fascinate your brain

Quick hint of things to come. Been slow on the blog this week. Middle ear problem occurs this time of year--allergy thing, I think. Labyrinthitis is not fun and once you have it, the ear is never the same. At any ate I did some thinking about Sally Hogshead's book Fascinate at open house and began wondering about Triune Brain theory (McClean's theory) and Left/Right Brain issues as they might relate to the 7 fascination triggers.

The objects of persuasion (products, services, etc) each have an array of attributes that might predispose decisions being made about them to be strongly influenced by an area of brain function AND certain particular fascination triggers ALSO tend to lean here and there on the continuum of brain organization.

Brushing up on the brain now and will explore the ecology of fascination triggers in an upcoming post--middle ear notwithstanding. There's an entire ecosystem out there on the decision landscape. Critters struggling for existence upon a rich array of habitats.

What's any of this have to do with real estate---quite a bit, actually. Go figure!

where are we now?

Wasn't able to suppress a faint urge to straighten my office area (my office is legendary) and ran across some of the promo materials I picked up in Sacramento from the NEW statewide MLS in support of their merger scenario and the additional $750,000 of credit line. The pink sheet is dated June 4th--almost 2 months ago. Still no merger agreement. No recent news. No hybrid NEW Statewide application. There have been tentative appointments to the new combined board, but they've not been made public. Sounds like more of the same? Still wondering who is actually in charge and why they aren't making better decisions. Tried to run a demo of the outsourced NEW Statewide MLS CMA program that pulled up on Google Alert and the video wouldn't start. Oh well.

Is there a sincere effort underway to create the best MLS application possible OR is the NEW Statewide MLS just a shaky preemptive launch to discourage other entities who might aspire to consolidate data for the entire state? If you're the 800 lb gorilla maybe you don't need to be a cutting edge food forager to keep smaller creatures from messing around with the resources in your jungle? The "if we don't do it, someone else will" mentality is OK, but with a BIG IF. That IF involves the end users getting a product that's state of the art and equal to or better than any other entity would likely produce---at a competitive price, with competitive support and training. If that doesn't happen, the end users suffer the consequences of an ill conceived corporate positioning strategy. Stuff like that happens in the real corporate business world.

What does all this mean for the public? Are they getting better service from their agents than they did 10 or 20 or 30 years ago? Do Buyers choose the RIGHT HOUSE and Sellers find the RIGHT BUYER with greater frequency than they did in the past decades? That question is not asked. Being preemptive to stay preeminent takes a lot of time and energy! Besides, the public WILL buy and sell houses, regardless of the answer.

Working on a longer blog re fascination in real estate--as you might expect, that topic is a challenge!

Least common denominator x one size fits all

In a residential real estate context, when a "one size fits all" creature mates with a "least common denominator" beast the offspring will be neat, clean and consistent, but will they define the best interests of the public they purport to represent by offering stellar service?

MLS applications consistently confront the "least common denominator" beast. Most agents use only a fraction of the capabilities of their MLS system--EVER. They get in a rut and keep using it according to their comfort pattern, regardless of what the true capabilities are. After the last vendor conversion of the regional I used to chair, I conducted classes for a few years, but finally quit for lack of interest. Most agents don't  really want to learn the application in any depth. That suggests some important options. One approach is to "dumb it down" so the application is so easy to use that MOST agents use a majority of the available features. That's a very narrow and winding road. How dumb can you go? What about the agents who can and would use more power in an MLS application? What about the public that would benefit if their agent used that power or if the public themselves had access to more power through a public portal of the MLS? Who is the dog and who is the tail that does the wagging. Does it even matter when the state association is holding the dog's leash?

The headroom necessary to allow extraordinary agents to do amazing work with MLS data is often absent in today's systems. The new RPR application opens some small areas of new landscape for exploration, but the technology is out there to provide access to whole new continents of technological territory. Unfortunately, the exploration of new ways to assist Buyers and Sellers in their quest for the RIGHT HOUSE and the RIGHT BUYER is limited by least common denominator/one size fits all thinking. Many agents don't want headroom, as much as they want comfort, commission checks and a minimal learning curve. MLS vendors want accounts, meaning their least common denominator engine needs to purr just a little more sweetly than the engine used by their competitors. Don't wait for a ROARING LION to dash over the hill heralding a totally new approach to data organization (see my photo/tag based MLS data idea in an earlier blog).

When the state association decided to enter the MLS vendor business some naive individuals held slim hopes that they would strive to build the best MLS system ever devised. They had sufficient resources--financial and intellectual--AND the opportunity was there at the beginning (and may still be there). I was among the naive--silly me! I thought if you were starting from scratch and were the 800 lb gorilla in the real estate jungle, why would you build anything less than the very best? BTW, I did believe in Santa and the Easter Bunny longer than many children. My years as the chairperson and sys/ad of a regional MLS, left me convinced real estate data technology was poised for a quantum leap in technology and user interface development. I figured the state association could make that leap--if they chose to.

