Conversations about the MLS industry, creating software, and employee ownership.

The last day of the year seems like a good time to look back at my favorite posts from 2008. Without any ado, they are, in chronological order:

• Open Letter to Yahoo!, Google, Trulia and Zillow, Encouraging Data Standards.  This post has resulted in some good work on a syndication standard within RETS.
• Videos in the MLS and the Long Tail of Real Estate Search.  Video hasn’t taken off as I thought it might, but I still think there is room for improvement in MLS systems promoting the long-tail criteria consumers care about most.
• Attention! Quite possibly my favorite and most important post ever.
• Can You Design The Future? Yes, through your daily actions, that’s exactly what we all do, together.
• MLS Juice.  This has legs for the future.
• Making Markets.  The blurring of lines between the private and public MLS continues.
• “…ultimately the consumer that suffers…“  This could be an interesting topic at Inman next week.
• How Do Consumers Choose an Agent, Part I.  This, too, could be an interesting topic at Inman next week.
• How Do Consumers Discuss Listings Today? This is one action toward designing the future.
• Defining Moments: NAR Gateway/TREC and the Open Web.  Ideas I still like but seem like they’re going nowhere.
• Ahhh, Weekends in Minnesota.  GIven that it’s currently -15F here right now, I couldn’t resist linking to this.
• Analysis of NAR/DOJ Settlement of VOW Litigation.  We’re just a month and a half away from MLSs being required to implement VOW policies pursuant to the settlement.
• Videos of FBS Summit Panel on Consumer Facing MLS Listing Portals.  The experience of this panel was a game changer for me in many ways, and provides an interesting backdrop to the panel discussion on MLS web sites next week at Inman.
• Heavy Load.  The most commented post ever on the FBS Blog, and one that continues to demonstrate for me the value of blogging.
• We Live in a Cynical World of Tough Competitors.  I love everything about this post.  If you want to know me better, read this (twice or ten times).
• The MLS of the Future Requires Standards.  The message of the FBS Blog, being repeated.
• From Many, We Are One! The election.
• Too Big, Not Too Big to Fail.  The bailouts.
• Unsolicited Advice for the New RESO Board.  Can I mentioned universal property IDs again?
• Big Conversations About Big Brands, Big Agents and Big MLSs.  This is part of a series.

Okay, so that’s a lot of favorites.  Perhaps I’m too enamored with my own writing.  Anyway, Happy New Year to all of you!  I’m truly grateful for the wonderful year we had here at FBS, our super clients, all the great people I get to work with, and my family and friends.  I’m very excited for 2009!

In his post entitled The future that won’t be distributed, Doc Searls writes:

I think the reason we get upset about What Twitter is Doing, or What Google Is Doing, is that we are too dependent on them.

The Net and the Web are environments that encourage and support both our independence and our interdependence. Single-source one-to-many forms of dependence, such as we have on Google and Twitter are old-skool scaffolds of dependency, within and around which we will build forms of infrastructure where we become ever more fully independent and interdependent — without BigCo or HotCo intermediation. They may be involved, but not as Absolute Necessities. Not as silos. Not as walled gardens we can’t leave.

Data portability is part of it. So is service portability. We will always have BigCos like Google and HotCos like Twitter, to help us out. They are necessary but insufficient members of the future infrastructure where we are free to take or leave any of them — while also appreciating what they do.

We aren’t there yet. How fast we progress depends on how much we embrace our need for independence.

This is a mission statement for MLSs, making themselves “necessary but insufficient members of the future infrastructure where we are free to take or leave any of them — while also appreciating what they do.” This is the essence of competition, of being big but not too big to fail. All services should have freedom of choice at their center, which would require them to focus on proving in the marketplace why they should be appreciated.

Saul Klein of Point2 has posed a question at InternetCrusade as to what ” 5 things MLSs must do to remain relevant to the Real Estate Industry over the next 5 years?”  When I first started the FBS Blog, my first substantive post was similarly entitled “Death of the MLS?“  That question was perhaps more rhetorical than Saul’s, but the point was essentially the same — many people are questioning the relevance of MLSs in today’s web world.  One of my main purposes in starting the FBS Blog was to provide a counter to this drum beat, because the relevance of MLSs seems pretty clear to me.

