One of the funniest things Dave Liniger, founder of RE/MAX International ever said, was when he likened so-called third-party brokers who want to use MLS services without providing cooperation to listing brokers as "coming to the pot luck supper with nothing but a fork."
Agents are complaining that new business models are discounting brokerage services below profitability, effectively turning consumers into agents for themselves. That means agents who are representing the other parties in the transaction are finding themselves having to deal directly with consumers instead of their agents, and in many cases, they end up doing the other so-called agent's work for them.
What's wrong with this picture is that the consumer is technically represented by an agent, but the other party can't make the agent perform like an agent because of interference from the Department of Justice.
So far, despite a lot of grousing and fear of DOJ reprisals, the real estate industry has taken this inequality among MLS members lying down, but that may not be the case for long.
In a recent panel discussion, for which yours truly was one of the participants, at the AE Institute convention held in Reno last week, the number one concern association executives said their members complained about was "who they were going to face across the negotiating/closing table."
Said Charles Penn, CEO of the Birmingham Association of Realtors®, "I believe Belton Jennings said this: MLS databases were created and are totally funded by licensed brokers and their agents to help them cooperate in putting buyers and sellers together. In other words, MLS databases are not a "Realtor®-funded public utility" to which anyone and everyone has a God-given right to free and unbridled access."
This suggests that agents are starting to get mad, and they don't want to take it anymore. Nobody likes doing somebody else's work for them, especially under DOJ threat and without compensation.
And don't give me that guff that putting a seller into the MLS without providing other services is a service. The MLS is a cooperative between brokers, not consumers, so it's not a service. It's theft of services -- the theft of MLS services to listing brokers.
A new unrelated study suggests that human nature will triumph over freeloaders, which should give hope to service-oriented brokers that their anger is justified. Researchers at the University of Erfurt in Germany and the London School of Economics designed a study to see if policies could be designed that would ensure cooperation. They put volunteer students into two working groups -- one that punished freeloaders with fines and one that didn't.
The study revolved around a game with tokens. Each player was given 20 tokens and could contribute up to 20 tokens for a "public good." Each member profited equally from the public good, regardless of their contribution.
The students could choose which group to join; two-thirds opted at first to join the group with no fines for slackers, but many abandoned that group when they saw that the punishment group was prospering more.
In the punishment group, members could choose to fine other members three tokens, but it cost them one of their own tokens to do so.
Then, a funny thing happened. The students realized they got more when they cooperated. Wrote Reuters, which broke the story, "former freeloaders were some of the most enthusiastic converts to the punishment mode, the researchers found. By the time the game ended after 30 rounds, the people in the punishment group had donated an average of 18 tokens per round, said Reuters, while the live-and-let-live group had almost no members."
Little actual punishment was applied during the later rounds of the game, apparently because the threat of punishment was enough to ensure cooperation, the researchers told Reuters.
Observed Joseph Henrich, an anthropologist at Emory University in Georgia, "Even if nearly everyone is initially cooperative and contributes, free-riders can profit and proliferate, leading to the eventual collapse of cooperation," Henrich wrote. "For example, if most people in society are brave, conserve gas and donate blood, he explained, others benefit by evading military service or driving gas-guzzling cars."
Or selling the MLS to consumers without cooperating with other brokers ...
The moral of the story? Punish freeloaders by charging them for non-service, and they'll either adjust their business models to put more money in your pocket, or they'll stop using the MLS like a public utility and cooperate with listing brokers.
The trick is how to do it without the DOJ raining on your head.
Maybe it's time to investigate the feasibility of fee-for-service for serving other brokers' clients. Would the DOJ have a problem with that?
