As it was becoming apparent that the Internet was going to change the way every business operated, two very different industries faced the challenge of how to move forward, both realizing that they needed to establish open standards that allowed easy, consistent exchange of data and information. The people in both industries realized that the more open they were, the less competitive advantage each individual company would have and the less they would be able to protect their own way of doing things. However, on the plus side, both industries realized that by using open standards they could provide significant benefits to their customers, simulate new ways of doing things and lower the overall costs of doing business.

History shows us that in one industry all the competitors agreed to adopt and enforce a truly open, single protocol standard that hurt some companies more than others. They established a short time frame and agreed to a strong enforcement measure on the project so they could get through the pain and start seeing the benefits as quickly as possible. The other industry decided to adopt a semi-open standard as a basic guideline, and give everyone lots of time so they could move at their own pace.

Both standards were agreed upon during 1999.

The first standard was used to launch Covisint, a system that connected the major auto manufacturers and their suppliers over the Internet. Think of Covisint as a MLS for car parts that can assess the predicted demand of supplies as well as when and where they are going to be needed. The up side is that suppliers could now see into all the different car companies and better predict what production capacity they needed to supply and when and where to deliver things. It also allowed small new specialty suppliers to see opportunities for car companies and submit bids and compete for business on the same footing as much larger suppliers. During 2001, Covisint was responsible for over $25 billion in sales and by 2002 it had grown to over $150 billion in transactions. Best of all, it was reinventing and improving all of the car companies' logistics practices, providing better forecasting and relevant business information to everyone involved, and was speeding up product development, making all the car makers more responsive to consumers needs. By every measure, Covisint is a huge success that is helping all the car makers.

The second standard that was agreed upon was real estate's RETS standard that was supposed to allow for the easy, equal exchange of information between agents and MLS systems. The problem is that even after 5 years RETS is not really a standard - every local MLS is implementing it in different ways that are totally incompatible with other MLS systems. The goal of RETS was to provide a single interface standard that spurs the development of new and innovative tools for real estate companies and agents to use. The problem is that companies who want to invest in developing these systems can't roll them out nationally, so they don't invest. The few that do invest have to scale back features due to noncompatibility issues, and charge higher prices to cover the cost of having to write custom programs for each of the 1,600 MLS systems around the United States.

If we as Realtors would collectively embrace a single standard that every MLS had to adhere to, we would soon find that MLS fees would go down, as companies who provide online MLS could spread costs over many different systems instead of each one having to be custom built for that MLS. Additionally, we would see a drop in price in contact management software like Top Producer and CRM (Customer Relationship Management) programs like MegaAgent.com. Both of these companies spend huge amounts of money trying to interface with local MLS systems on their clients' behalf.

If Realtors want to maintain their value in the marketplace, we must create a single standard for sharing information that allows each agent to utilize MLS information economically on a national basis. The long term benefits of cost saving, improved customer service, and the creation of new and innovative services for consumers far outweigh any short term loss we have to endure. Every day we fail to make IDX a strong universal standard, the harder it becomes to maintain our value in the minds of consumers.

The key is to get proactively involved. You can call your MLS committee chair or your board Executive Officer and tell them you support a strong national RETS standard. Find out who your local NAR delegates are and urge them to support it. Unfortunately, if we don't get involved and push this forward, we will keep falling further behind and it will become harder and harder to catch up with our customers.

Let's learn from history and think about the long term health of our industry.

Published: December 7, 2004

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Co-founder of Hobbs/Herder Advertising and Hobbs/Herder Training, Greg Herder is recognized as the real estate industry's foremost authority on residential real estate marketing and agent productivity training. Herder is also a licensed Certified Residential Broker (CRB) and owner of MegaAgent Realty, and co-owner of JDG investments, a real estate investment company. Herder is a featured columnist on real estate marketing and training issues for Realty Times, Real Estate Executive Magazine, Savvy Executive Profiles, and, as well as a contributor to a variety of other industry publications, including Realtor® Magazine and Real Estate Business Magazine. He also authored the innovative how-to book “Satisfaction Guaranteed - 100% Satisfaction Guaranteed or Your Money Back," which ushered this unique concept into the world of real estate service. Greg has conducted over 1500 one, two or three day seminars over the past 17 years for the real estate industry and is a professional member of the National Speakers Association (NSA). He graduated cum laude from California State University with a BA in psychology and is currently working on getting his PhD in Organization Behavior.