To that end, let me quote at length from my seminal post Death of the MLS?:

Before delving into the three doom and gloom scenarios (bias showing through), some background on the MLS model and its value proposition may be helpful.  Whenever someone asks me what I do for a living and they aren’t familiar with the concept of an MLS, I tell them that it’s sort of like the stock exchange for real estate.  The MLS facilitates the definition, if not the creation, of a market for real estate.  Now, I know this analogy is far from perfect, but I think the idea of a market is critical to this discussion.  What is the market being served by the MLS?  Is it the market for real estate services?  Is it the market for real estate?  Is it the market for real estate advertising?  Some other market?  Does the MLS serve the purposes of competition in any of these markets?  How?

From my days in college studying economics, I recall there were some pre-requisites to “perfect competition” in a market:

Many buyers and sellers.

The products are basically the same (homogenous).

Perfect and complete information — buyers and sellers are on equal footing.

Low barriers to entry into the market, mobility of resources.

Predictability, usually established by some legal framework to uphold promises.

Of course, there isn’t a “perfect” market anywhere (some agricultural commodity markets come close, but that’s about it).  Rather, these conditions present a continuum towards perfection.  Looking back to pre-MLS, it’s pretty clear that the MLS helped foster many of these core requirements of competition in the real estate market itself.  The MLS brought more buyers and sellers together, provided more information about the products, lowered barriers to entry into the market, and provided predictability for real estate agents, buyers and sellers regarding how they could work together.  Much the same could be said for how the MLS impacted the market for real estate services.  Buyers, sellers and their agents knew much more about what each party was bringing to the table in the real estate transaction as a result of the MLS.  Moreover, the MLS “leveled the playing field” (eased entry) in the real estate services market, which is another reason many complain about the MLS today.  Many feel that competition is best experienced head to head, with as many barriers as possible.  By providing technology, education, lock boxes, and other services at a lower cost to the average agent, the MLS lowered a lot of barriers.

Interestingly enough, back in the present, those prognosticating or wishing for the death of the MLS feel that the quest for perfection is now being impeded by the MLS.  The MLS is alleged to have rules that get in the way of new entrants, who don’t want to play by those rules.  The MLS is claimed to be preventing the free flow of information.  The MLS supposedly is restricting the number of buyer and sellers.  If true, these actions would indeed be anti-competitive.  The question is whether the claims are true or not.  In what market is it true?  If the MLS didn’t exist, would these factors be fostered more or less?  Would a national or super-regional MLS improve the competitive environment?  Under what circumstances?

Much of the furor regarding the MLS lately is over the role the MLS should or should not play in the market for real estate advertising.  The lawsuit by the DOJ against the NAR mostly involves real estate advertising.  Many of those who complain about the rules and regulations of the MLS are those wanting better, cheaper, faster access to the MLS data so they can advertise it on the Internet.  Is the MLS fostering this market or making it less competitive?  Is the aggregation of the data possible on the same scale without the MLS?

Of course, this was written before the settlement of the NAR/DOJ litigation over VOWs. Also, during the last 18 months, there have been several large regionalization efforts, but the majority of the efforts are focused on data exchange or sharing among MLSs, not broad consolidation. So, the value proposition of the local MLS seems to me to remain strong, providing for more efficient data exchange, lock box systems, and more to create the local real estate market. I don’t see that changing any time soon, do you?

Writing in Read/Write Web, Paul Miller, quoting himself, says:

“Just as ‘we’ used to duplicate and under-utilize computational resources, so we do something very similar with our data. We expensively enter and re-enter the same facts, over and over again. We over-engineer data capture forms and schemas, making collection exorbitantly expensive, whilst often appearing to do all we can to limit opportunities for re-use. Under the all-too-easy banners of ’security’ and ‘privacy’ we secure individual data stores and fail to exploit connections with other sources, whether inside or outside the enterprise.”

Sound familiar?  Mr. Miller continues:

“In a small way, the efforts of the Linked Data Project’s enthusiasts have demonstrated how different things should be. The cloud of contributing data sets grows from month to month, and the number of double-headed arrows denoting a two-way linkage is on the rise. Even the one-way relationships that currently dominate the diagram are a marked improvement on ‘business as usual’ elsewhere on the data web; even in these cases, data from a third party is being re-used (by means of a link across the web) rather than replicated or re-invented. Costs fall. Opportunities open up. Both resources, potentially, improve. The strands of the web grow stronger.”

