I've heard several people describe real estate as the last industry of pure capitalism. It's a bit like the wild west with plenty of opportunity for those willing to work hard. As the real estate industry matures, we're seeing a lot of issues that parallel the growing pains of the old west. Many of today's hot topics involve MLS data, agency laws, and contract terms that are all significantly different around the country. Is all that freedom really hurting our industry?
Everybody Else Has StandardsIn most industries new products come to market because a trade organization or standards group develops some set of rules that everyone in the industry will play by. You know that USB port you plug your flash drive into? That port is a result of such efforts to set a standard. If everybody did their own thing in the consumer products space, there would be chaos.
There are industries around us that already follow standards, some by law. Banking is a good example as loan rules are set at the Federal level. Sure, there are some variances on lending limits from region to region but the rules are generally the same everywhere. Even title companies have to follow RESPA regardless of where they are. Where does that leave real estate?
A Wholesale Lack of Standards
Around the country, the practice of real estate varies dramatically from state to state, even within the same state. Different forms, different laws, different practices. All different. MLS systems are the same way. The model rules mean nothing because they're just guidelines. The reality is that the databases themselves, the terms used, and even statuses are different everywhere.
50 states, hundreds of MLSs and associations, hundreds of thousands of members...
How do we even get most of them to agree with so many differences?
Somewhere along the line the real estate industry needs to decide to standardize so that at least some part of it is the same...everywhere. I'm not talking about socialism. I'm talking about strength in numbers. The power that comes from concensus. The power that comes from standards.
Standards Drive Growth
When I used the USB example above, it's because getting a standard in place puts all the players on the same field. Once that happens, products and services can be provided to the marketplace where variety and choice drive consumer decisions. The same thing is possible in the real estate industry. Establishing true standards would have a huge impact on what brokers and agents could do while simultaneously sending a message to consumers that our services have substantial value.
Imagine a single MLS database standard and rules nationwide. Could you imagine that? Such a thing would reduce the cost of MLS services while also driving a huge change in data analysis. Vendors would design for one standard, not 100.
Imagine consistent transaction processes, title procedures, brokerage rules, and others. Sure, there would have to be allowances for some regional dfferences. But right now there's almost no standard.
Real Estate 1.0
The reality is that standardizing laws across all 50 states is unlikely to happen. It might, but it would take a lot of work and time. MLS standards would be easier but still take a lot of work and time. The point is that our industry needs to get to Version 1.0 on some standard. When that happens, we'll see growth and change like we've never seen before.