Statewide MLSs Are Both Too Big and Too Small

May 24, 2010 Michael Wurzer

Inman News published an in-depth paper from Cameron Paine, CEO of the Connecticut MLS, advocating consolidation to statewide MLSs.  I agree with many of the arguments and claims made in the paper, but I disagree that statewide MLSs are the best solution.  Instead, as I’ve long advocated here on the FBS Blog, the best solution is a national data standard that allows for innovation and competition at every level by every MLS, franchise, broker, agent, and software developer.

My primary question at this point is whether consolidation is the only path to data standards.  The whitepaper states, “Politics is the single greatest barrier to the advancement of MLS consolidation.”  There’s a grain of truth in this statement, and it applies to forming data standards as well.  At the same time, creating statewide MLSs without first addressing data standards would only seem to exacerbate the current problems by making the political entities stronger.  It is in this regard that statewide MLSs are too small.  The best data standard is one without borders, not one constrained to state boundaries.

With a national (or broader) real estate data standard, software developers would have a much better chance of writing software that could be sold to all the agents in the country instead of just those in one state at a time.  By creating a bigger opportunity for software developers, the competition increases and the options to agents, brokers and franchises increases commensurately.

In addition to being too small, statewide MLSs also are too big.  As the whitepaper points out, politics is one of the biggest problems, and making MLSs even bigger (other than through market forces) will just exacerbate the politics.  Having 50 statewide data formats may be perceived to be an improvement, but not if it prevents a national standard.  The whitepaper points out that some brokers don’t have a choice of MLS software, but the choices become even less with statewide MLSs.

No, statewide MLSs are not the answer.  What is the answer is developing national data standards that can promote a platform on which competition and innovation can be fostered.  Only the market can determine the best size of each MLS, but the market needs to be able to work and so leaders like CTMLS should focus on creating a platform for competition instead of trying to button-hole data into statewide MLSs.