist her $150/hr rate to console me and hold my hand instead of paying you 3% of the purchase price?

For that matter, did you know that 1 in 4 adults use AI for mental health? From the Stanford study:

A striking 24% of surveyed participants use LLMs for mental health. These users are more likely to be young, male, and Black and have poorer mental health and quality of life. They report difficulty accessing traditional mental health treatment – particularly due to cost and insurance coverage – and use LLMs because they are free, convenient, and available when needed. Users rely on LLMs for social and emotional support, to learn therapy skills and tools, and to supplement existing therapy. Non-users of LLMs for mental health expressed doubts about LLMs’ empathy and trustworthiness. Our sample likely overrepresents technology adopters, conservatively adjusting for this based on address-based estimates of population LLM use suggests that 13-17 million US adults may use general-purpose LLMs for mental health.

If people are willing to treat Claude as a therapist for mental health, you don’t think they’ll talk to Claude about the anxieties from trying to buy or sell a house?

So… what would you say you do around here, Mr. or Ms. Real Estate Agent?

Combining the Above

I am not an AI doomer. I don’t actually believe that AI will replace all human workers. And combining the two above suggests why.

AI is not good at doing “lifestyle search” because it fundamentally does not understand what “lifestyle” is. It doesn’t have a lifestyle and has no experience with it. (Again, maybe future AGI type stuff may make this statement outdated, but then I just hope to merge with Wintermute and not care about housing or food or anything.)

AI is really good at generating reports and recommending data-backed offers and such.

The solution is obvious: let AI do what it’s good at doing, then hand that off to the human who is good at having a lifestyle, at dining out, at having hobbies and families and pets, at you know, being human.

The effort to “be more efficient” to the point of having consumers chat with AI in 97 languages is bad for two reasons. One, it truly devalues the human real estate agent, and two, it delivers a sub-par experience for the consumer. As HouseMe.ai said in Inman:

HouseMe.ai emphasizes that it was founded by working luxury brokers, not outside technologists. The company says that grounding in the day-to-day realities of high-stakes transactions shaped a platform built to answer the questions buyers and sellers most frequently ask.

I end up wondering why you would want the platform to answer questions buyers and sellers ask. Wouldn’t it make more sense instead to have a human being informed by AI answer those questions? But if a human did answer those questions, what value is the person adding there? If she is simply repeating what the AI did, there is no value. So what is the human agent adding?

What is it that you do around here?

What we have to figure out, along with every industry in America today, is to specialize better and let AI do what it’s good at while humans do what they’re good at, and then train the humans to be ever better at those things. Because the AI is nonstop training to be better at what it’s good at, and trying to get better at things it’s not good at today.

Seems to me that it is simply a matter of time before somebody somewhere tries to operate a brokerage that has no human agents and just uses AI to help a buyer or seller do a transaction. That’s coming, and I am confident of that.

I am equally confident that that brokerage will carve out a niche and no more. Because AI isn’t good at some things. What I don’t know today is what value the human real estate agent will add. We had best focus on figuring that out as quickly as possible.

-rsh

MLS & Associations

Unlock MLS makes a truly innovative first step towards a central problem in the MLS today.

I was either on an airplane or speaking at the Columbus REALTORS event when the news broke about the first true innovation I have seen from a major MLS in years. Unlock MLS, the MLS for the Austin metro area, has made real changes that matter in an attempt to deal with the current strife and divisions in the industry.

You see, Unlock MLS tackled the meaning of “Participant” head on. This has been a foundational source of problems for years, but really coming to a head in the recent kerfuffles. I have written and spoken about it for a while, and it truly is encouraging to see Unlock make a move.

This is the first step of real innovation on this critical issue. Is the step perfect? No. Am I going to nitpick? Yes. Could I perhaps suggest some refinements that might be more… how should I put this… simple and elegant? Possibly. Perhaps Unlock MLS would consider those suggestions, but more importantly, I am hopeful that other MLSs will follow the lead of Unlock MLS and tackle one of the most important issues in the industry today.

