You may find this backwards, but I think CALREDD, if it succeeds, might actually make more new entrants/competition possible by providing a bigger target.

But that’s a discussion for another post.

Where we do appear to disagree is on efforts like calREDD, which you’re willing to consider and I adamantly reject as a monopoly approach specifically designed to eliminate competition. If you think there isn’t competition now and that the lack of competition is what’s causing inefficiency, how much worse will it be with a single MLS? I can see the immediate allure of a single MLS as a way to get data standards and simplify the rules, but history has proven that such a monopoly approach will, in the long run, hurt more than it helps.

My point is made resoundingly by listening to the black-is-white-white-is-black propaganda from calREDD, the monopolist-to-be which was represented admirably by Joel Singer at Inman. According to calREDD, their system is magic and the systems they’ll replace are antiquated, and they boldly proclaim this in the face of hard facts to the contrary where fundamental features on which members rely day to day to do their work are missing from their system. These are the type of stark short-comings only a monopolist can overlook, and why sometimes the cure is far worse than the illness.

I joined my rejection of calREDD and similar monopolistic “cures” with rejection of overly broad cries against current MLSs (like those voiced by Brad during the transition between speakers and by Mr. Ross during the RPR presentation) because I believe the latter is what leads to the former. Instead of informed analysis or market-testing of solutions, we get people whipped up to toss out all those “antiquated systems” and “mouths to feed” without considering whether the proposed cure is worse than the illness.

Lastly, we agree that there is ample competition in the MLS software space and, again, where we disagree is on proposed solutions like calREDD, which inextricably join the offering of MLS and MLS system. You cannot choose one without the other, so the calREDD approach is most definitely in the competitive MLS software space. And, again, my objection is not to the competition. As I’ve said, bring it. My objection is to such competition being brought within a veil of confusion about the ultimate destination (monopoly) and without consideration of all the options (standards). So, I post to remove the confusion with facts and reveal calREDD and all similar approaches as the monopolies they in fact propose — a cure far worse than the illness. The better cure are those being successfully deployed today by real MLSs (like those in CARETS and North Carolina) that have successfully served their members for many years. Importantly, those solutions, too, will evolve over time as they are tested in the market but what’s good about them is they promote instead of frustrate competition.

Thanks for your comments here. I sincerely appreciate them. I have been an outside admirer of your thinking and your company for a while now.

But my conclusion remains the same: the MLS system as we know it is in need of major change.

Part of our disagreement lies in our level of analysis. The fact that there are 900 MLSs nationally means little in my view. There are probably 500 pizza places in San Francisco and 500 in New York. They are numerous. They do similar things. But they do not compete. They only compete with their in-market brethren. That’s where I’m looking – within the markets. And that’s where the competitive landscape is really barren.

I also approach this as someone who has run a company that built Websites for brokers and, now, as someone who helps them think through their overall digital strategy.

What I saw then and see now is a system that makes it too difficult for brokers to innovate. “Overlapping market disorder,” frequently unimaginative leadership, and gratuitous and outdated rules present needless costs and generally get in the way of creating quality online experiences for consumers.

I talked with a large broker in Connecticut just last week who was being put through the ringer because the two MLS to which he belonged would not allow “co-mingling” of data. The result? A fragmented – and from the consumer’s perspective, totally puzzling – user experience.

The paperwork involved in setting up a simple IDX feed is in many markets a manual, time consuming process. This is changing. But too slowly.

We work with an online brokerage that – DOJ settlement notwithstanding – continues to have hurdles placed in its path.

And regarding the DOJ settlement: I recognize that it was not about MLSs directly, but rather the use of the MLS as an instrument of unfair exclusion. If there were real competition in local markets, such a tactic could not have been employed (and the DOJ would have not intervened.)

I do not discount the work that goes into maintaining cooperation among brokers in local MLSs. That is considerable.

Nor do I disagree that there is heated competition among MLS software vendors. That is undoubtedly the case. But I am not talking about software vendors: I am talking about the institutions they serve. Entrepreneurial companies compete intensely for contracts with even the most calcified institutions (e.g., the federal government.)

I don’t think we can account for the lack of change here to “crybabies” pouting on the fringes of the market. I do think that for practical purposes there are unnatural barriers to entry. Anyone in any market could indeed start a new MLS. They could also start a new political party. In theory. But there’s a difference between strong market leadership and an unnatural state of market lock-down. Entrepreneurs try to take out Google all the time, despite the odds. Your observation that there are no new entrants willing to compete against a local MLS makes my case, not yours.

So we disagree on some things. But I think we probably agree on more than a 20-minute panel discussion at a conference, or my blog post, can bring to light. I agree, for example, with your call for a national data repository. I tend to think that CARETS probably is the better path to change than CALREDD – I’m just not willing to dismiss the latter. I too fear large beauroracies.

And for the record: I think MLSs – with all of their content, all of their cooperative power, and all of their capacity for surfacing insight into housing markets – have tremendous potential. I just think it’s been stifled in a cradle of complacency that needs to be upended.

Don Stewart
Agent Invitation

In terms of the MLS, the market for a national or state MLS (apparently the desired result by reformers like Joel Singer of calREDD) is wide open to competition as it doesn’t exist today. This is the fundamental distinction between approaches like calREDD and CARETS, where CARETS creates competition and calREDD (before agreeing to join CARETS) or other statewide or national solutions that focus on one system for everyone would reduce options and competition. This is why focusing on specific solutions is critical, so that the overall call for change doesn’t blind people to thinking that anything is better than the crappy MLS systems we apparently have today.