It is here, in the use and reuse of data, that the potential of the cloud will be realized.

Two applications to MLS: (1) we should be creating a linking mechanism with universal property IDs (URIs); and (2) MLS is one potential home for identity management for real estate professionals.  The last likely is controversial but has strong potential benefits for single sign-on and other authentication and identification needs on the web if open standards are followed.

How much value could be created by the Real Estate Standards Organization if it were able to implement and gain adoption on universal property IDs?  Forget, for a moment, defining broad and deep data standards, and, instead, focus on one thing — establishing a method to link together all information relating to real property.  This one change would bring about the benefits extolled by Mr. Miller, which bear repeating:

“Costs fall. Opportunities open up. Both resources, potentially, improve. The strands of the web grow stronger. . . .  It is here, in the use and reuse of data, that the potential of the cloud will be realized.

If you aren’t paying attention to the discussion on the future of real estate sales going on over many blogs the last week or so, you should go read up now and lay down some comments.  This is really good stuff:

• Start with the my recap of some posts from Brian Larson at MLS Tesseract, Rob Hahn at the Notorious R.O.B. and Danilo Bagdanovic over at Agent Genius — but go read those posts in their entirety as they provide an in-depth introduction to what ensues below.
• Carrying the conversation forward, check out Russell Shaw on Agent Genius advocating in “Will Real Estate Ever Have a 900-lb Gorilla” that there won’t and cites the lack of brand identity of all the big “brands” today along with the evolution of 100% companies and desk fee agents, especially RE/MAX and independents, as proof.  Rob Hahn then responds to Russell with a post entitled “The 900-lb Gorilla Cometh”.
• Next up, check out Glenn Kelman on Bloodhound Blog, questioning whether technology will squash the small, independent agent/broker. His questions at the end are key:
  

  What do you think? Is technology creating new economies of scale in real estate? Are small brokerages able to compete just using the public sites provided by the MLS? Will large brokerages be able to use better data access to build the market-leading real estate search sites?

  And is it the role of the MLS or of the National Association of Realtors to create a level technology playing field? Will the small brokers get priced out of the technology wars? I don’t pretend to know, but it would be great to hear your thoughts.

  The comments to Glenn’s post also are hugely illuminating.

• I also think Greg Swann’s recent posts on the power of links in his Scenius software praxis are extremely relevant here, for all the reasons I stated here even though I hadn’t yet connected with Greg’s posts.

Though none of these posts contains “the answer”, together they lead the dicsussion toward better thinking about what’s next in real estate sales.  My own thoughts are:

• I want for agents to control their own destiny, and believe that software can help.
• We have an IDX solution that needs to get better at link love.  I haven’t figured it out yet completely, but I believe there are multiple ways that an IDX and VOW solution can promote agent and broker sites to improve SEO for all involved.
• Quality content is key — the Consumer Reports of real estate — and interactive maps with agent-defined neighborhoods and enhanced school information referenced from and back to listings provide the foundation for the excellent search and listing displays consumer crave.
• The white label brands advocated by Danilo Bagdanovic fit in well with this model.
• Of course, much of this requires money and the big brands and third party providers have that.  The question I have with these models, though, is whether they can ever get out of the way of the agent enough to empower the agent instead of take from them (see Brian Brady’s comment on Glenn Kelman’s post for more on this (Greg, is there a way I can link to comments on Bloodhound Blog?)).

So, many questions remain that only time and talent will answer, but we’re definitely working our end to play a part in the outcome and we’re excited to see what happens.

Brian Larson makes the case they are not, at least in terms of the “disclosed by any other means” requirement in the NAR/DOJ settlement of the VOW litigation.  Go check it out and discuss it on Brian’s excellent blog, MLS Tesseract.

I’m tracking two conversations about being big on the web and want to share them with you.

Future of Real Estate Brokerage

First, there is a debate regarding regarding whether the future of real estate brokerage favors the big brands or the power agents. Rob Hahn argues that the big brands will prevail, who writes:

I believe that the brokerage of the future will be large enterprises that are consumer-centric, with most of the power shifting back to the broker and away from the agent.