First, let’s look at what Unlock did by looking at their policy and rules document. Unlock reached out to me directly and provided the documentation. Second, I will do a bit of analysis on these new rules. Third, I’ll offer some constructive criticism not just for Unlock but for others considering the same.

Let’s get into it.

Brokerage Issues

Is the problem with the industry that there are simply too many agents? Updating the Tragedy of Numbers from 2022 with latest data… it’s getting worse, not better.

Back in September of 2022, I wrote a post that took me an enormous amount of time to put together because of the need to pull data in and see what it said. The post from then is The Tragedy of Numbers, or Why (Some) REALTORS Should Embrace the Coming Storm.

I referenced both the FTC Butters Report and the NBER paper titled “Can Free Entry Be Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry” and ended up concluding that some agents in the industry should welcome the end of the unilateral offer of compensation. (Remember, this was in 2022 and the monumental jury verdict in Sitzer was over a year away.) Why?

Because the tragedy of numbers for real estate, according to the data, was that increasingly high numbers of agents (REALTORS) pushed down the per-REALTOR commission income dramatically. I assumed that buyers would be left to fend for themselves, that buyer agency would plummet, number of REALTORS would be cut dramatically, and seller-side commissions would fall to 2%. Even with those dire assumptions, here’s what I wrote in 2022:

Under those assumptions, here’s what 2011 to 2021 looks like: Yes, REALTOR numbers would plummet even more than the W2 scenario. Overall GCI income would be cut in half as buy-side commissions go away.

But even at the lower commission rate, the average REALTOR would make more money. By 2021, the average REALTOR under this scenario would have nominal GCI of $142K, versus the $82K that was the actual — a 72% improvement. How is this bad for the professional REALTORS left standing?

I ended up concluding in that post:

Merely keeping membership at 2011 levels would have increased per-REALTOR GCI by over 150% in 2021 in real dollar terms. And nobody in 2011 thought there were too few REALTOR members at over 1 million. And no one could seriously argue that NAR would lose political influence with “only” a million members. That’s silly talk.

What truly hurts the competent REALTOR today is not the government, not the market conditions, not Zillow, not any bogeyman. What really hurts her is simpler than that: too many other REALTORs. Fewer is better.

I wanted to update that post, because it turns out that mid-2020 to 2022 was the best real estate market we have seen since the Bubble. In fact, quite a few people think it was the second RE Bubble. Some of them believe we are still in a Bubble today, even as transactions have fallen through the floor.

In the original post, I looked at numbers from 1975 to 2021. I updated them with 2022 to 2025 data, and wanted to take another look.

Please keep in mind that I am not an economist, and did not stay at a Holiday Inn Express last night. Nonetheless, I have capable AI assistants for research, and I think some of these conclusions are warranted.

Mike Wurzer, CEO of FBS, was good enough to write up a summary and highlights of our debate in Ohio at the Central Ohio Real Estate and Development Summit hosted by Columbus REALTORS.

You can find his post here.

I like to think that Mike and I did a good job of showcasing how two reasonable people can disagree and debate without things turning rancorous or nasty. And his writeup was fair indeed with none of the drama or the nastiness that has crept into our industry dialogue of late. That doesn’t change the fact that Mike was wrong and remains wrong, however.

I thought it worth continuing the debate here in print and who knows, perhaps another round of discussions in the future. This is a public post, because his writeup was also public. Once again, I’d like to express how appreciative I am of Mike’s engagement, his knowledge, his expertise, and his courtesy.

Treating Symptoms, Not the Disease

Mike thinks that my proposed solution to end IDX is “flawed in multiple ways.” He writes:

First, the main point I made during our debate: Ending IDX would only shift the war to VOWs, which Rob conceded are not likely to go away given they originated from the settlement of a lawsuit by the DOJ. Imagine for a minute that Rob got his way and all IDX feeds were turned off tomorrow, requiring everyone to switch to VOW feeds to continue to display other brokers’ listings. Given that the portals are already operating as VOW sites, who do you think would win such VOW wars to sign up as many customers as possible? 

What Mike leaves out, of course, is my response to him at the Columbus event.

