scaling and consolidation

In biology scaling is a major topic--whole books have been devoted the the effects of scale at levels from cellular to planetary. As I was driving into the office today a recurring idea popped into my brain and I realized it had extreme relevance in considering the current path of the state association with regard to statewide MLS, standard forms and educational offerings.

The state association, conveniently enough, sees California from spy satellite altitude--the towns and even the houses appear pretty similar from far above the earth's surface. Lots of similarities--town centers, suburbs, freeways, rural roads--patterns repeating, over and over, regardless of what part of the state is considered.

The process of buying and selling the land and structures seen in this distant view also has strong similarities. Buyers, Seller, agents, escrows, loans. Pretty similar across the vast landscape viewed from space.

From that high altitude vantage point it might seem reasonable that a "one size fits all" solution would have benefits across the board. Same forms, same MLS database, same agent business practices, same educational presentations etc., etc. Admittedly, that perspective certainly works well for the state association--it's simple, efficient and consistent. No worries about being responsive to smaller scale heterogeneity--because the other components are necessarily responsive to the sweeping statewide "one size fits all" solutions. Easier for those in the smaller scale world to adapt rather than to create alternatives!

Here's the rub. Buyers and Sellers and agents and land and structures vary widely across the state when considered at smaller scales. Seen up close, the state isn't a corn field, it's a richly diverse tropical paradise of variation. The state exhibits incredible diversity. More importantly, the Buyers and Seller living in this wonderland of detail measure the quality of their experience ONE HOUSE AT A TIME IN ONE PLACE AT A TIME. Furthermore, they don't buy or sell houses very often and when they do, it's often in the same area of the state. Their sense of scale and "grain" is totally different than that of the state association. In the final analysis, BUYERS AND SELLERS PAY FOR THE WHOLE REAL ESTATE INDUSTRY, including the state association.

Considering the way Buyers and Sellers encounter the real estate "habitat", one house at a time, at human scale, do they tend to receive the best possible service when that service is defined or constrained by "one size fits all" statewide solutions? NOPE!

quick post -- iPad twist

This came to me Sunday as I was looking at iPad and iPad ap developer sites. In Sacramento I went to an hour presentation by 3 iPad owners--regarding how it might or might not revolutionize real estate. Impressive, but Sunday the REAL impact of iPads capabilities emerged for me. That involves a trip into the PAST, not into the brave new cyberworld.

The iPad could easily become the perfect, lightweight, lightening quick and visually amazing---MLS BOOK.  Everyone is enthralled with being able to connect to the internet with the iPad--BUT the internet is still SLOW for MLS applications. Doing searches and downloading images and data is at the mercy of connection speed, etc. It can take forever.

What if there was a distributed database application that would pump MLS images and data INTO the
iPad 's on board memory with incremental updates available online. You'd have a 1.5 pound MLS book with icons for areas and be able to turn pages like on an old fashioned MLS book--look at pictures, expand them, change the display to show details, save favorite properties, etc. Even bring in other information and all without being online--it would be VERY FAST and VERY PORTABLE. Not quite as current as online, but so much faster and user friendly.

In my opinion, agents knew more about real estate when there were MLS books than they do now when being online is everything.

Technology for the iPad MLS BOOK idea is out there--a distributed database program was available until recently with our MLS because of folks out in the boonies without broadband. Porting it into the iPad platform would access a pile of users--all the grizzled old agents will kill for MLS Books again and the newbies will learn just how cool things used to be--before the technology tsunami.

trade offs with statewides, part 1

Some of these trade offs have been mentioned or alluded to in previous posts. One of the problems in writing a blog that focuses on a narrow range of topics is the redundancy factor. Do you assume all the readers have read all your blogs? They probably haven't--this blog already has close to 150 pages of text and they sure don't read like a fine novel. The alternative is to be somewhat redundant and offer an apology to the faithful who will find themselves saying---"Hey, he wrote about that a few weeks back"!