Unfortunately, it turns out there are a number of reasons favoring creation of a less than cutting edge application--involving control and power. At this point, nearly two years down the road, the application is so NOT cutting edge there's still some doubt that it has long term viability, regardless of the political prowess employed in coercing adoption. What is cutting edge is that the new statewide MLS enjoys a corporate platform that places it essentially beyond conventional concepts of accountability and responsiveness, not to mention financial performance. It doesn't need to make money to achieve success--at least that's what the initial period indicates. System performance is also not a huge requisite. There is still no public portal, the IDX is primitive and the CMA remains outsourced. Could a conventional MLS vendor sell a system that was so incomplete?

What about headroom within the basic statewide MLS application? Early on there was a plan to encourage outside developers to create a diversity of "front end applications" for use on the statewide data container. Various sophisticated or even simpler applications could be purchase by agents for nominal amounts, sorta like apps for iPhones. Franchises or independents could commission their own MLS apps for their agents and even their clients. Problem was that with so few users there was no incentive for anyone to spend time on development of alternative applications. That might change after the merger, but there's that front end from the vendor representing the OTHER part of the merger to consider. How will the existing vendor feel about fronting a data container open to a variety of front end applications, some of which may be more robust than its current offering?

We'll know more when the merger is actually complete--which it still is not --- as I understand it. What seemed to be a ready to sign arrangement is dragging out with legal fine tuning--for weeks and weeks.

demographic 2

Let's cut to the chase here, before I try to write an extended treatise on generational psychology.

As a group Gen X tends to be more focused on the "Self" and are acutely aware of what they want. They genuinely feel entitled to see their dreams become reality, thanks to the nurturing of high self esteem throughout their formative years.  When those dreams fall short, Gen X often experiences anxiety, frustration and stress. There's quite a bit of that right now. Because they are self absorbed and relatively independent they ultimately feel more alone when confronting unmet expectations that did earlier generations.

So how do these characteristics of Gen X match up with the wide wonderful world of residential real estate in 2010? Is the industry ready to facilitate their crucial role in the recovery? Not so much! Thanks in part to the business endeavors of the state association, we're well on the way to a "one size fits all" world including contracts/disclosures, agent education, misc. business products, misc. consumer products and perhaps before too long, even a statewide MLS with, you guessed it, a "one size fits all" database. The typical member of Gen X desires an individualized experience to maximize his or her expression of "Self" in the process of finding the Right House and acquiring it. They may be able to locate that experience, but it could take some effort. The pervasiveness of the state association has engendered a mentality among many agents and brokers that the convenient one stop shop is all that's needed to be successful financially AND provide the sought after services to Buyers and Sellers.

The current forms are extraordinarily complex and difficult for agents to understand in any real depth. The buyers and sellers who execute the forms usually haven't a clue. How do you spell anxiety and stress?

The MLS information is copious, but has little to do with the features that will actually factor into the resonance/fascination feelings able to drive the purchase decision all the way to the desired dream. The Gen X buyer is totally into the Self, the industry tends to treat buyers, sellers and property in a very consistent way--regardless of personalities, parcel size, price, location or condition. Perhaps there's a little disconnect in the making?

Of course individual agents or offices (remember when offices dictated how business was conducted without substantial influence from the state association?) could tailor procedures to accommodate the Gen X psychology, but only if they're aware that alternatives could produce greater success and satisfaction for some agents and certain members of the public. One size never fits all.

When you think about it, there's a trend in many other consumer based business environments to personalize the experience for consumers--see the remarkable book The Experience Economy. I bought a copy in 10/06 after seeing it in Long Beach at a state association meeting--but it was published back in 1999!--way ahead of it's time. For real estate it's still way ahead of its time. Houses are pretty unique and the way people live in houses is totally unique. It's obviously easier to create a "one size fits all world" for the entity defining the process, but how does that approach work for the public buying and selling real estate? Whose priorities really come first? Is the real estate industry operating for the benefit of the public or is the public buying and selling houses in a way that maximizes benefits to the most powerful entities in the real estate industry?

demographic disconnect ?

As I was sitting an open house on a recent Saturday I resumed reading Generation Me, a book I bought 3 years ago when I became interested in the demographics lurking in the future of real estate (and the rest of society). You may recall that a few weeks ago I realized that Boomers are not going to be a major force in the recovery of the coastal resort real estate market. I bounced that idea off a number of bright people when I was up in Sacramento at state association business meetings and got some somber expressions. When I returned home (I often call my office home because of the time factor) I rummaged around and found the book (a reason to always BUY books, not check them out from a library) and began rereading it to shine some light on 1) what demographic might lead the recovery and 2) what the psychological profile of that demographic might be regarding wants, needs and expectations.

