It is the tendency of our age that many things are moving toward centralization. Like efforts to collectivize our economy, health care, school and retirement systems, similar proposals in the real estate industry tempt us to move control of our vital business data to a national system. Now REALTORS have the urge – under the guise of fixing the troubles with our industry, the “urge to merge”  threatens to undermine brokers’ local control of their companies. Ironically, an industry that insists that “all real estate is local” is actually on the march toward nationalizing its listing database.

One wonders if all that’s missing is the appointment of an MLS Czar?

Over at the Inman website, the collectivist movement hides under the sheep’s clothing of fixing real estate practices that are supposedly “broken.” Don McKay suggests that “if only” we could get a national MLS system that is totally owned by the licensees, real estate would be so much better. Don thinks,

The biggest need at the moment is a national multiple listing service owned by the licensees, with all info on all listings available to any person with access to a computer terminal. Every agent could belong to this MLS for a very small monthly fee. Limited advertising would pay for the total cost of building and maintenance over time

Needed by whom?

Consumers certainly don’t need a national MLS system. Current research shows the average buyer moved a median of 12 miles from their previous location (fact-lovers see page 28 of Annual Profile of Home Buyers and Sellers, NAR). Considering consumers will ultimately be footing the bill for a national system – through their costs of commissions by brokers – somebody might want to explain to a buyer in Des Moines why he’s paying to have local Long Beach information available to his broker.

As for the oft-repeated lament that licensee-control of MLS would be better, there exists a decade of evidence to the contrary. In the two decades since MLS migrated from catalogs to databases, the central challenge continues to be the lack of “all info on all listings.” REALTORS’ own websites provide ample evidence that self-ownership doesn’t always improve performance, either.

Currently, too many REALTORS cannot or will not enter complete listing information into their current systems. Why would we believe they would suddenly do it in a national system?

Most brokers today are forced to hire an office administrator to chase agents for missing listing information. Especially photos. Major franchises have resorted to rules withholding listings from their public-websites unless agents complete mandatory fields and add a minimum number of photos. Licensees directly own these systems.

The cry for a national MLS stems from the modern collectivist belief that “standards, enforced nationally” will solve everything. Why should we assume that a national MLS system would fix real estate practices any more than the national air traffic control system has decreased travel delays or congestion. In fact, the reverse usually happens to organizations that become too large. Remember that REALTORS wielded significant influence over REALTOR.COM – a near-national-MLS prototype -  yet that nationalization didn’t prevent millions of inaccurate, photo-less listings from appearing online.

A national MLS won’t necessarily reduce fees, either: A reduction might occur to large companies who currently participate in multiple local systems, but overall costs are more likely to rise as innovation is sacrificed to centralization. The computing power, storage and management costs of would be significant and subject to mandatory growth by a few aggressive users. It would only take a few large brokers who decided to add 50 photos per listing to raise the costs of storage – for everyone. And don’t forget the costs for training, technical support, maintenance and “policing” violators of MLS data policy across the continent.

Finally, consider enormous systems are run by equally enormous committees. Local MLS systems already struggle with the committee-oversight model. Brokers aren’t going to simply give up the desire for representation in a national system. In New Jersey, the committee-controlled MLS was so disastrous that two largest brokers quit and formed their own system. Somehow putting more people at the table doesn’t sound like a formula for progress.

Is there an alternative to collectivist theory that “if only” there were a national MLS everything would be great?

Yes: No MLS at all.

That’s the individualist approach to business. And the only sensible evolution for real estate data management of the future. Unlike twenty years ago, when computing power was expensive and complicated, there no longer is a need for centralized database. Not even locally. Companies worldiwde use standardized, open source protocols like XML to share data with each other without a clearing house, arcane technical procedures or costs.They simply export their database data and send it bi-laterally to the trade partners of their choice.

The answer to what troubles locally-run centrally-planned MLS systems isn’t more central planning: it’s no planning at all.

Brokers already collect listing data – sometimes multiple times – in various computer systems. Innovation demands we reduce the number of systems, not create one more. So eliminate MLS altogether and simply let broker send each other data-feeds. Even the “poor, little” companies who rely upon MLS as their data system today (a problem of whole other dimensions) could redirect their saved monthly MLS fees into an inexpensive XML-ready database. A one-time fee, too, not an ongoing monthly costs. Once established, their XML-feed would not only let them share data with other brokers, but with a variety of innovative online marketing companies, too.

So less MLS would actually create more marketing opportunities for them. At lower costs.

In fact, liberating the real estate industry from proprietary MLS systems could create the same positive outcomes that music sales enjoyed once their files were liberated from the “legacy” systems of the compact disk. The advantages of broker-to-broker level data exchange are enormous. Each broker would return to control of his own technologies, procedures and costs of managing data. None would be forced to use a system that was otherwise worse than his other technical capacities, as sometimes happens today. And participation would be entirely voluntary, bi-laterally. This would also solve the non-competitive practice of forcing brokers with better websites to display inaccurate, photo-less data from inferior brokers.

Twenty years ago, when MLS systems first emerged, the costs and complexities offered brokers little choice other than the village-model of computerization. Today, cheap computing power lets millions of “friends” come together in massive, de-centralized, open social networking platforms. It would be ironic if, in the future, real estate brokers voted themselves back into the central-computing dark ages.

- Matthew