Looking at trade offs is important because the proponents of statewide MLSs seem oblivious to any negative aspect of expanding the area of data coverage to an entire state. Users get more data (in terms of quantity), that data costs less to compile and distribute, users don't need to join many MLSs to receive it and the Sellers get expansive exposure for their properties. In addition, because of the large user base MLS vendors who serve LARGE clients are available with what should be superior technology. It all sounds like a no brainer--why would anyone NOT want a statewide MLS? There are a number of reasons, but you won't hear them at many discussions, because those are all conducted by proponents driving the statewide agenda.

Here are some potential trade offs to consider. It's also important to take a careful look at the alleged benefits to see how many of them are compelling in the real world. We'll fold that analysis into the conclusions.

One size fits all database. Ironically the legendary Six Principles that some infer are driving this whole initiative, include right up front in Principle #1, the standardized of all data with local options. You never hear about local options anymore--funny how that works. Technology could allow local options to be included and tied to the "area" field--do a search that returns a house in a particular area and you see local option fields. You could even do a search for just local options--find out what you were up against if you were working in an area somewhat unfamiliar (of course NO ONE would think of doing that, would they?). The one size fits all database will be either VERY big or VERY general (or maybe even BOTH-LOL).

Here's the kicker!! Will it be the absolute best database possible for the agents and the public in each market area? NOPE! It's ultimately going to be a trade off of quality for quantity. However, the public wants the best possible chance of finding the best possible house--ie the RIGHT house. The statewide database is focused in another direction--reaching a compromise among diverse needs in diverse communities all over a very diverse state. Does the public want to compromise on their chances to find the RIGHT house because of an organizational urge to offer statewide coverage? No one asked the public.

One MLS Vendor for the state. I know, I know there will be two vendors after the merger--for how long?
There is also the conceptualized idea that a large back end data container could be accessed by any one of many front end applications. I had that idea 3+ years ago--seemed really attractive, but there are obstacles galore, centered on power, greed and numbers. In my scenario there would be a default search engine for agents and separate one for the public, but open source code would allow outside developers to create alternative front ends, some simple, some specialized and some super techie. A counter would tally users and make that info available--you could see which front end was getting high usage, or slipping from favor if updates didn't keep up with technology. The OLD Statewide application continued to mention a similar goal, but never got enough users to encourage outside development of anything. After the merger, things could be different, but with two MLS front ends already competing for users and revenue, it's not likely third party developers will rush to write code anytime soon. I suspect there will be one front end within a year.
How does the public feel about agents using a front end that may not be well suited to them finding the RIGHT house from among the huge inventory? No one asked them.

One governance structure for the state. We already see the lack of accountability associated with nested boards drawn from the same population of the like minded faithful in the state association. The Old Statewide Board is populated with the politically astute, not necessarily those with applicable talents in project management, database technology or application marketing. The merged governance will morph along similar lines. Dissenting viewpoints will disqualify prospective board members, as they do now. Changing direction of technology, or rules, or infraction procedures in the whole state will be similar to steering super tankers with canoe paddles. The larger the MLS, the less responsive it becomes. At a statewide level, there will be minimal responsiveness and accountability. Great for the entity in charge. Performance won't matter very much--where are you gonna go? In a small MLS things are different. People know each other and do business with each other. If there's a problem, it's important to get it worked out. At a state level--there's a tendency to just blow things off. For example, exactly what happened to the $3,000,000 and why was the Old Statewide such a failure? We don't know where the money went, or why the application went sideways and we won't know. More importantly, those who made BAD decisions over the past 2+ years of Old Statewide efforts remain anonymous, and may even be making more bad decision right this minute. That's statewide organizational culture marked by little transparency, no bona fide accountability and an arrogant, paternal disregard of alternative viewpoints . The large metro brokers who are also well connected with the state association power base may have modest influence over policy of a statewide MLS, but smaller firms basically have no voice, given the governance structure. How does the public feel about the brokers in the area in which they are seeking a house having no essentially no voice at the statewide MLS level? No one asked them.