At the same time I was reading Generation Me I started a new book titled Fascinate, by Sally Hogshead. Excellent read and fun as well--just finished it. Each year I do summer reading. Started when I was a kid. My mother would take me to the library when school let out and each week I'd check out books, read them and get more the next week. I did lots of pool time in Arizona, but I still fondly remember laying on the cool concrete floors reading when it was 110+ outside. I should add that my mother and father were both teachers, so this behavior wasn't totally eccentric.

I'll comment more on Sally's work (click for her site) in a later post, but it is relevant here. What's it gonna take to fascinate the target demographic likely to lead the real estate recovery? Thought about that for a few moments and realized something disturbing. Houses are sometimes fascinating, as are neighborhoods, scenic vistas and lush gardens. The very decision to buy is often based on some degree of fascination (often termed resonance) with a particular house or setting. In contrast, the real estate industry, ie the business of buying and selling houses is almost devoid of fascination. Look at the forms, the disclosures, the inspections, the advertising, the self promotion of agents/firms--where are those fascination triggers? Same goes for trade organizations--only more so. An industry that accounts for $50 BILLION in commissions, not to mention all the ancillary capital flowing in and around it, exhibits a striking fascination deficiency. I read a lot of books on marketing, decision making, organizational dynamics, consumer psychology and VERY rarely see any examples drawn from real estate--booze, cars, technology, food, etc., etc. are held up to illustrate creative enthusiasm in advertising design and cutting edge brand creation--but there's nothing from the real estate realm. Think about that while I move into the foundation of the demographic landscape we are facing now that the Boomers are retiring (in more ways than one).

Gen X is typically defined as those born in the 60's and 70's, putting them between 30 and 50 years of age in 2010. That's the next younger group of consumers of real estate services and real estate. How do they differ from Boomers? Let me count the ways! Obviously, there's a wide range of characteristics and some Gen X people have learned to behave outwardly much like Boomers, most often in industries run by Boomers (wanna guess what one of those might be?). There are some strong trends in Gen X psychology supported by extensive research. 

One obvious contrast with Boomers is that Gen X folks are in the peak years of income production. Boomers are retired, thinking about retiring, working less or starting new careers not focused primarily on income. The Gen X crowd didn't rush out there and seek instant wealth though. Consistent with their sense of self esteem (real or created), many took their time exploring their true passions and desires. Some have now settled on a career (maybe the 2nd or 3rd---I should talk--LOL).  The economic downturn certainly affected Gen X, but, on average, they owned less real estate and still have significant years to pursue a recovery of personal finances. Many will enjoy sufficient financial success to become buyers of coastal resort property. The Boomers who sustained coastal resort real estate for the past 15+ years often took a major financial hit and are likely to take a pass on coastal resort property that ranges far above $500,000 for even entry level cottages. They'll stay in vacation rentals and hotels and resorts while they look wistfully at the coastal houses they used to covet or may have even owned. Some Boomers may have Gen X children who are successful--but that's another topic for another post. 

Assuming Gen X represents the next wave of resort property buyers, what about their psychology is relevant in evaluating the current real estate business trends to determine goodness of fit.

Boomers grew up firmly in the grasp of group psychology. The war produced mass societal movements (physical, emotional, societal) and necessitated conscious thought about what others thought and expected. Groups were organized for all aspects of the war effort abroad and at home. Individual identities were secondary to a hierarchy of groups. The "ME" was present, but didn't have a very large voice much of the time. During the 60's and 70's Boomers explored self actualization and protest, encouraged by times marked by economic growth, but groups were still an important part of life. The younger portion of Gen X grew up in an school and home environment that often encouraged self absorbed pursuit of dreams fueled by self esteem that lacked any real foundation.



I'll end initial section here and pick up the real estate aspects of Gen X in the next post.  

Ta da! The final principle!

6. MLS Boards of Directors should include broker owners with appropriate regional representation.

We believe that broker involvement in MLS governance is critical. The MLS is the single most important business tool in the real estate industry and as such the provision of MLS services should be accountable to all participants. We believe it is imperative that brokers from both large and small firms be given representation on MLS Boards.

Well, they don't get any better, do they? The finale is hardly set with streamers and confetti.  So what's it mean? The implication is that those poor brokers were barred from involvement in the operation of MLS governance--not sure when or where that happened. Most brokers don't want to sit on boards, attend endless meetings and play politics--all those activities having little to do with profitability or delivery of quality service by the firms they own. I would argue that the single most important business tool in the industry is actually the real estate agent. It is certainly easier to control an MLS system, but the public depends on agents much more than the MLS. 

