On January 29, 2025 a mid-air collision between an American Eagle regional jet and a U.S. Army Blackhawk helicopter occurred on approach to Reagan National Airport in Washington, D.C. Like most accidents, it was determined afterward to have been avoidable; failures to effectively communicate risk awareness and flight corridors to pilots, plus incompatible civilian/military protocols/technologies all contributed to the tragic loss of life.
Thanks to post-accident investigation by the National Transportation Safety Board (NTSB), the operational weaknesses uncovered—and the recommended fixes—may well help prevent another such accident in our skies.
Recent, very public comments by Robert Reffkin and Hoby Hanna voicing their frustrations with MLSs echo similar concerns by other large brokers shared at industry conferences recently, including at the most recent RISMedia CEO & Leadership Exchange. While not life-threatening like the D.C. collision, my motivation to write this article is to call attention to underlying issues affecting organized real estate now, before a collision occurs.
How did we get here?
Broker discontent with the MLS is not new, but if MLS execs are not alarmed by the growing number, frequency and systemic nature of the complaints, we should be. Even though the MLS can rightfully be described as an industry of criticism, this is not normal.
Brokers created the MLS to bring order and standardization to a dysfunctional, chaotic real estate market. Thanks to their foresight, the revolutionary idea of a pro-competitive collaboration of competitors built specifically to improve the real estate marketplace for buyers, sellers, brokers and agents, is unique to the U.S. and Canada—and remains the envy of the world today.
But along the way, and for a variety of reasons, the interests of the brokers and the local MLSs began to separate. And that divergence, that critical lack of alignment on interests, is both at the heart of the discontent of brokers today and will be the prime contributing factor to any coming collision with them.
The importance of good governance
Some of the developing fault lines can be attributed to the dis-representative nature of the governance and ownership model of the MLS.
While, over the last few decades, the more progressive leadership of some associations and MLSs identified the compelling fact that a single CEO cannot serve two masters without a conflict of interest, many MLSs are still led by an association executive and association (or shared) board of directors. With shared finances, the MLS often becomes the piggy bank, bankrolling association services that may be in conflict with a broker’s interests. Additionally, seats on the board of directors can oftentimes by dominated by sales agents, rather than brokers.
It’s worth noting that separating the governance, leadership, and executive officer of the MLS from the association is a widely accepted, though not universally adopted, best practice and method for risk reduction.
The importance of professionalism
Every MLS that I am aware of is a volunteer-led organization. And we love our volunteers, but when no professional requirements exist to select the best suited to serve in leadership, sometimes boards of directors draw the most willing, which may not always be the same as the best suited.
I am aware of at least one large MLS, for example, has had the same two small brokers serve as president or vice president since at least 2006.
Successful strategies that MARIS and other MLSs have adopted to ensure both quality candidates and robust participation include:
- An MLS corporation, board of directors, and CEO independent from the association
- Reduce the size of voting members of the board of directors to 13 or fewer
- Allow for elected leadership terms of longer than one year, but with term limits
- Guarantee representation on the board for the largest 2-3 brokerages
- Ensure a mix of brokerage size representation (large, medium, and small)
- Maximum 2-hour board meetings (there will always be exceptions for important business, but make sure the length of the meeting is due to business, not dialogue)
- Specific anti-nepotism language in the bylaws
- Empower the CEO. Hire a professional, don’t micromanage, and hold the CEO accountable for their performance.
Any MLS board of directors comprised of those who are both the best suited and the most willing is lucky, but luck isn’t a great strategy.
So, with nothing but respect for all industry volunteers, my question is simple: Is this truly the best governance model to lead the largest asset class in the world, or can we do better?
The downturn will come
Real estate has had a historically long run of tight markets and high demand. Without the long overdue cycle of market downturns, it’s easy to forget the value of the MLS. In fact, many real estate agents today have only experienced a market with price appreciation and strong demand from buyers.
Real estate isn’t local
The moment real estate information went online it became data. So, if someone from the other side of the world can get all the real estate information they need to buy property in the U.S., real estate is data. Yes, expertise is still very much local, but data is global.
