We’ve reached the peak of the silly season
The “silly season is defined by Wikipedia as “a period—most commonly during the summer months—when the mainstream media focuses heavily on trivial, frivolous, or offbeat stories because major political figures and lawmakers are on recess, leaving a lack of hard news“. It’s the time when we read “Man Bites Dog” articles, or tales of outrageous human behavior.
I’ve been observing discussions about the MLS industry’s role, governance, current issues, and future prospects. Opinions vary from poorly informed to well-informed, making me feel like I’m witnessing an ongoing “silly season.” As I’ve observed before, you don’t have to have a clue to have an opinion on something. I know we’re in a time of change, but I am optimistic that the MLS community has the brains and the will to meet any challenge.
The challenge we face today could be existential. If the MLS rules are an inconvenience for a member, who gets to choose how (or if) the inconvenience is resolved? Deciding that may decide the future of the MLS.
We all have reasons. We’re doing it for “the client”!
If you’re reading this, I assume you know the facts of the matter as reported everywhere by everyone. You may filter out prejudice in the authors’ positions as you wish, but I’m not going to. Everyone is entitled to take a side. I don’t want to parse the motivations of Refkin, MRED, Illinois REALTORS, Bright, Zillow, or anyone else, but they all share certain public positions that revolve around advancing their cause because they believe it benefits “consumers” or “clients”.Cynic that I am, I dismiss some of those reasons as self-serving. There are obvious business reasons for the positions of Compass, Zillow, MRED, and the Associations affiliated with it, as well as the shareholders of Bright MLS.
Compass and Zillow are huge companies with smart, aggressive leaders and substantial obligations to their shareholders, and each is committed to advancing its cause by leveraging whatever assets it can bring to bear on the problem. That led Robert Refkin to offer to subsidize a potential 100,000 new members for MRED and its affiliated Associations, as well as any other MLS that aligned with their business model, which is no small financial gain for them or commitment for Refkin. It was a terrific propaganda win for Refkin and a financial windfall for the MLS. That put pressure on Zillow to reaffirm its position using the tools at its disposal. The manner in which Zillow deployed that leverage led MRED to interpret it as a violation of its rules. And that led to Lawfare!
Lawfare isn’t good for anyone but the lawyers.
Again, I’m going to turn to Wikipedia for a definition (full disclosure, I am an annual financial contributor of $20 per annum to Wikipedia) – it tells us “Lawfare is the strategic use—or misuse—of legal systems, proceedings, and institutions to intimidate an opponent, damage their reputation, or hinder their objectives. It turns legal action into a weapon where the process itself, rather than a definitive victory, is used to drain time, energy, and resources.“
Without going into the details of Zillow’s quarrel with Compass’s business policies and the details of MRED’s rules, suffice it to say that when Zillow was unhappy with MRED’s actions, it decided to use the legal system to challenge the MLS ruleset. Maybe I am being too harsh in calling it lawfare, but that is where I think the company’s actions threaten the structure of the MLS.
Zillow, like Compass and every other member of MRED, agreed to follow the rules of the broker cooperative upon joining. There is not one set of rules for the small and another for the big. The rules apply to everyone, regardless of size, business model, or business goals. When Zillow chose to ignore the rules of an MLS to which it belonged, it faced consequences. They began litigation to prevent the consequences (that’s the lawfare part), but, to their credit, MRED didn’t blink; Zillow faced real consequences when MRED stopped its listing feed to their site. And everyone in the country seems to have at least one opinion about it, no matter whose side they’re on.
Rules? We don’t need no stinking rules!
The Multiple Listing Service is, at its core, a broker cooperative. It is an agreement between competitors who understand the fractured nature of the real estate market, where there are millions of sellers, each seller with one unique product, trying to reach millions of buyers, each looking for a single property. It is a difficult, if not impossible, task without an agreement to share inventory access equally among other members of the cooperative.
Rules are important. In the case of the broker cooperative, the rules are the difference between the portals that serve the rest of the world, which are more properly advertising websites, where data standards are sketchy at best, and there is no governance of the aggregated data. Our MLS rules ensure that the interests of the market and the needs of consumers are served, even when it is inconvenient for individual members’ business interests. And that’s why MRED had little choice but to enforce its rules when Zillow chose to violate them. And in saying that, I’m not siding with MRED against Zillow. I don’t have a dog in that fight. I am siding with the rules everyone agreed to when they joined the MLS. In fact, when any company bullies or litigates to create undue influence on the ruleset and operations of the broker cooperative, I am firmly on the side of the MLS. If you don’t want to follow the rules, don’t join. If you don’t want to do business without the MLS, you join and follow the rules. The choice is yours, but it is a choice, not a fait accompli.
This is why we can’t have nice things (unless we’re thoughtful)
I’m sure you’ve heard or used this phrase to describe irresponsible behavior that led to the destruction of something valuable. You might have even been the culprit once or twice as a child, but now we’re facing a serious problem that goes beyond the business needs of Compass, Zillow, or even the MLS involved.
Over the last 100 years, the broker cooperative has grown and matured, becoming the most efficient engine in the world for helping agents connect buyers and sellers, and making the “American System” of real estate the envy of the world. The broker cooperative became ubiquitous, and like so many things, we took it for granted. No real estate agent or broker in the United States has ever lived in a world without a functioning MLS, and as a result, we take its benefits for granted. Like the air we breathe, we don’t think about it until it’s gone, but when it’s gone, we die if we don’t restore it.
Rules were never intended to promote or restrict any single business model – they were made to facilitate the most efficient marketplace for buyers, sellers, housing providers, and tenants. Rules aren’t always comfortable. They may not always be simple. They may create friction for vendors or third parties. But all of those problems are outweighed by the incredible tool that benefits real estate professionals and their customers and clients.
I don’t like it when rules get in my way, but I recognize that the rules are there for all of us, and no party or business model is entitled to rewrite them for themselves, regardless of their size or influence. Though it may be an unpopular sentiment in a world of large MLS structures and Mega Companies, what has made the MLS the amazing engine of competition it has been is the collective rule-making of its volunteer members, with the assistance of its professional staff. Rules make us do the right thing even when we don’t want to because they shape what we do, how we are constrained, and how we are held accountable. Without the rules set, an MLS is just a Portal, and that’s only an advertising vehicle, not a broker cooperative.
Former Speaker of the House Paul Ryan said, “Every successful individual knows that his or her achievement depends on a community of persons working together.” I hope that MRED, Zillow, Compass, and every other member of every MLS understand that their success relies on the community working together and on the need to preserve their rules while still finding a way to compete and be successful in that competition. They’re all smart and resourceful enough, and I’m rooting for them to do so.
In the meantime, I’ll be over here eating popcorn and watching.