I love the part about "provision of MLS services should be accountable to all participants". Exactly what the Old Statewide MLS effort lacked. Over $4M allocated, most spent and no one is talking about what went wrong, who made bad decisions, what the plan is to fix it or much of anything else. Familiar faces will represent the state association on the merged governance board--same political appointment strategy--sacrifice success to stay true to the political imperative. How Groupthink does it get? 

The breakdown of small and large broker firm representation is a ruse. All those on the Board are part of the faithful Kool Aid Krowd. They don't actually represent large or small firms, they represent the statewide association volunteer leadership establishment--first and foremost. Incidentally, the board structure was largely pulled from Connecticut's statewide MLS governance plan--an odd twist because Connecticut and California have little in common other than initial characters in their names. It was probably easier that way and considering the board composition the governance plan is immaterial. 

Regardless of the board, who actually makes the decisions (and not too well thus far)? Don't know. Won't know. When additional funds are offered without any accountability requirement by the state board of directors, what can we expect? A vague, "trust us, it will get better" is all it takes. There is seldom an alternative to the party line even offered, or if it is, that carefully crafted alternative is so distasteful the directors gasp at the mere thought of the dire consequences! Oh, there is always an urgency involved, thrusting lots of partial information out there with a tight timeline leading to a drop dead decision point. It's a predictable pattern, and it works. 

That's it--finis! What have I learned going through the Six Principles again, knowing what I know now? I'm less impressed than ever at the writing, but the authors knew quality didn't matter. No thorough scrutiny was likely. If you keep sending the same message, even if it is flawed, people who don't care enough to analyze the contents, will come to believe the message. That certainly happened here. Five years later the Principles are still used to rationalize a series of sweeping changes in the fabric of residential real estate. In reality, the Principles don't rationalize anything, certainly not a statewide MLS. 

You've heard this before, but what if the public were to look carefully at the 6 Principles and ponder how they might benefit from their application to the real world real estate market? Would those principles increase the likelihood of Buyers finding the RIGHT HOUSE or Sellers finding the RIGHT BUYER? 

Members of the public are the ONLY life blood of this industry. As a group, they are smarter, more creative and exhibit significantly more diligence than real estate professionals. If the industry spent as much energy and intellectual capital seeking to improve the public's real estate experience as it does pandering to hackneyed political imperatives and plotting internal power plays, the distant horizon might assume a golden glow presently lacking in the darkness before the dawn. 

Link to comments re statewide effort

Here's a link to an interesting post addressing the state association's statewide effort by Jim Harrison of MLS Listings, Inc. (serves over 100,000 users in N and S California).  Good reading, but focused on his business and the role the New Statewide might play in the MLS vendor arena. That's just part of the picture. The New Statewide initiative is just a piece in a much bigger picture (actually a picture puzzle) that stretches across the entire landscape of how residential real estate is bought and sold in California.

I'm going to finish the 6 Principles today (thank God!!) and finish a post I started on Monday about the demographic disconnect that is threatening the timing and efficiency of recovery from this singular down cycle.

Follow the link above, read the final principle and the demographic demon should be ready for dissection.

Principle 5 (still alive?)

Honest, this is going to short and sweet. 

5.. MLS rules should be uniform and enforced consistently.

Over the years the relevant market area for many brokers and agents has expanded beyond the artificial boundaries of now out-dated MLS regions. As a result brokers are increasingly operating in multiple MLS environments and facing complex issues related to the disparities in rules, regulations and enforcement governing different MLS’s. We believe rules should be established that simplify and enhance the experience of MLS users across systems. To that end we believe that the C.A.R. Model MLS Rules should form the basis to develop statewide rules and standards of enforcement.

Relevant market area? Relevant to whom? Does the Buyer care how widely the agent ranges or does the Buyer want an agent who knows what the heck he or she is doing in a particular area that's the focus of interest in selecting a new house? More self absorbed rhetoric and I love the "outdated". That's so state association! The reality is that average levels of service may well have been better 25 years ago than they are today. Outdated can be a good thing. 

Here's the rub, most MLSs ALREADY use the model MLS rules. MLS rules are not complex--ever read them? It's all pretty simple stuff. To suggest that the whole state MLS system needs to be changed so that the overburdened mega brokers can avoid that dark veil of complexity and spend more time in their luxury sedans driving to the country club is a stretch. I've never heard a broker say "I'd love this business if only I didn't need to stay up nights pondering these diverse MLS rules and obscure enforcement policies". 

