In Michigan, negotiations broke down between two MLS organizations who want to merge. One, an association-run MLS wants to retain control of the MLS data. The other was willing to give up its assets in order to merge, but wanted a broker council to control the data. The two MLSs couldn't find a compromise, and now thousands of agents are out of luck and have to belong to two MLSs until another plan can be thought of.

In New York, The Greater Syracuse Association of Realtors is discussing the dissolution or sale of the Central New York MLS. They want it to be privately owned to retain better control of the data in the face of the state possibly creating a state-wide MLS.

In Atlanta, Boston, Chicago, Houston, Cincinnati, and dozens of other cities across the U.S., similar problems are beginning to happen. Brokers everywhere are beginning to question whether or not it is in their best interest to be part of a broker-owned MLS or an association-run MLS.

When did the MLS become about control instead of utility?

Brokers are licensed by the state as the responsible party of their businesses. If someone gets upset in a transaction that a brokerage is involved in, it is the broker who has to sit through arbitration or a court hearing. The NAR's own rules suggest that if a broker wants to use another broker's listing, that permission is required, the foundation of Internet Data Exchange. Yet, some MLSs believe that when the listing goes into the cooperative, the broker loses all control of it.

To some brokers, what's the point of being members, then?

MLS data has become big business because the aggregated listings have value, not the individual listings. Some MLS organizations believe that once a broker turns over listing data, that it belongs to the MLS. The MLS then wants to monetize the data and protect it from unauthorized use so the monetary value remains high. The reasoning is to protect the integrity of the data, but the true reason is to protect the value of the aggregated data.

Aggregated data has tremendous value to Internet portals, data mining companies, title companies and others who study, compile or otherwise use the data for profit.

Without control of the data, board-owned MLS executives have little to control. Their job is to further the causes of the real estate association such as creating non-dues revenues and business expense centers. Some have taken it a step further and used their positions to create business opportunities for themselves or others, with less emphasis on serving the brokers and agents who are members of the association.

On the other hand, MLS executives are supposed to make it easier to police the membership. They are supposed to be the checks and balances in a cooperative system that otherwise might allow some brokers to monopolize agents, listings and consumers, or cheat the system with pocket listings, or punish competitors with adverse splits. A well-run MLS can soften those competitive tendencies to allow the industry as a whole to flourish, rather than just a few competitors. The MLS is the great equalizer, when all members get a vote, regardless of size or business model.

MLSs used to exist without much controversy and that’s because their mandates were pretty clear - provide the utilities that enable brokers to share listings and compensation.

Today, some MLSs see themselves as the leaders of change in the real estate industry.

Somewhere along the way, the utility of MLSs changed to a business model, and more people began to weigh in on how that model should be run. Associations evolved away from serving the interests of brokers, in favor of business ideas put forward by progressive professional leaders. It was a matter of time before MLSs became more difficult for the average agent and broker to control.

Associations and MLSs were volunteer-run organizations, but as more Realtors joined the ranks, competition increased. Realtors also have competition coming from banks, third-party vendors and others who see the lucrative real estate commission as something that can be divided and shared.

The result was that volunteers were harder to come by, so more professional association and MLS managers were hired.

Leadership can also be corrupted by personal agendas. It's easy to forget the cooperative nature of an MLS when a broker is thinking instead of her market share.

If a Realtor owns a big brokerage, then there is a natural tendency to protect the interests of its size and contribution to the MLS. That’s when you see things happen like 10-day rules to get a listing entered into the MLS, when we all darn well know that with today’s technologies, a listing can be entered instantly. But the overly generous 10-day rule’s real purpose is to allow a brokerage to sell its own listings without having to cooperate with a competitor.

If a Realtor is an agent or a small broker, he or she is more likely to vote for things Internet Data Exchange, which enables all brokers, but especially smaller brokers and agents, to have listings on their Websites.

With brokers in charge of an organization, it’s pretty easy to predict that such an organization will have rules and regulations that are sympathetic to brokers. A salesperson-led MLS organization will pass rules and regulations that benefit salespeople. An executive-led organization will benefit the corporation, not individual brokers and agents, and so on.

The best association leaders whether they are brokers, agents or professional executives, think of what’s best for the membership and the membership’s clients, without using their positions to further personal agendas or politics. The worst leadership follows an agenda – even if they think they’re doing the right thing for themselves.

In other words, the best MLSs do what the members are paying for - provide the best utilities to cooperate in a sensitive, competitive environment.

No more. No less.

Published: November 5, 2004

Use of this article without permission is a violation of federal copyright laws.