Yes, VOW does not go away even if every MLS listened to me and eliminated IDX, because VOW is not about marketing or lead generation but about online delivery of real estate services. However… Mike does not answer my question:

If portals could so easily switch to VOW, why haven’t they? If VOW were the answer for the portals, then why is Zillow bothering to sue MRED instead of just moving to VOW? Mike thinks that everyone would just switch to VOW feeds, but he’s somehow leaving out the key requirement of user registration that VOW requires.

I have already acknowledged that it likely is not that difficult for the portals to make the switch, especially in the era of smartphones and single-sign-on everywhere. And yet, they haven’t. Why is that?

Because they know, like everyone else recognized back in 2008, that requiring registration dramatically drops user engagement. There is a reason why the entire industry adopted IDX instead of VOW, which was protected by the DOJ and the Consent Decree. If what you want to do is not deliver brokerage services over the internet but do lead generation, then IDX is much superior to VOW.

Mike’s answer is to preserve IDX, but “adapt data licensing to today’s realities.”

That to me is treating the symptoms, rather than the disease.

The Sickness

Mike left out a bit of context in his writeup, so allow me to add it here. I started off by stating that I was concerned about the survival of the MLS system due to self-inflicted wounds. I believe my precise words were, “The MLS is busy committing suicide.”

The reason I believe that should be familiar to most of my readers, but let me summarize:

• The MLS was created as, and was for most of its existence, a cooperative of real estate brokerages.
• Those brokers competed for clients, but once they got clients, they collaborated to get the deal done.
• The MLS not only made that collaboration possible, it provided an enforcement mechanism for shared compensation.
• Prior to the advent of the internet, no one who wasn’t an actual broker or agent cared about the MLS. (Sorry, appraisers always cared.) Lead generation was newspapers, magazines, telephone, physical office locations, yard signs, and so on.
• The internet changed all of that by creating the most powerful lead generation platform we had ever seen.
• IDX was a short-term response born out of the pragmatic realities of the technologies of the early 2000s: maintaining databases and data feeds was expensive and difficult. The data is in the MLS; just put that on the internet.
• As IDX became more and more important to brokers and agents, the MLS focused more and more of its attention to IDX and IDX rules and IDX policies, and less and less attention to the inter-broker cooperation that was the central value of the MLS. As an example, I recently analyzed a large MLS’s Rules and Policies. I found that there were twice as many words devoted to IDX rules than there were devoted to brokerage cooperation.
• Brokers tolerated the top-down micromanagement and the monopolization of listing syndication by the MLS because the MLS still guaranteed compensation. They put up with the annoyances of data licensing regimes because guaranteed compensation was worth the pain.
• Sitzer Settlement eviscerated compensation from the MLS. Now, its value proposition is in cooperation and in the database.
• Also, technology has advanced by leaps and bounds since 2000. Today, it is neither difficult nor expensive for brokerages to manage databases and data feeds (i.e., APIs).

One result of the focus by the MLS on data distribution instead of inter-broker cooperation is that the brokers themselves have come to increasingly view the MLS primarily as a database and a data syndication platform rather than as a vehicle for cooperation with other brokers.

This is suicide. Because the MLS does not have the staff, the technology, the expertise, nor the infrastructure to be a true data management company. Most MLSs lease their entire tech stack from a vendor, like FBS or Cotality or Black Knight. Real data companies do not rent their core technology from vendors. The number of actual data scientists employed by the 500ish MLS’s in the country can be counted on one hand. At least two individual brokerages I know of – Compass and eXp – have more software engineers on payroll than the 500 MLSs put together. It goes without saying that actual tech companies like Zillow and Redfin and CoStar and Move have orders of magnitude more expertise, talent, and resources to be a data company.

I believe that if the MLS is seen primarily as a data utility, then it will soon be replaced by companies and organizations that have actual competence in data management.

So the sickness to be treated is not a data license issue; it is that the MLS itself has forgotten where it came from, what it is, and who it serves. Every MLS has a sentence or a paragraph right at the front of its Rules & Policies saying something about how it is a broker cooperative. But every MLS acts like it is a data company. MLS boards will spend orders of magnitude more time discussing IDX rules, talking about technology, and debating data syndication policies than they do inter-broker cooperation or how to be more accountable to the brokerages who make up the MLS cooperative.

