Expunging Agent From The MLS System and Other Legislative Follies

Jun 12, 2007 Michael Wurzer

Several years ago, we had to comb through the system and remove the word “agent” wherever it appeared. So, Listing Agent became Listing Member, Selling Agent became Selling Member, etc. The primary reason this had been requested was in response to legislation in several states declaring that real estate “brokers” are not “agents” for their client but rather are just “transaction brokers” with fewer duties to their clients.

We made the necessary changes but I remember thinking at the time that this legislation was a mistake for the industry as a whole. I thought then, and still do, that agents provide more value to their clients and that the industry should move in the other direction — toward assuming more liability, not less. One of the reasons consumers hire professionals is to delegate responsibility for something over which they are not experts. The less delegation real estate sales people assume, the less value they provide.

I think legislation like this and the more recent legislation banning rebates provide good examples of how lobbying and legislation is too blunt of an approach to solving problems and is just as likely to result in unintended consequences as actually solve the problem. I like to call this the bubble wrap effect, where if you press down in one area, the problem just pops up in another. The better approach is to let the market solve the problem through competition, which has the benefit of constant trial, error and correction, which is much more likely to produce the best solution over time. But humans are impatient and filled with hubris. We don’t want to wait and we think we know the answers, and so we lobby for them to be legislated.

There are two other examples of the bubble wrap effect looming in my world: (1) the craziness that has become software patents; and (2) association efforts for statewide MLS systems.

I’ll post more about patents at a later time, but suffice for now to say that 20 years of patent protection for anything to do with software is simply ridiculous. How many creators of software really need a 20-year jumpstart on their competitors in order to induce them to create in the first place? That question is rhetorical. The answer is none. Software should not be protected by 20-year patents. (For an interesting blog on this topic, check out The Technology Liberation Front.)

Regarding statewide MLS systems (not MLS but MLS systems), Saul Klein from the Internet Crusade posted recently about CAR’s efforts to create a statewide MLS system and asked: “Are we merely looking at changing the form of MLS and not the substance?” My answer to that question is yes. A statewide MLS system is the wrong solution to the goals set out by the MLS Statement of Principles by the CAR Board of Directors. Why? Because of the bubble-wrap effect. A statewide MLS system will solve some problems and create others. Sooner rather than later, the statewide MLS system will lag technologically. A statewide MLS system necessarily limits instead of increases competition. This isn’t necessary to solve the problems of data and rule inconsistency plaguing large brokers. The better solution is to create standards for data and distribution policies and let competition solve the system problems.

Before ending this post, I think it is important to note that there is a significant difference between a statewide MLS and a statewide MLS system. A statewide MLS could have a consistent set of rules but whatever regionalization solutions are proposed should maintain competition in the market for systems. Too many people get the “system” and the “MLS” confused.