The recurring lack of attention to the needs and wants of the public is a clear indication that the real estate industry is a sales industry, not a service/representation industry. The residential real estate industry seems primarily crafted to benefit the industry and the trade associations, not the public. Commercial real estate may be different. Interestingly, it is not as much influenced by trade associations and is actually more consumer-centric. My theory is that consumers of commercial real estate services are more knowledgeable and experienced than residential consumers. They demand and get personalized service and representation from highly skilled firms and individuals. If they don't get what they want, they go find it.

Part 2 of trade offs in next Blog--yes there are more.

oil spill sidelight

Just a note on the continuing ecological and political disaster in the Gulf.

Rep. Joe Barton (R-Tex) received $10,000 in 2008 from the national real estate trade association's political action fund. In the 2010 cycle he received $5000. Check out this opensecrets website to see who gets money at the Federal level for voting "pro real estate". You'll see some names familiar from the news feeds. Funny thing is the recipients of these contributions vote on other things too--who woulda thought? Maybe real estate issues are all that matters?

thought experiment in drop off

Here's a post derived from a thought I had a couple nights ago in Sacramento. I always enjoy the meetings because of the down time from regular business activities. In between meetings I get major work done and some stellar thinking--to wit blog posts every day. Back to reality now and competition for time. This post addresses a topic, like many, that involves what everyone seems to believe is true, but may not be quite as it seems.

Imagine a graph showing dues for MLS services plotted on horizontal axis and number of users paying the dues plotted on the vertical axis.

The relationship is linear--graph is a straight line. More users paying the same amount of dues (lets hope) yields more gross dues income in a linear way. As mentioned earlier, the cost to deliver that MLS service doesn't increase linearly, so profitability actually increases as the number of users increases. If we throw a line for costs to deliver service on the graph we see that it levels off and goes up much more slowly than the gross dues receipt line. What if we expand the service area to encompass far more users? Again the cost to bring in more users, isn't linear. In summary, there's a linear relationship for users and dues and a declining cost per member to provide those services. The result is, the more users, the sweeter it gets financially. This graph  shows the perspective of a statewide MLS, or even mega regional. They never tell you that in presentations. Anyone ever heard "and the best thing about a statewide MLS is that it maximizes the profitability of the entity running the MLS"? They leave that out--wonder why? They might need to pass more savings to the users?
This is just money aspect--then there's the control, power, political gravey, etc.,etc. Those factors are difficult to graph--LOL. It is sooo sweet--for the controlling entity.

Lets imagine another graph addressing the generation of leads for a property in the MLS FROM the MLS. Number of leads per week (or month or whatever) is plotted on the vertical axis and the area served by the MLS (individual, regional or statewide), measured as a square miles and plotted on the horizontal axis.

What kind of a graph would we expect? Linear? Lets start with a 10 square mile area for MLS exposure and say we get 5 leads a week from the MLS for a house near the center of that area (either directly or through leads worked by other MLS members). What if we expand the MLS exposure to 30 square miles by enlarging the MLS boundaries, merging with another MLS or whatever. Would we expect the number of leads to increase linearly--to 15 per week? Not sure? What if we bumped the coverage all the way up to 60 square miles, would we get 30 leads per week? Would we think it is as likely that a Buyer interested in our subject house would become a lead through MLS means as the distance from the property increases? Pushing the argument to the extreme, how many leads for property in Eureka would be generated from an MLS listing of that property seen in San Diego? I don't know if anyone has ever really tested what the drop off factor is, but the commonly stated premise cited in favor of big MLS coverage and even statewide coverage is that the Sellers get more exposure for their property. They DO get more exposure, but is it quality exposure as likely to produce QUALITY leads and a Buyer willing to pay an acceptable price as exposure derived from MLS and originating from nearby the property? There is a drop off and I suspect it's pretty steep. Less steep for resort areas where out of area Buyer are a major factor. Those out of areas Buyers come to the resort town anyhow, so it's not as though the lead is lost without distant coverage in an MLS, it just comes from a different origin.