Understanding how consumer access to data has changed the industry will be a fundamental part of realigning the purpose of the MLS. Despite a very worthy push towards broker/agent professionalism within our industry, the lack of easily accessible cross-market data for any broker working across MLS markets today undermines their ability to present themselves as professionals.
It was never meant to be this way. Brokers cannot represent clients effectively without the data they need to do business. But the good news is that the 540 some-odd MLSs out there don’t have to merge, consolidate, fold, or otherwise go out of business to meet their broker’s needs; they just need to collaborate on data with their neighbors. Which, not for nothing, is the way it would be built if we started from scratch today.
Who does the MLS work for?
This should be a simple answer: The broker.
But does the MLS serve large, medium, or small brokers? Should any precedence be given for size? How can the MLS reconcile the different needs of different sized brokerages? How can size be recognized in a way that isn’t unfair?
Questions like these act like lodestones, tugging on the strategic direction of an MLS. Without constant reassessment by leadership, it’s far too easy for the executive and/or board of directors to become bogged down in the reactive tactics of day-to-day operations. Hamstrung by a very real industry bias towards decisions that won’t
generate angry phone calls, aversity to risk and inertia become de-facto strategies.
So, how do we fix things?
To be clear, there is only one strategic mission for an MLS; provide the most timely, accurate, and comprehensive real estate data. The tactics of how to achieve the strategy is where the rubber meets the road, so in no order of precedence, I submit the following solutions:
Align interests
Align the interests of the brokers and the MLS. Identify the pain points caused by the MLS experience that do not forward the interests of the brokerage business. Fix them.
Fix the data
Fix cross-market data shortfalls. Assume that when everyone agrees that the MLS’ job is to provide “timely, accurate, and comprehensive data” the obligation to be comprehensive extends to at least statewide data. If a real estate license gives the legal right to transact real estate throughout the state, the MLS should be able to provide the data brokers need to do business wherever they choose.
Revenue share
Revenue share with brokers. Brokers originate the listing data that the entire real estate industry—and associated verticals—rely on, so they should have a direct line to the revenue derived off monetization of that data.
MARIS has a fee for vendor data feeds that we service and every dollar we earn from our data feed fees has a direct line back to the listing broker.
Come December, for some of our brokers it will mean just a few dollars more in their pocket. But for some of our larger brokers, it will mean somewhere around $10,000. The point is that, through incentivization, rather than fines, the MLS makes it in the broker’s interest to list and close properties in MARIS. At scale, these numbers become much, much bigger.
Fix the process
Fix the process of acquisition and delivery of data feeds. A single approval process to get access to multiple MLS feeds and use-based measurement for data fees would be a good start.
Sadly, anyone who wants national real estate data already buys it from some company other than the MLS—simply because the MLS can’t provide it. Banks, mortgage companies, and other real estate data dependent companies spend millions of dollars every year to buy national data—just not from MLSs or brokers.
Brokers and MLSs need each other to make it work because no brokerage or MLS alone have enough market share to reach the 80%-90% national coverage threshold for data to be truly valuable to the companies that buy it.
Ownership
Give brokers ownership of what they built. As a professional habit, I try to think past how the industry does things now and concentrate instead on how things should be done. If we were asked to build the MLS from scratch today, literally nobody would build it the way it is currently structured.
In conclusion
Is a fatal mid-air collision equivalent to an impending crisis in real estate? Of course not, except that both could have been prevented.
Through collaboration, MLSs and our broker partners can reset expectations for the role of the MLS, bring efficiencies and reduced friction to the data feed process, improve transparency in real estate data to consumers, and beneficially restructure the ownership, revenue, and use terms for the data powering the largest asset class in the world.
Lastly, to directly address the concerns of those brokers who have shared their discontent with the status quo; the best MLSs are listening. MARIS hears you, we know other brokers are quietly thinking what you said publicly, and we are working towards a collaborative solution called Networked MLS. Stay tuned.