I believe that the smaller brokerages will become boutique shops, who are allowed to exist because they fill a market niche that the big players do not care to address.

I believe that agent splits are on the way down, and that the number of real estate agents will be reduced fairly dramatically. At the same time, the top producers will find that they are able to build real wealth by ownership stakes in the enterprise, becoming partners in all respects, resulting in either same or increased income.

Contra Danilo, I believe that the freedoms that real estate agents and teams currently enjoy are headed to the ash heap of history as the big brands reassert themselves.

And technology will make all of this possible.

Rob is addressing Danilo Bogdanovic, who suggests that the future of real estate brokerage is:

A “”White Label Brokerage’.  It has an agent-centric versus broker-centric focus and a fee structure that does not interfere with an agent’s business focus. It allows agents to brand themselves, the team to brand their team, and the small brokerage office brand their own company name.

This is a big conversation and reading the full posts linked above is worthwhile.  I wrote some time ago about the excellence of examples like Jay Thompson going independent.  Jay’s brokerage, Thompson’s Realty, appears to be a great example of Danilo’s “white label” brokerage where agents within the firm are creating their own brands on-line, like the Butterworth Group and Heather Barr, the North Phoenix Agent.

There’s a lot to like about this model, where the expertise of the actual people doing the work is front and center for the consumer to see and judge, without any brand interpretation required.  This model is especially compelling in this age of “too big to fail“.  At the same time, the big brands do seem to be getting bigger and consolidation in the real estate industry seems likely as the market deteriorates.

The Bridge To The Next Big Conversation

Central to Danilo’s theory of the white label brokerage is the web.  The web is about links, because links power search engines.  Some of the biggest links in real estate are from listing portals back to listing owners’ web sites.  In most cases, the links from listing portals go back to the big brands, which own the majority of listings.  More links, more search engine placement.  Brokers like Thompson’s real estate rely on IDX sites to power their search, and yet the biggest portals don’t link back to IDX sites.  This also applies to the continuing trend of MLSs building consumer facing listing portals, which have deep links going back to the listing brokers.

Future of MLS Web Sites, IDX and VOWs

The next big conversation I’m following deals with the possibility that the new VOW policy required by the NAR/DOJ settlement could jeopardize IDX and favor consumer facing MLS sites “protected” by VOW rules.   Again, Rob Hahn is playing devil’s advocate and suggests “the incentives are just enormous for an MLS to create public facing websites, dirty up its IDX rules, and have everyone else toe the VOW line — especially the ’signup’ requirement that creates a walled garden around listings, except on a MLS website. I just can’t imagine why a MLS would not pursue this strategy.”

Brian Larson details the issues well on the MLS Tesseract blog, and concludes that the new VOW policy is more likely to strengthen instead of weaken IDX.  In doing so, Brian raises significant questions about consumer-facing MLS listing portals, a topic we covered in-depth this last summer:

As to whether public-facing MLS web sites are good or bad, I think there has never been a debate, really. Those who want to believe public-facing MLS sites are good have argued for that view; those who believe they are bad likewise. Each side ignores evidence that does not support it. We did a whitepaper in May with Focus Forward Consulting (Kevin McQueen’s firm) that addressed some of the problems with the MLS-public-facing debate. Those problems remain unaddressed. Neither the pro-MLS site camp nor the anti-MLS-site camp has shared with the community meaningful data supporting their central arguments. I don’t think anyone wants to pay for research that might prove them wrong….

One of the big questions for these public web sites is where the links are going.  Ironically, often the biggest brokers are the ones who object to consumer-facing MLS listing portals, yet the links from such inordinately benefit the biggest brands and do little to promote IDX sites.  I’m not entirely sure of the solution yet, but I believe links are the key and those who have more links and better links will end up being the winners.

Help Me With Questions for Panelists at Inman Connect in January

I’m thinking about these issues a lot these days as I’ll be moderating two panels on MLS issues at Inman Connect in NYC in January, one on consumer-facing portals and the other on big MLSs getting bigger.  The panel on consumer-facing MLS listing portals includes Bob Hale from HAR.com, Sami Inkinen from Trulia, Spencer Raskoff from Zillow, and Cameron Paine from Connecticut MLS.  One question I have is who do these sites benefit most, big brands or independent brokers?  Is this answer to this question different for MLS portals versus other portals?  What’s the future of IDX and VOWs versus the portals?