If only the MLS rules were the same it would enhance the experience of MLS users across systems. Oh really! That quality of experience is important to whom? The public--NOPE! They might be better served by an agent who only had to worry about one set of MLS rules because they stay where their expertise lies. If they want to list elsewhere, taking 10 minutes to read the local rules of the road, is not unreasonable.

Bottom line is there is no problem with MLS rules, except that the state association wanted, in 2005, to create the perception of a problem whose solution happened to fall in line with their agenda of creating a statewide MLS. Remember, they couldn't use THAT WORD in 2005, but the concept was floating out there as a shadow solution to this and oh so many other pressing problems.    

Principle 4

You know the program--my comments in alternate type below. This one took awhile. It's simple, but delicate because it takes some not very subtle jabs at existing MLSs and AORs, in order to rationalize change. 

4. MLS entities should exist for the benefit of the participants and subscribers.

We believe that MLS fees should be set at a rate that gives the MLS and/or the Local Association a fair return for delivery of MLS services. We believe that local Associations of REALTORS� provide valuable services to their members. These include services and activities that advocate for homeownership, ethics and professionalism in the industry. We believe that local AOR’s should be adequately and fairly compensated for these services, including those that may be directly associated with an MLS. 

It's really important to remember this was written in 2005. The ecology of MLS services on the left coast is different now that the state association IS an MLS vendor itself (albeit half a step and future merger removed). Before "broker load" and online applications were widely adopted, running an MLS was a labor intensive job for local AORs. Association offices had hardware and back-up systems, routers, etc. and the AOR/MLS staff performed diverse technical operations. True, by 2005 most MLS systems were web based, but this Principle points to an earlier time as it questions motives for  MLS fee structure. We won't belabor the financial failure of the state association's efforts to become a statewide MLS--sure is handy to have a seemingly endless line of credit available.  


First sentence implies that MLS may NOT be primarily operated for the benefit of the members. Second sentence suggests MLS service fees see use in supplementing association profitability. Whether that's any business of the state association, is a moot point, particularly in view of their attempts to get in the MLS business throughout the state. Nevertheless, the state association knew about, but did little to address these alleged concerns for decades. As its attention focused on expanding state association services, products and control through direct marketing to members, a striking shift in attitude evolved. Principle 4 brought that new found concern for MLS members out in the open. Random circumstance? Regardless, relations between the state association and local AORs have been on a downward path ever since the Principles were released.

Moving on, Principle #4 concedes local AOR have functions, it just doesn't seem exactly sure what they are, because the items listed are covered by the state and national associations. No mention of the local interactions with community and agents that are only possible with the sustained presence of a local association communicating a consistent message and responding to local member and community needs. 


The final sentence indicates the local AORs and MLSs should be adequately compensated for performing tasks also performed by the state association. Strange twist, poor writing, a portent of things to come, or all of the above? 


The tension between the state association and local AORs has increased significantly over the past 10 years. Power is shifting in the all too familiar "one size fits all" direction with the state association standardizing educational offerings, forms, technology and perhaps, MLS services across the state. With few alternative products and services to compare, most members are pleased with the apparent simplicity of this brave new corn field of homogeneity. Whatever members want, the state association has a product or service for purchase. Is it the best one possible? Who cares because it's important that members support THEIR associations (state and local). Besides, easy one stop shopping saves time. 


How will this standardization trend play out in the future? The role of the local AORs in promoting and assisting the state association in selling it's wares will expand with locally oriented AOR programs likely to further decline in frequency and quality. What's the future of locally owned and operated AORs? Good question! A better question is what does that answer have to do with statewide MLS endeavors?


Returning to the "sponsors", are there benefits to the public in consolidation plans for AORs and MLSs? It is still hard to see any significant benefit in terms of finding the RIGHT HOUSE or the RIGHT BUYER. Buyers, Sellers and houses are physically localized. Wise choices must be based on very specific distinctions. Sweeping commonalities or efficiencies of scale (the public is not likely to see any financial benefit there) are not going to matter in the housing decision, regardless of promotion or politics.


As is the case with the other principles, benefits from #4 flow in a surging torrent toward the prevailing statewide MLS vendor. A trickle of financial relief could dribble to users via slight reduction in MLS fees. The public will encounter a lower average quality of service due to agents ranging far and wide, beyond their radius of effective knowledge.  


  

Principle 3

3. Use of MLS data and its distribution to third parties should be controlled by the brokers who provide the data.

We believe that a listing represents intellectual capital and that the process of creating a listing is a value-enhancing activity. Brokers entering into an exclusive agreement with sellers accept the responsibility for marketing the property and should have control over distribution of the listing data. The rampant and uncontrolled dissemination of valuable listing information on the Internet has increased the cost of doing business and devalued the role of the agent and broker in this process.

