When Consolidation isn't in the Cards, Try Data Collaboration Instead

For the last five or ten years, MLS consolidation has been a driving force behind many of the most progressive MLSs in the country and solid progress has been made in some areas - though not quickly.  The benefits of consolidation are many, including an increased data footprint, greater economies of scale, consolidated IDX feeds for brokers, and usually a reduction in fees for subscribers - at least for those who had been paying for two or more MLSs.  

These are significant benefits and powerful reasons to consider consolidation, but improvements in technology have opened another path that does much of what consolidation offers without the inevitable political hurdles that have prevented many an MLS/Association merger. I am talking about non-contiguous MLS collaboration using a single-source data base.  It's a mouthful, but what it means is that two or more like-minded MLSs that don't share any common geographic boundaries can stay independent, but through collaboration get many of the benefits of consolidation by simply sharing an MLS data base and product.

If politics IS the issue preventing consolidation (which, let's be honest, it is), then removing politics from the equation is a great place to start.  When you consider that there is no technological barrier to two MLSs using the same MLS system - regardless of where they are in the country - the hurdles to gaining most of the same benefits of consolidation are reduced to straightforward administrative decisions about how to match data fields, and, if desired, products and services.  Think about it - two hypothetical MLSs, each with 5,000 subscribers can, by simply cooperating on a single combined MLS system, now negotiate together for a combined 10,000 subscribers for their shared MLS product and any other joint system they choose. Or ten MLSs of 5,000 can negotiate on behalf of 50,000. Scale opens a whole new realm of possibilities and advantages.  There are synergies in just about every way imaginable - and all without the bloody difficult questions of who is going to be the CEO, what the new name will be, where it will be based, which Board members will be on the new Board, etc.

It's not a new idea, per se, but its time has come.  MLS execs - if consolidation isn't in the cards for your MLS you should start talking to other like-minded execs who aren't on your border and therefore not a threat.  Seriously, you should talk.  Like tomorrow.  Non-contiguous MLS collaboration is the single best way to ensure both relevance and independence.

It's no cake walk to convince a Board of Directors that collaboration with an MLS two states away is a good idea because they're going to ask, "why does it matter to me?"  It's a valid question, but the answer is simple: Scale.  Gaining scale is your insulation against disruption.  Data collaboration means that the MLS can provide subscribers with more listing data, enlarge their geographic and data footprint, give more clout in negotiating better terms for data use, and represent more subscribers.  The more subscribers you have means lower per member costs from vendors, and more income without raising fees, which translates into not only better services (that can be paid for out of the money saved by data collaboration), but goes right to the heart of the purpose of the MLS - more comprehensive, accurate, and timely listing data.

Now, there will be those who will argue that listing data from two non-contiguous MLSs hardly helps brokers or subscribers, but my answer to that is - baloney.  First, we don't know it won't help because no one's really doing it yet, and second, there is always crossover between markets, no matter how small.  It's not crazy to think that collaborating on MLS data in a new market would help facilitate a broker's ability to open companies in both locations.  As if the economic benefits from collaboration aren't enough, collaboration between multiple independent MLSs would create a network of MLS data, products, and services serving large numbers of subscribers that would permit the participating independent MLS to stay independent while gaining much of the economic clout of much larger MLSs.

The devil will be in the details of the operating agreement, so here's my advice:

1. Don't agree to an operating agreement that allows for a deadlocked Board.

2. Make it hard to withdraw from the agreement.  Both parties have to WANT to collaborate and both parties have to know that their future likely depends on their success.  You have to insulate your progress from the whims of a rogue leader/Board.

3. The original idea of the MLS was to get brokers more comprehensive, accurate, and timely listing information through cooperation.  One way to look at this is that the only reason your MLS isn't already cooperating with the one two doors over is that you just haven't made it there yet.  

It's time to jump start progress.    -   CP