I used leads in the thought experiment above because they're easier to measure and visualize. It would be better to develop an index of saleability using several variables. First and foremost did the house sell at all? If it did, how long did it take? What percentage of the initial list price was the selling price. What percentage of the final list price was the selling price. Those variables should offer some sense of saleability. What we're ultimately interested in is the relationship between the area of MLS exposure and the saleability. Does wider exposure produce an increase in saleability in a linear way? Does a large MLS or even a statewide MLS produce a linear increase in saleability to the direct benefit of the Seller? I don't think the proponents of statewide MLS can produce data showing it does!

Proponents would argue that the Seller DOES get more coverage, so on balance a statewide is still better than a smaller MLS. A far off Buyer or agent MIGHT generate a sale, unlikely, but it might happen.

I would counter that everything else isn't equal. There are TRADE OFFS with a large MLS. What if those trade offs more than offset the small benefit of having wide MLS exposure primarily among agents and  members of the public who have minimal interest in property so far away?

Trade offs are in an upcoming post.

home sweet beachtown

As delightful as the Sacramento weather was, it is extremely good to get back to Cayucos--3000 population and a classic pier, plus sandy shores and rocky headlands.

Thought on way down re statewide, one size fits all, MLS database and what the public and agents really need.

Here's an analogy--if you're going to cook a gourmet meal with subtle nuances of flavor, texture and appearance combined in a synergistic symphony of sensory pleasure to create an exquisite dining experience---do you want a detailed recipe for each dish, or do you want a shopping list for the grocery?

Statewide generic data is likely to become a shopping list.

If you're a hugely skilled chef, you can take the shopping list and create the unforgettable gourmet meal, but how many "chefs" out there in real estate land are that skilled, even in their own market areas?

Where will the "recipes" come from, if not the MLS? RPR has a bigger container, but it's not a recipe yet.

The statewide MLS movement is saying to the public--this is the data WE decided you need, regardless of who you are, where you're looking or what you're looking for. Beyond that, you're on your own. Your agent MIGHT be able to help you discover the RIGHT house, but that's not our problem at the statewide MLS. We decided to provide some data for the whole state, rather than deep detail about the area you're interested in. It works for us.

How will the public feel about that?

last act

Well, the theatrical production of "statewide and handsome" will hit the stage tomorrow after the ramp up today. Dire predictions at BOD session if directors vote the merger down. It's a familiar tale with some added drama in that they really did run through a lot of money this time.

A few things came out during discussions. The new vendor is Discover MLS (name may not be the best choice--sounds accidental) and is staffed by some of the folks who were at Concentric, before Concentric ceased to exist. I was assured that these are the good folks and are doing great work, leaving open the question of what happened to the other folks? I kept asking how the project management is going to be improved and got various answers, none very concrete. Old Statewide CEO is still on board, but then he was on board during the past not so stellar period when Concentric failed, then faded.

Eventual goal is to have one back end and choices for front ends. I had a similar idea over three years ago at these very meetings after reading Wikinomics. It seemed cool back then--not so much now. The time lag on this stuff just doesn't work in the real tech world. TOOOOO slow.
Outside developers won't write front ends unless there are enough users--most are writing iPad apps anyhow. Now there is a user base.

The interface between the two vendors over the short term is still fuzzy. What if one garners most of the users? At what point will the NEW Statewide only support one front end? I'm also vague on how R/D gets done on the software the New Statewide took over from Concentric??? The mergor's vendor is a major player and will take care of their own R/D.

At any rate the directors will approve the money and the merger. It's going to be another wild ride and spinfest.

Let's just hope the governance crowd can get their act together this time around. Quit admiring their political futures (what part of the anatomy is that???) and actually make sure the project at hand is MANAGED.

Oh, interesting sidelight related to my statewide analysis (still on back burner). As the existing statewide accounts get data combined to pump into one data container down the road a piece, the customization that was lavished on them during prolonged pre-launch periods will be scrubbed.

One size fits all is creeping among us...LOL.