My recommendation was not “eliminate IDX.” My recommendation was, “MLS, get out of marketing and data distribution to focus like a laser on broker cooperation.”

“Just Make Big Sites Pay More”

I think it should be obvious how “data licensing” is a wholly inadequate response to “stop focusing on data distribution and refocus on broker cooperation” but… just in case, let me illustrate by looking at Mike’s core recommendation.

He writes:

Instead of ending IDX, I suggested that MLSs address the cooperation disconnect by pricing IDX and other display licenses based on usage so that high-traffic sites pay more than low-traffic sites. Usage is how data is licensed in most industries, and it also can work in real estate. In addition, consider how MLSs could experiment with coupling such usage based licensing terms with broker reward programs like the one created recently by NTREIS and MetroTex. This kind of balanced initiative has the potential to create a positive feedback loop rather than the negative one that looms and threatens today.

Seeing as how I tried to launch an MLS based precisely on this kind of data monetization and brokerage payback mechanism, I understand the play being made here. I tried to do it, so obviously I believe in it.

However… the MLS is going to have to grapple with a strategic issue I had to grapple with. Given the ease and cost of data technologies today, why would a broker not go direct to the big sites and demand payment? Or more precisely, just how much of the revenue could such a data monetization MLS keep as a pure middleman?

One way to illustrate this is to rewrite something Mike wrote, replacing the word “MLS” with the word “brokerage”:

Once brokerages start licensing around use case instead of requester category, a lot of today’s fights become unnecessary.

If I am a portal, one of these high-traffic sites, would I not investigate getting the data directly from the source and maybe not paying the middleman markup?

The middleman – the MLS in this case – would need to provide enough value through aggregation and normalization and license management to justify whatever percentage it is taking. It cannot possibly be that high since high margin naturally leads to, “Let me go direct.”

Which then leads us to the other major issue I brought up during the debate.

I have already cited why the MLS is ill-positioned to becoming a data utility focused on data licensing. But there is one more key reason.

If the average MLS board operated like a board of a tech company focused on doing data management, that would be one thing. But the average MLS board acts far too often like an overactive HOA board instead routinely getting into the most nitpicky nitty gritty of a broker or an agent’s business. We all know about the IDX rules that require a certain font size for display. THAT organization is going to be a great data middleman?

Plus, there is the merry go round of directors who have one year terms based on how popular someone is in the REALTOR Association. So a great MLS with a great Board of Directors can transform overnight into the East German commissariat.

I know Mike agrees with me on this. After all, he wrote:

As The Realty Alliance letter says, MLSs should “stay out of business practices by enabling fierce, efficient competition but not regulating how brokerages operate.”

They should do that, yes, but when you have placed data syndication in the hands of the MLS… it’s going to be very difficult not to try to regulate how brokerages operate.

Do Less, MLS

In closing, I also wish to thank Columbus REALTORS for the in-person debate opportunity, and to thank Mike for both the fun times in person and the reasoned debate afterwards.

I suppose if I take a step back, the difference between Mike’s worldview and mine may be that he believes the MLS to be fundamentally healthy but in need of some minor tweaks around data licensing whereas I believe that the MLS is fundamentally sick unto death and in need of major intervention to survive. Chances are, he’s right; it always pays to bet on the status quo in our industry. But if he is right, then whether the MLS does or does not do data licensing differently won’t matter because the MLS is fundamentally healthy.

If I am right, then the consequences are catastrophic. If you think about risk management, investigating, studying and thinking, and potentially taking action… weigh the consequences and probability together.

All I can advise the MLS to do is to talk to their brokers more, particularly the bigger ones who have the capability to do data distribution directly themselves. Ask them if what they want is an MLS that does even more data licensing and pursues “ten different licensing use cases” with ten different regulatory regimes attached. Maybe what they want is an MLS that does less and focuses on being a brokerage cooperative.

-rsh