Contagion is a New Word for Brokers

by Victor Lund on August 17, 2012

ListingSyndicationsmallIf you spend much time around me, you would know that I get attached to words like “curate,” and use them so frequently that it annoys the good people who are around me every day. I am working on that.

I have been a student of the effort to develop, to launch, and to save the Euro. A currency sharing standard among nations is more serious, and more important than a data sharing standard. However, in many ways real estate data sharing standards are analogous. I love some of the terminology used by economists and leaders to talk about the Euro. One word that hit my radar today is Contagion

Contagion

  1. Spread of a disease by physical contact
  2. Harmful Influence
  3. Spread of feeling

Contagion in the context of the Euro relates to how currency management by some currency sharing countries like Greece, Spain, or France may pass along a detrimental virus to other currency sharing countries like Germany.

Contagion in the context of real estate data may relate to how data sharing standards by some brokers may spread a detrimental virus to other brokers.

Contagion in the MLS

Today, brokers share data in the MLS to enjoy the benefit of offers of compensation among other participating brokers. There is some degree of contagion here in so far as a company that has a large stockpile of listings allows brokers with no listings to represent those listings to their buyers. There are plenty of countries around the world where brokerages do not share with other brokers because of fear of contagion.

The brokers participating in today’s MLS in America generally believe that the contagion of participation and sharing data in the MLS is acceptable within certain parameters:

  • The MLS is a closed, private, and professional service
  • Everyone is a licensed broker and agent in the State
  • State law holds each party accountable
  • There are MLS rules of conduct and arbitration to manage differences
  • Most subscribers are REALTORS who agree to a code of ethics
  • NO FSBO lsitings

At the end of the day, there is very little effort by brokers to leave the MLS. However, like the Euro, the existence of brokers in the MLS that do not conduct transactions may become a contagion. Simply being a licensed broker and a dues paying participant may be too low of an entry point to be granted the rights to use the data shared in the MLS.

Contagion in IDX

IDX or Broker Reciprocity is also a bit of a contagion among real estate brokers today. Why should a broker with no listings and no agents be allowed to participate in MLS and use the data shared by brokers who do?

The thesis behind IDX aka, Broker Reciprocity is that I will let you show my listings as long as you let me show yours. Most participating brokers in most MLSs are great custodians of this sharing principle, but there are examples of brokerages do not offer any exchange of value. Sure, they meet the minimum threshold of being a licensed broker and paying MLS participant, but that is the extent of it. Those brokers represent a contagion that could undermine the participation of brokers in the MLS IDX program.

FSBO listings may not be co-mingled with IDX data.

Contagion in Listing Syndication

Contagion in Listing Syndication is a very tricky topic. Here, the Eruo analogy becomes highly pronounced. The problem that participating countries in the shared Euro currency is that participating countries have no barrier to abusing the standard. They can run their countries irresponsibly and dilute the currency.

The value of the MLS data standard is that the MLS is the information gatekeeper that holds each broker responsible for the use of the data. When data moves beyond the custodial realm of the MLS and off to third parties, it creates a dual standard which causes a new contagion.

Imagine infection that it would cause if France adopted two currencies – the Euro and the Franc. It would not only impact the people of France, but it would infect all of the participating countries in the Euro. Other countries would be forced to follow France and also create tow currencies, and that would infect their people. Chaos would ensue.

What currency should I trust?

Now think of listing syndication vs. mls data.

What data currency should the consumer trust?

Are brokers creating a dual currency that will destroy the MLS?

Will the second data standard open the door to spreading the contagion of FSBO listings that will kill brokerages?

Is the MLS exacerbating the problem by supporting brokerages in publishing listings through syndication and fueling the dual data standard?

Does anyone care?

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