End note is caucus lasted till after 7PM and I'm soooo ready for the trip home tomorrow.

RW

ibp magic

During yesterday's meetings I had an opportunity to read through the IBP on the new statewide proposal. Of course it has the usual disclaimer that it is for study only and has not been approved by SPF, Exec, Boards, yada, yada. It is an artful piece of work, tripping lightly through the history--semi avoiding direct confrontation with the fact that lots of people spent lots of time over the last 18+ months out there selling a system that, even now, is not fully developed. Don't know what book on tech start-ups they read, but it's often better to finish the product before you sell it.

The vendor is pushed under the train raising the question--if that vendor was an obstacle on the path to the grand consolidation plan why wait until October to become concerned and late in the year to take action? Interestingly, few knew of that action, including those using the systems that were launched.

Now we know ANOTHER team of "highly experienced outside developers" was engaged to carry on. Oh, they're anonymous, but they're doing a great job, "The software has become increasingly stable and robust". So what was it before and why did it take 18 months to make the change?

The IBP then goes into 4+ pages of detail that few will read. Most is about governance, a favorite topic focused on which of the faithful will get appointed to which slots in the new organization. That's very important for those climbing the organizational ladder. I won't delve into those details--lots drawn from the Connecticut model and the odd mix of the mergor and mergee power people. Plus a whole category of membership for the state association--and rightly so. It is not an MLS.

More interesting is a section regarding the new vendor, called MLS Vendor Co. for now. It doesn't say if this anonymous group is the same anonymous group that's running the system now.

The odd thing is the IBP states that the statewide will retain ownership of the application, but a few lines later it states that the MLS Vendor Co will own the software. Will try to get some clarification there. Can't be both ways.

As a sidelight, I'd suggest a new wordsmith be located. This IBP is not well written, if the intent is to lucidly explain past events and future plans, but maybe that wasn't the intent.

There is much work left to do integrating databases, finishing development on features (still no client portal). The IBP doesn't say what entity is going to do this work--presumably the mystery MLS Vendor Co., but it's not clear. The Mergor's present vendor is going to have some role. It seems MLS Vendor Co is also working on version of their windfall application to sell to other clients around the US and will pay royalties to new statewide MLS. Wonder if those clients will know the identity of MLS Vendor Co.? We'd better hope MLS Vendor Co has better luck selling the system than the statewide MLS board did or there will be few royalties. There is an agreement in place between the statewide and MLS Vendor Co that is contingent up approval at Sat. Board of Directors meeting. Who's seen it? Not those voting.

The new statewide (or Holding Company) will pay the state organization back as soon as 13000 users are on the new MLS system. That could be awhile.

End of the day, what do the agents see when they enter their password? We don't know. IBP doesn't address. What will the public see when they enter the client portal that doesn't exist yet. We don't know. How will the numbers work in terms of profitability for the new statewide? We don't know. What could go wrong and what's being done to mitigate that possibility or eliminate it altogether? We don't know.

If there were less than optimal business decisions made in the development of the old statewide system (the IBP makes it sound like there weren't--just circumstances beyond control and an iffy vendor), what's being done in terms of leadership and administrative changes to improve the chances the new statewide will be a better experience? We don't know (but I'm betting a lot of familiar faces will be running the show again).

There are a lot of other "we don't know's), but the directors are confronted with no real choice when the vote comes. A yes vote opens a path toward huge uncertainty and challenge with most of the upside benefits being reaped by the state association. Voting no is not an option. There's a system up for 1000 or so users. Millions of dollars have been spent, tens of thousands of volunteer hours have been invested. The outcome of the vote, albeit carefully orchestrated, is certain.

Another, perhaps better, approach would be a yes vote with conditions, but the only people with knowledge sufficient to create those condition are those who don't want them. The directors certainly don't have the ability to tweak the plan.

Groupthink once again. Can it work in a competitive technology arena? It doesn't work as well in tech environments as in politics. In tech, at the end of the day, performance counts.

