What are the other options?
Among the approaches other than centralized and decentralized regional MLSs, the options for cooperating vary widely. For example, two MLSs may allow their participants to view each other's active listings only, or they may include off-markets. They may coordinate on IDX rules, IDX data feeds, or both; they may not coordinate on IDX at all. They may include offers of compensation between participants in the two MLSs; they may not extend offers of cooperation. They may coordinate their rules, creating a third entity for enforcement, they may coordinate their rules keeping their own enforcement, or they may have entirely independent rules.
A note about compensation in MLS cooperative agreements: Many folks start with the assumption that the offer of compensation must extend to participants in other MLSs if there is cooperation among the MLSs. This need not be the case. Sometimes listing brokers in remote or resort areas will resist MLS cooperation efforts because they fear uninformed agents from other market areas will sell their listings but not properly service the transaction between purchase agreement and closing. They may be more comfortable if they can choose to extend compensation to participants in other MLSs on a case-by-case basis. Many of the benefits of cooperation are available without the offer of compensation; and removing compensation concerns of some brokers may deliver the benefits sooner.
Some commentators have dismissed these concerns as those of listing brokers wanting to protect their territory: "Those resort brokers just want to protect what they've got! They don't want to have to share their commissions. The cooperating broker should be able to evaluate whether she is qualified to serve her buyer in the area in question." This overlooks the fact that a great many cooperating brokers should probably not even be in the business; and assuming they will make reasonable judgments about their qualifications is not wise. Furthermore, if the listing broker is offering compensation, most feel they are entitled to a certain level of service.
Choosing a course of action
It may be reasonable for two MLSs to choose not to cooperate at all, and it may be reasonable for them to merge. In most cases, the best choice will be somewhere in between. Inefficiencies and lost opportunities are associated with failing to cooperate. But putting together a plan for merger or regionalization could take years; in the meantime, it may be as if the MLSs are not cooperating at all.
For many organizations, "commando cooperation" may be the best choice. Commando cooperation is what I call any effort by two or more MLSs to cooperate quickly and aggressively on two or three important issues.
One example of commando cooperation is unified IDX. Imagine a small state with six separate MLSs. The MLSs come together and agree that over the course of four to six months they will standardize their IDX rules, pull their IDX listing data feeds together into a single data feed, and allow any participant in any of them to have an IDX site with listings from all of them. The result? Every broker in the state now has a web site where consumers and its own salespeople can view virtually every active listing in the state. This approach delivers significant value to all the brokers in the state (not just those on the "edges" between two MLSs). This approach does not deliver all the possible benefits of cooperation, but it can be achieved quickly and at low cost. It can also serve as the model for further cooperation among the MLSs.
Concluding notes
Cooperation between MLSs should result from a business decision. It is the responsibility of MLS leaders to identify objectives for cooperation, attaching value to them, and comparing that value to the costs of the approaches proposed. For some organizations, moving quickly to deliver on limited objectives will make sense; for others, a comprehensive approach to fixing a "broken" market may be necessary.
What are your thoughts? Does your market need MLSs to cooperate more, or should they be focused on other issues?
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