This is going to be short and not so sweet. It's a history lesson with a guest performance by the horse that left the stable and the corral long ago. Not sure what they mean by intellectual capital. Creating a listing is a value enhancing activity? Enhancing the value of what? Initial state is that there is no listing. An agreement is signed with a seller and a listing is created by gathering data, most of which is in the public domain already. Photos and ad copy represent creative content (Copyright eligible--unless rights are given up to MLS--if they can be, when the Broker isn't the photographer and there's no transfer of rights) that add value to the listing in terms of marketing strength, but intellectual capital?  Delusional grandeur ring a bell?  

Brokers should have control of their listing data? They should, but they gave that up years ago and it's not coming back. The national trade association started a public website that paved the way. Pandora's box opened and no one is going to put the intellectual property back inside. Data wants to be free--and it will remain free. Data is cheap, wisdom is  priceless. Real estate gave up data and continues to fall short of wisdom. Maybe giving up data wasn't a good plan unless there is a plan for another layer of value added service?

The final sentence just whines. WAAAAA! Don't see how the cost of business goes up, but the part about roles being devalued by data leakage is only true if the roles are limited to distribution of data that is generally available from multiple sources. The state and national trade organizations were present as all this horrible stuff took place--and how did the state association react? Several years later they (still don't know who "they" are) crafted these amazingly obtuse 6 Principles. Several more years later they attempt a statewide MLS using the obtuse Principles as a springboard. 


How's that working out in the real world away from the Kool Aide bowl? 

Principle 2 (much)

Moving on to #2 (my comments in bold type below).
2. California REALTORS� should have universal access to all MLS data.

C.A.R. members are licensed by the state Department of Real Estate and as such are able to sell property throughout California. Consumers have access to statewide and even nationwide listings through a variety of data aggregation sites on the Internet. In order for REALTORS� to provide their clients with the information they want, California REALTORS� should have access to all listing data in the state. Shared databases and reciprocal agreements should be strongly encouraged.

Here's where things start to get really strange. Did anyone edit this stuff? First sentence is certainly true. We are ABLE, in a licensing sense, to sell real estate throughout California according to California Real Estate Law. Does that mean we should? Maybe not so much, because there's the small issue of fiduciary duty which we'll get back to shortly. Next sentence----Consumers have access to statewide and nationwide data--yup! Remember this was written in 2005--access to information is way better now. Unfortunately, MLS data is about the same as it was in 2005--ie falling behind in quality when compared to various aggregators and certainly the RPR effort by the national association and LPS (which is basically an MLS system, minus compensation--add a widget and presto!). Ok, now we take an excursion far from logic and rationality. Agents should have access to all listing data to give their clients the information they want. Didn't the previous sentence say the public already had access to nationwide data? In fact, that data and a diversity of applications offer more information and tools than MLS listing data, except for compensation info and the public doesn't see that anyhow. 


So the statewide listing data access doesn't really provide the public anything they don't already have and the agents also have access to all the info the public does -- so if they want information about property at the other end of the state (or the nation) both the public and real estate community can easily get it.


Perhaps this Principle is NOT about information, but about the size of the area within which agents do business. The implication is that any agent in any part of the state should have all listing data so they can range far and wide throughout the state to represent a client. 


You guessed it! It's time to return to fiduciary duty, as well as to recall the RIGHT HOUSE/RIGHT BUYER concept from last post. Which agent is better equipped to deliver a full measure of fiduciary duty consistent with the BEST interests of Buyers or Sellers in locating the RIGHT HOUSE or RIGHT BUYER? An agent familiar with the immediate vicinity of the property in question, it's vicinity, the history of that market, the planning environment, etc.,etc. or one from another part of the state who may know the client, but doesn't know the area? I'll concede that it's possible for a skilled and diligent agent from far away to do their homework and eventually bring serious expertise into play to achieve results similar to those provided by a local expert. Likely? NOPE! Excellent agents are very busy keeping up to speed in their OWN market area and because they do, they probably have plenty of business right in their own backyard. It doesn't make sense for an agent to do the work necessary to become and remain a local expert in order to competently represent clients during occasional transaction in other areas. 


It seems that the state association is promoting an expansion of market coverage that must inevitably lead to a decrease in the average quality of service Buyers and Sellers receive. So, where's the benefit fall? A statewide MLS benefits the state association in terms of control, power and profitability. The are concerns that the state association is becoming an increasingly aggressive business endeavor seeking to expand its activities into all aspects of real estate to become the preeminent force in every residential transaction. The old saying that the state association's goal is to keep the REALTOR at the center of every transaction has evolved into keeping the state association and it's products at the center of every transaction. That's fine if public best interest is positioned on the same path. Unfortunately Principle 2 suggests public best interest may be positioned on another part of the landscape entirely. 