Final note. I like to pretend that members of the public could witness what's going on in these meetings. How would they feel if they knew what was going into to this new statewide MLS stew that will have a large impact on their ability to find the RIGHT house to buy or the RIGHT buyer to sell to? They might loose their appetite.

More on SD and OSFA

I did finish the marathon--took a long time because of the knee injury. I'm still amazed I finished. Thought seriously about quiting at mile 3, but just kept trying things, stride, stretching, etc. etc. and the knee finally improved about mile 9. Got through the tough hill and freeway, then down to Friars and the next 10 miles were just pain and patience. I'm either courageous or wacko (my friends know which). Now I want to do next year's and run for time.

A couple more thoughts on the diversity of housing seen along the trip (and one size fits all - OSFA). It's similar to sampling in ecology. How many variable would it take to describe a cornfield? What about a rain forest? More data fields for the rain forest? By several levels of magnitude! What about a rain forest and a tropical reef? Both are diverse, but the data fields need to be different. If you're an ecologist and you want to understand those environments you need to have carefully designed sampling devices and protocols to capture the diversity, or lack of same in each type of environment.

Long long ago, I did my doctoral work on intertidal pools and developed an array of sampling devices that matched the physical characteristics of the habitats and the organisms in an attempt to capture the diversity in a way that resonated with the organisms themselves. If your goal is the learn how organisms interact with their world you need to interact with that world (using sampling devices)in similar ways and at similar scales.

So what's any of that got to do with MLS systems? All houses aren't the same. In fact they can differ in staggering ways. How do you filter them, ie sample them? You need a sampling device--a search engine. You also need variables for the search engine to filter. What kind of filter and what kind of variables? It depends on the houses, their surroundings and other off site attributes. One filter and one set of variables for a broad assortment of houses isn't effective for Buyer or agent. Does it really make sense to have one database for a whole state that might contain $80,000 condos and $20M estates? If you were a buyer would you feel you were working with the best system possible if you wanted an oceanfront estate with a seawall made of rip rap that also had private stairs to the beach--and you were looking in the same data container that had $80,000 condos in it? Would that seem optimal? With a statewide, someone else created your data environment and gives you a sampling device--the same that everyone else gets.

Now the agents should know the properties individually and they can help the selection process if they do--but what if they work such a large area they don't know all the houses personally? How many houses can an agent know personally? What happens then? The agent occupies the virtual world of the one size fits all database and the odds that the Buyer finds the RIGHT house decrease.

Is this one size fits all data container the very best system the real estate industry can create for the Buyer? Absolutely NOT!

When the big left coast association first trotted out the 6 principles and started talking about statewide MLS, I often stated my opinion that with their resources and the collective intelligence of 200,000 members, if they didn't fully intend to create the best MLS system ever, they shouldn't even start the process.

That's still my opinion. Why create less than the best, just because it suits certain political and corporate goals that have little to do with the stakeholder group that pays billions in commissions on the way to meeting a basic human need-- finding a place to live?

statewide detour

Up at state association meetings in Sac. Got more info off blogs than from Issue Briefing Paper. Directors got stuff just last week -- and said nothing to nobody as far as I know. More stuff went out Monday--when people were traveling. Now there's caucus pressure and further details to overwhelm all but the recklessly courageous. Another rush job! Same old formula. There's not enough info, but there are dire consequences if there's not a yes vote on Sat. They are SOOOO good at theatrical device. Critical urgency and brinkmanship all in one. They'll get the yes--there is no real option for no.

A quick read of the IBP shows little of substance--lots of discussion of boards of directors, governance, etc.,etc. All that is about blowing up the skirts of the mergor (or mergee??)while keeping face after they pushed the vendor under the train.

IBP has nothing about why this is good for buyers or sellers or for most practicing agents.

Why does a buyer for central coast resort property care if I have data from San Diego or Newport Beach? THEY DON'T! Why do I care? I DON'T. Why is statewide good? If it looses any of the content or quality of the present data system and limit further improvements, it's not good, EXCEPT that it's good for the state association.

