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The highlight topic for the CMLS conference last week was the overview provided by Tom Phillips, President and CEO of TREND; Gene Millman, TREND Board Chair and David Charron, President and CEO of MRIS on their shared vision for bringing their two regional MLSs together. The keynote for me is that these organizations and their boards of directors started with a clean whiteboard. Nothing was held back from the development of the strategy, including dissolving both companies.

The two organizations do not have the answers yet, but they are on the path to figuring it out.

Why would they do this?

Great organizations start ambitious projects with answering the question of Why. TREND and MRIS came up with this list of Whys that are on their project website,

  1. Consumers and Brokerage firms do not have boundaries, why should an MLS?
  2. Core Values of each organization are the same.
  3. Better position to meet broker and subscriber demands.
  4. Be expansive and inclusive
  5. Acquire or develop better services.
  6. Address and lead industry initiatives better
  7. Innovate
  8. Move quickly

People who listen to their customers usually succeed

A friend of mine always reminds me that if you asked consumers what they wanted, Ford would have developed faster horses instead of cars. That sentiment aside, there is a thunderous outcry from across the industry to provide better MLSs that span markets more efficiently. Brokers want MLSs that provide services that overcome their technology challenges of overlapping market disorder, redundant data management, disparate rules and regulations, lack of data standards, lack of standard business rules, etc.

Today, there are over 770 MLSs that provide the same service differently. The differences between MLS services are driven more by protectionism than they are by service levels. Brokers who never leave their MLS area do not really feel these problems unless they are in one of those arbitrary border zones between two or more MLSs. Perhaps that is the point.

The arbitrary border zones are rampant. We have 50 States in America – an average of 15 MLSs per state. That’s insane. Moreover, there are between 1200 and 1400 Associations of REALTORS® each with different lock box solutions, rules and regulations, forms, etc. It is a nightmare for broker operators as well as agents who span any more than one.

Governance Issues

I am pretty sure that the business operators of MLSs can handle the mergers. However, the tricky part is resolving governance issues. For most MLSs, the Associations who founded them hold the ownership of the company. They expect dividends and ongoing revenue from their investment. Getting Associations to appreciate that they will need to give up MLS revenue will be hard. Perhaps they will not need to with this construct that MRIS and TREND are contemplating. But, perhaps they should.

If an Association has benefitted by a full return of investment and dividends for many years, is that reason enough that they should continue? Or should they look to other opportunities to grow and expand their services into better supporting the education, standards and professionalism of their membership?

In the case of MRIS and TREND, they will even go as far as to consider shuttering their current corporations and rolling into a new company. It is an astounding and bold consideration that may prove to be the path to a new model in consolidating MLS services.

Watch This

It is not easy to do these types of things in the full transparent view of the public, but that is how these firms choose to proceed. The good news is that every stakeholder and pundit will be provided an open view to the progress and ample opportunity to voice their concern. No doubt, this process will bring up issues that range from excellent to absolutely wacky. But that type of customer-centricity is exactly what makes both of these firms excellent. They use their listening skills to develop strategic plans and executional roadmaps to satisfy their clients.

This process that MRIS and TREND are pursuing will be a living case study for all Associations and MLSs to consider. These are smart, progressive firms with incredible boards. This may represent a new model for MLS consolidation, and when large and small brokers signal their support of the initiative, it will signal that this effort addresses the business needs of our industry for now and for the future.