Leveling the Playing Field Leads to Disaster

by Victor Lund on January 31, 2014

running_businesman_jpg1I read a story today about a social studies professor who engaged his students in an experiment do demonstrate the long term effects of socialism or leveling the playing field. This is a topic that is so dear to the hearts of today’s real estate brokers that I could not resist sharing the story.

The day of the first test, the teacher advised the students that he would average the score of each student and issue the average grade to everyone. The students took the test. The average was a B, and everyone was given a B.

As you can imagine, the slackers were happy for their grade, but the top students were disappointed.

The second test the class took resulted in everyone getting a D. There was little incentive to prepare, so students took the lazy route hoping that others would pull their weight.

What do you think happened on the final test?

It should be noted that socialism has never worked in private enterprise, but cooperatives have worked very well. Something like the MLS, which is a form of a cooperative, is a handy tool for everyone – much in the same way that a processing plant owned by local farmers benefits each farmer equally. The processing plant does not interfere with the grower or their ability to get their product to market.

Recently, some MLSs and Associations of REALTORS® have gone beyond the services of a co-op. They have launched products that are tied to marketing, which in our example of the farm co-op, would be tantamount to planting seeds in the fields. Marketing is an example of leveling the playing field, whereas the MLS is not.

In the final test for the sociology class, the average test score was an F. Every student failed the class because there was no incentive. The lesson here is that MLSs and Associations must take care not to remove incentive for real estate excellence by providing services that compete with agents and brokers who are working hard to be A students.

I will tell you in advance that there is no clear place to draw the line. It is incumbent for each co-op to survey their broker participants to figure that out. I would expect that there will be fewer services incorporated into MLS and Association subscription dues and more programs shifted to premium services.

As an example, agent websitesvirtual tours, or CMA solutions are unlikely to fall in the category of an MLS benefit. That does not prohibit the MLS from providing a marketplace where agents or brokers can get discount purchasing or freemium services.

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