That's the key. The merger could be a windfall for the state association after their last (and first) MLS effort slipped sideways in a mysterious failure so astounding it might have been planned. The only other explanation for the failure is gross incompetence--and that couldn't be the case! Well, maybe if there were some essence of Groupthink mixed in with the Kool Aide.

The state association will derive more power, more profitability and more control of more aspects of how real estate is bought and sold in the state. Their hands could soon be in every little nuance of every transaction.

The other amazing thing about today is all the new educational and promotional programs they have--a few free, but most cost significant money--coming from people who already pay dues. The state association is competing with almost every sort of vendor imaginable for agent dollars. Most of their products fall short of outstanding, sometimes far short. They do have a sorta captive audience though--that can be a huge leg up on success.

More later--walked two miles round trip from cheap lodging to meetings--legs feeling much better on the way to marathon recovery.

Oh, I am still finishing the white paper analysis--the hope of a statewide MLS remains alive and twitching in the background.

back from SD marathon quick post

Check out Robertson's post re business meeting and the spins likely to unfold during the statewide discussion. Frank and to the point. No one who is talking really knows what's going on--including the state directors who are supposed to enforce accountability. It's no way to run a corporation or a government, but that's the way we humans do things. Of course we have excitement in our lives because of this flawed organizational psychology, BP oilspill, mortgage meltdown, various wars, climate change, etc, etc. At least we're predictable! Just ask what direction Groupthink will take us---that's where we'll be.

I'll post later on the marathon, and continue with statewide MLS string (which may or may not dovetail with reality after the meetings in Sac). We probably won't know much more than we do now. Information doesn't flow readily from behind the closed doors. Maybe we're not old enough to know the truth (maybe no one knows the truth at this point---LOL).

RW

side trip

I rode down from San Luis Obispo today on a chartered bus. All the way to San Diego to run in the marathon (bad knee and all--another story). Because of the height of the bus and the fact that someone else was driving, I had a chance to see a big chunk of Southern California.

The scale of the development in this state is staggering. New houses, old houses--many older than me--OMG! Big, small, expensive and even some relatively cheap. It's a very mixed array, but only in some respects because the inertia is under way to create one size fits all MLS databases for all that diversity, to go with the one size fits all forms.

Some people see rich diversity and others see the diversity of benefits associated with providing just one size--a least common denominator path to the future of real estate sales.

Of course firms, brokers and agents could provide the personalization and customization that captures the unique elements of properties and individuals, but many seem increasingly enthralled by the convenience of this one size fits all world--you just get on a computer, click on some filtering fields and the rest is easy. Reductionism come to house hunting. The house is merely the sum of the parts--at least those that are described as fields in the MLS database. Sure, the buyers see the houses in person eventually--based on the search filtering. What houses are they NOT seeing? Perhaps that is a more interesting question! How do you know what you're not seeing? The buyers often don't know and, in some cases, neither do the agents.

The MLS system is playing a larger and larger role in creating show lists while taking agents and, in turn, buyers further and further away from the attributes that figure into the experiences of living in a home. How many MLS data fields tell you about those experiences? To restate a common theme here-it may be a fine fit according to data filters, but it is the RIGHT house?

A statewide MLS will contribute to this distorted impression of virtual reality.

What are the benefits of one size fits all solutions (OSFA) and who are those entities who seek them? Back on the main journey next post.

A better size?

Any wrap on the Connecticut Statewide MLS CEO's white paper must at least consider some other motivational factors that might act to encourage consolidating data into a statewide MLS system. The four TRUTHS of the white paper are either not logical, not true (or may not be true all the time, in all situations, with all types of property/buyers/agents). Put more simply, the four TRUTHS aren't likely to be driving the current urge to merge.

Drawing on my background as an ecologist, I want to consider a wide array of players in the MLS environment, then ask some questions about how they might benefit from consolidation of MLS data into a single container owned and operated by one entity.