Here's the key point. Does the state association offer business products and services that set new standards and enhance the ability of members to provide a full measure of fiduciary duty to their clients? We're not talking about gross closed commission success, we're talking RIGHT HOUSE and RIGHT BUYER. We'll save that mega topic for another post--more of the Principles to come first. 

The magnificent 6-revisited

After all these years, the 6 Principles are still called out as justification for recent actions related to the "merger" and other odd gyrations leading to the attempted salvation of the OLD Statewide by an immaculate conception creating a NEW Statewide. NO ONE has ever fessed up to writing these 6 convoluted statements of un-principle-there was a group of the state association political faithful, AKA MLS WORKING GROUP, but who did the wordsmithing? Of course, that kind of "transparency" is a trademark of the state association. The State Board of Directors passed the magnificent 6 in 2005--to this day no one is very sure of meaning. Think what has happened to the world of property information technology in the subsequent half decade--OMG. Still, the 6 principles apparently remain inviolate--shinning like a directional beacon to illuminate a brave new world for . . . WHOM??

Consider that 5 state association presidents have been in office since approval of the 6 with various treasurers, president elects, SPF members, etc. Five years worth---but the march toward statewide relentlessly moves forward--sorta suggest that the volunteer leadership is either all intoxicated with Kool Aid or the impetus for a statewide MLS is coming from a shadow leadership that doesn't change or executive staff--regardless of what's happening out in the real world.

Much as I hate to (shudder!!!), it's probably time to look at the principles in depth (which few have done, without considerable confusion) and ask how each affects ALL the stakeholders: the state association, the local associations, the brokers, the MLS vendor and the agents. OH,  maybe we should include the Buyers and Sellers. The Principles hardly mention them--never forget the state association represents (sorta, when it's convenient) the members, NOT the public. Recently, only the bold heading text of the 6 Principles has been used in copious New Statewide MLS propaganda, but the subtext has real meat. Oh, I'm going to break this up into a 2-3 posts--you might fall asleep otherwise--and I might do the same. Clarity and logical consistency is lacking. My comments will be in contrasting type beneath each Principle.

FIRST--a word on behalf of our "sponsors".

The perspectives of Buyers and Sellers (AKA the sponsors) are, or should be, paramount in trying to identify Statewide benefits.

Buyers want to buy the RIGHT HOUSE at a fair price, in a timely way, with minimal inconvenience or liability. RIGHT HOUSE means the one representing the wisest overall purchase decision considering ALL the houses available for purchase at the time. Can you imagine the Buyer wanting anything less?

Sellers want to find the RIGHT BUYER in a reasonable time, a buyer that will pay an acceptable price and close the deal with a minimum of inconvenience and liability for the Seller. The RIGHT BUYER covets a particular house and is motivated to purchase it above all others. How many Sellers don't want to find the RIGHT BUYER?

Those goals largely define the best interests of the public, pulling in the issue of fiduciary duty. Although that seems pretty straight forward, the roles of other stakeholders (including the MLS environment) in attaining those goals are more fuzzy that you might think.

NOW we're ready to begin--you're so patient!

MLS Working Group Statement of Principles

(Adopted by the C.A.R. Board of Directors 9/24/2005)

1. MLS data needs to be fully standardized with local options for data field variation.

We believe that local customization of MLS data fields has made the comparison of data between MLS’s unnecessarily complex. A lack of uniformity has created artificial boundaries that impede the efficient operation of the market and the ability of REALTORS� to service their clients. We support universal data fields that are standard across all MLS’s while also recognizing the need for adding local descriptors.


Ok, right out of the chute-- are they saying data should be fully standardized but. . . not fully standardized? What the heck? How do local options fit in with "fully standardized"? Formats could be standardized, but when we read down we see that customization of data is BAD. It makes comparison of data between MLS's complex because of a "lack of uniformity" and impedes the efficient operation of the market and the ability of REALTORS to service their clients (that last is an VERY ODD turn of phrase--we used to kid new agents whenever they said that). Do clients care about the efficiency of the market? Have you ever asked clients how they feel about the efficiency of the market? Are the clients willing to sacrifice their best interests so the market can become more "efficient"? Are they comfortable reducing the odds of finding the RIGHT HOUSE or the RIGHT BUYER to assist the market in operating more efficiently? 


This first Principle seems to say that each MLS has unique aspects to its dataset and that creates inconvenience because it introduces complexity.  Who is inconvenienced, under what circumstances and is there a beneficial trade off for that complexity? Agents and the Public (who now have access to large chunks of the data) could certainly encounter complexity when COMPARING data across MLS boundaries as they consider property within the coverage area of more than one MLS. Why would they doing that? One possibility is that there is NO DISCERNIBLE DIFFERENCE between the two MLS areas, at least for the types of houses and area attributes they deem important. The other possibility is that they like typical attributes of properties in one area (and MLS) but prefer other attributes in another area (and MLS). They are comparing contrasts across MLS boundaries--not easy to do with one dataset if it doesn't include the contrasts. 