The panel on MLS regionalization is Joel Singer from CAR, Art Carter from CARETS, Jim Harrison from MLS Listings, and Joel Cohen from IMAPP.  A good question for these regionaliation efforts is whether consumer-facing search engines is a critical part of the effort.   I believe consumer-facing MLS sites are important for some of the panelists and not others, and learning the reasons why will be interesting.

What I’d really love, though, is hearing from you regarding what questions you’d ask these panelists.  What are the key issues that need more discussion from your perspective?  These are big conversations and I need your help.

In his post MLSs Under the Gun, Brian Larson alerts us that all NAR-affiliated MLSs must adopt a VOW policy on or before February 15, 2009, to comply with the settlement in the NAR/DOJ litigation. Brian also provides some excellent checklists to help MLSs, vendors, VOW operators, and others prepare for the new policies. These materials are must reading for anyone involved with MLS data.

For FBS’s customers, the RETS Manager built into the flexmls Web system will help you provide the persistent download required by the settlement. However, as Brian points out, you’ll need to work to define what is confidential data. Importantly, for this purpose, confidential essentially means cannot be distributed in any manner (including printed reports, emails, etc.) to anyone outside the MLS. This is going to be a very, very small set of fields and likely not the same as what MLSs traditionally consider to be confidential information.

One additional item I’d point out is that the MLS needs to provide a way for sellers to specify that they do not want their listing or, alternatively, their address, displayed on a VOW. If the seller does opt-out of having their listing or address displayed in the VOW, they also must sign a document that affirms they understand the listing won’t be available on any of the web sites. Importantly, a question Brian poses and I share is:

Does the MLS have an affirmative responsibility to ensure that none of the data feeds it provides to Realtor.com, IDX sites, syndicators, and other web sites, include the listings or addresses of sellers who have opted out of such displays? In other words, does an MLS act inconsistently with the policy if it distributes listings the seller has withheld under this section to Realtor.com or the like?

That seems like a tall order.

What questions do you have about implementing the policy? Comment here or, better yet, over on Brian’s blog, MLS Tesseract.

Awhile ago, I wrote about my experiences with Windows Vista on my IBM/Lenovo X61 tablet.  Short summary: loved the hardware, hated Vista.

A few weeks ago, I bought a new MacBook.  It arrived, I turned it on, and in about four weeks of usage, I think I’ve turned it off twice (intentionally).  Otherwise, it just runs and runs fast.  This is what an operating system is supposed to do and so I’m now a big-time fan of OSX.

The hardware is okay, too, but that’s not the reason I’d get a Mac — it’s all about the OS.  In fact, I really don’t like the sharp edges on the MacBook, which are uncomfortable when using the laptop in, of all things, your lap.  I also don’t like that there is no docking station, apparently because Jobs thinks any openings on the bottom are bad.  Nor do I like that I needed to buy a new monitor and new, special cables for the new monitor, and an aircard because I couldn’t tether my Blackberry with it as I had for years on Windows.  Nor am I fanboy because OSX is easier to use; it isn’t, especially if you’re used to Windows.  Lastly, it isn’t because OSX is more secure; it likely isn’t for long.

Overall, I’m not a Mac fanboy at all but I am an OSX fanboy, because it’s fast and stable, which means a lot when you use your computer every day, most of the day. I open my MacBook and it’s instantly on.  Close my MacBook and it shuts down nicely, without stranding my applications or work.  Open it again, instantly on.  All my applications are tucked neatly into their spaces, running continuously without repeated failures.

When it comes to the cult of Apple, I’m with Bart, but when it comes to the efficiency and efficacy of OSX, I’m a huge fan!

On the eve of my trip to Scottsdale for the December RETS meeting, which will be my last as the current RESO Board Chair, I offer the following unsolicited advice to the new RESO Board:

1.  Elect a Chair from the Technical Side.  The RESO Board is split into business and technical sides, and I am on the business side.  However, all the action is on the technical side, which, along with chairs of the technical workgroups, constitutes the Standards Committee.  The Standards Committee is responsible for defining the road map for the standard.  Given that the Standards Committee defines the road map, I recommend that the Chair be elected from the technical side or, at the least, should attend the Standards Committee meetings to stay in the loop on the work going on there.