Players Groups (stakeholders)Include (there are others, but these are central):
Buyers
Sellers
Agents
Brokers
Vendors
Local Associations
Local MLSs
Regional MLSs
State Associations
National Association


We'll examine how each group of players influences how real estate is bought and sold in terms of numbers, organization, power, control, profitability and influence over other players.

There is a complicating factor. Some individuals belong to more than one player group. Some used to belong to one group, now belong to another, but may return to the first group, or even become part of a third group, or a fourth group. Inevitably, the interests of the groups overlap to a considerable degree. They're all part of the process of buying and selling real estate. What happens when the interests of the groups don't overlap, but rather diverge along one or more planes of hyperspace? It's actually pretty simple. The group with the greatest stake in the outcome, the most power, the largest financial benefit or some combination of the above, attempts to make that divergence of interests disappear or, at the very least, seem immaterial to the greater scheme of things related to the real estate business. That creates the all important "if it's good for group A, then it must be good for group B" conclusion. An even better outcome is the "we belong to group A, so it's our group and therefore everything group A does must be good for us" conclusion. We watched the new Alice in Wonderland flick on bus during the trip to the marathon in San Diego. That movie displays the same kind of logic needed to draw the above conclusions about the real estate groups of players environment.

This slight of hand isn't as hard to achieve as you might believe, because success in real estate is measured by a very simple metric--money. That one, easy to measure, variable is influenced by 100's of other variables, many of which are difficult to measure. Recall how alluring the white paper became when the prospect of saving $100,000,000 was unleashed. The trade offs can't be so readily measured. Quality of service isn't easy to throw a number at. It's so tempting to just cut to the chase and go with what's sexy and measurable. Whata ya know? There are major players out there acting as alluring temptresses pimping out just that simple elegance. Show us the money and all is good!

The two groups with the greatest numbers among the stakeholders, the real estate agents (well over a million nationwide: 200,000 or so in CA, including MLOs) and the public (many millions paying over $50 billion in commissions in good sales years) represent the very core essence of the business of real estate. You'd think they'd be pivotal components in statewide MLS consideration, but they are NOT, because they have little or no organization, power or control.

If the public doesn't like the standards of practice in real estate, what alternative do they have? Find someone who does it the way they prefer? It's not that easy with standardization where it is. The public has nearly no organized voice. They have a need for real estate, but little control over how that need is met, aside from choosing from an increasingly homogeneous assortment of agents who use the same contract/disclosures, the same information, etc, etc. They may soon use the same MLS database too. Of course, there are different business models out there, but how different are they and are the alternatives available in every nook an cranny of the US?

What about the agents? They have have organizations at multiple levels and they pay dues/fees to all (directly or indirectly)--local, regional, state and national. Their interests must be well represented! Oh really? Those organizational entities are supposed to represent the agents, but flow of communication and power moves in a classic top down direction. There is very little moving from agents up. In fact, dissenting opinions are rare at the top. Those agents that rise in the organizations must hew to the accepted doctrine and culture. At which point, whom do they represent--other agents or the organization? As a result, even if most agents believed a change was needed--could they make it happen? Not likely, because very few agents actually participate in shaping the path of the trade organizations or even local associations. The few that do are trapped by Groupthink phenomena. Moreover, the people who fill key leadership positions at state and national levels were involved at local levels and may still be in one way or another. It's not an oversimplification to say that all of organized real estate is effectively controlled by a few hundred people at the volunteer level and even fewer at the key executive staff positions. In whose best interests is that control directed?

Meanwhile, most agents are engaged in the process of chasing commission checks, not engaged in organizational politics. Many don't see any clear relationship between the politics and individual profitability. Up until the last few years there wasn't much relationship. That is now changing.

The agents and the public may need to find a way to have more impact on their own best interests by working within existing organizations (not holding my breath there) or by creating new ways to exert better control over the real estate industry for the benefit of the groups that comprise its core essence.

Next installment moves on to Vendors, Local AORs, MLSs and Regional MLSs

Finally we'll look at the state and national organizations.