Comparison is complicated in the different MLS market areas that might tend to differ in attributes--DUH! Why do Buyers (as did Sellers when they bought) choose one area over another area in the selection process? Because of distinctions in attributes arising partially from area characteristics. The complexity that the MLS Working Group thought was a problem may be the essence of why Buyers make the choices they make--assuming they really want the RIGHT HOUSE. The 6 Principles seek to make it easier to choose by standardizing data and easing comparison of SELECTED data across MLS boundaries. This is also often called loosing information. What if the standardization process removes information that some Buyers might deem critical to their goal of finding the RIGHT HOUSE? What if, in an ideal, efficient market, the underlying goal of the MLS was to promote the sale of houses, regardless of whether they represented the RIGHT HOUSE? Sounds fine for many of the stakeholders, but what about the BUYERS and SELLERS and their best interests? 


There are those Local Descriptors, but what are they and where are they. Lately we don't hear much about local options. The 10 MLSs that are using the NEW Statewide each have different datasets, but I heard in Sac that those distinction have delayed data sharing and will probably be removed before the one mega data container is configured for ATM (after the merger). Does that mean that local descriptors are OK, but contrasting MLS datasets aren't? Contrasts are contrasts and they are important to Buyers and Sellers, but will they survive the urge to merge? Standardization of formats and labels is fine, but leave the information in the data container. See Michael Wurzer's blog on Statewides in a previous post.
  
End of the day, what does Principle #1 seem to say? Data should be easy to compare so the real estate market is efficient and transactions are smooth and abundant. 


What does that have to do with a statewide MLS? Very little and here's the reason. "Statewide" was still a very naughty word in 2005--the concept was there, but the word made many members livid. Since 2005 mega regionals and aggregation arrangements have organically evolved to solve much of the perceived fractionation of similar market areas by MLS boundaries. That phase is largely over and the state association missed the boat.  


At that point, the ONLY way for the state association to leverage itself into the picture on the way to garnering more power, control and profitability was to go whole hog for statewide and suggest that anything on a smaller scale was vastly inferior. They finally got the state directors mellowed out (multiple Kool Aid keggers) about statewides in 2008, THREE years after the 6 Principles were approved. Is that any way to run a tech company?       


Read ahead, if you like and I'll tackle #2 in a day or so (got to recover from #1!! ). Principle #2 is totally surreal--OMG!

2. California REALTORS� should have universal access to all MLS data.

C.A.R. members are licensed by the state Department of Real Estate and as such are able to sell property throughout California. Consumers have access to statewide and even nationwide listings through a variety of data aggregation sites on the Internet. In order for REALTORS� to provide their clients with the information they want, California REALTORS� should have access to all listing data in the state. Shared databases and reciprocal agreements should be strongly encouraged.

3. Use of MLS data and its distribution to third parties should be controlled by the brokers who provide the data.

We believe that a listing represents intellectual capital and that the process of creating a listing is a value-enhancing activity. Brokers entering into an exclusive agreement with sellers accept the responsibility for marketing the property and should have control over distribution of the listing data. The rampant and uncontrolled dissemination of valuable listing information on the Internet has increased the cost of doing business and devalued the role of the agent and broker in this process.

4. MLS entities should exist for the benefit of the participants and subscribers.

We believe that MLS fees should be set at a rate that gives the MLS and/or the Local Association a fair return for delivery of MLS services. We believe that local Associations of REALTORS� provide valuable services to their members. These include services and activities that advocate for homeownership, ethics and professionalism in the industry. We believe that local AOR’s should be adequately and fairly compensated for these services, including those that may be directly associated with an MLS. 

5.. MLS rules should be uniform and enforced consistently.

Over the years the relevant market area for many brokers and agents has expanded beyond the artificial boundaries of now out-dated MLS regions. As a result brokers are increasingly operating in multiple MLS environments and facing complex issues related to the disparities in rules, regulations and enforcement governing different MLS’s. We believe rules should be established that simplify and enhance the experience of MLS users across systems. To that end we believe that the C.A.R. Model MLS Rules should form the basis to develop statewide rules and standards of enforcement.

6. MLS Boards of Directors should include broker owners with appropriate regional representation.

We believe that broker involvement in MLS governance is critical. The MLS is the single most important business tool in the real estate industry and as such the provision of MLS services should be accountable to all participants. We believe it is imperative that brokers from both large and small firms be given representation on MLS Boards.