2.  Get Past June 2009 Sooner Than Later.  In November 2007, the NAR MLS Policy Committee recommended a rule that all MLSs become RETS compliant by June 2009.  Though this policy has the potential to do great things for the industry and RETS over the long run, the initial impact has been to divert attention into getting the few MLSs not already RETS compliant up to speed.  This has required cleaning up version 1.7 to version 1.7.2, rewriting the compliance checking tools, and working on a bunch of procedural issues for compliance.  Though important, none of these efforts directly advance the standard.

3.  It’s All About The Data!  I’ve been attending RETS meetings since 1999, I believe, but for several years I had been less involved until the April 2007 meeting in Austin.  I went to that meeting with the express purpose of advocating for stronger data standards.  The ideat that now (then) is the time to push for greater data standards nationwide seemed to gain some traction from advocacy from me and folks like Frank Tadman and Peter Spicer (then of REInfoLink) and Gregg Petch (then of MRIS).  We established a rigorous schedule for the payloads workgroup and proceeded to meet nearly every month for the next year or so.  A lot of work was done in those meetings, and then the NAR MLS policy for June 2009 compliance was announced and that work essentially ground to a halt.  Yet, a stronger data standard is what will deliver the promise of RETS.

Related aside:  One of the biggest challenges with the current payloads is that they are expressed in schema, which, for all practical purposes, is not accessible to lay people.  Since Austin, I’ve been advocating for a RETSipedia that would allow the entire community to work together to define the standard names (fields) for RETS but we haven’t gotten there, largely because schema doesn’t play well when flattened out.  If we’re going to get anywhere with data standards, I think the community should strongly consider starting with defining the data dictionary first (start simple and use spreadsheets, like most of the regionals have been doing across the country) and then pick the best technology for representing that dictionary.  This also directly relates to the Syndication standard, which should be a key priority for the new Board.

4.  Define and Promote a Strategic Road Map.  For as long as I can remember, the “marketing” workgroup has met at each in-person meeting to discuss ways of promoting RETS.  At each of these meetings, I say the same thing: “Marketing is more than promotion and you can’t do effective promotion until you’ve defined your product and your market.”  What’s been missing for many years is a clear strategic road map.  In my view, the marketing workgroup and the business side of the Board should be helping to define the customers to be served by RETS and the needs of those customers.  Once defined, the promotion of that road map will be much easier.  Here’s my suggested road map:

• Adopt and promote broad and deep data standards to:
  • Reduce or eliminate duplicate entry of listings;
  • Promote easier data sharing among MLSs; and
  • Reduce the costs brokers and others face from dealing with disparate IDX data feeds.
• Adopt AtomRED as the transport for syndication to make it more cost effective for all parties involved to have timely and accurate data on all web sites, instead of the out-of-date mess that exists today.
• Establish and promote a uniform property ID system to foster linkage of property data on the web.

5.  RETS.org or RESO.org.  This is both a small and a big deal.  Currently, the communication channels in the community are not very good.  The RETS.org web site could be made a lot better by: (a) putting the standards documents in HTML (instead of PDF) and breaking them down sufficiently to enable people to link to, comment on, discuss and make suggestions for specific provisions of the standard; (b) create and show detailed version histories; (c) make it easier and clearer for Board members and workgroup chairs to communicate to the community at large regarding what is happening; and (d) fix the forum RSS feeds so they send out all updates instead of just the initial post.  One of the successes of the RESO community over the last year has been to establish firmer rules regarding how and when change proposals are to be made.  However, making the standards more accessible on the web would go a long way to helping everyone meet these new rules.  Unless the community wants to make Google documents or groups the final home for rets.org, better functionality needs to be built into the rets.org site to allow for the best communication.  This need also extends most urgently to the need to finalize broader and deeper data standards.  The RETSipedia remains a good idea that could generate a lot of valuable content and energy in the broader real estate community.

I wish I could have accomplished some or all of the above while I was on the RESO Board, but, alas, it was not to be.  I’ve been privileged to serve as Chair of the initial RESO Board and look forward to continuing to participate in the community as a non-Board member to promote and advance the standard, which is critical to the growth of our industry.

I look forward to seeing many of you readers in Scottsdale!