Opinion: The inside job no one's talking about

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Despite the hype about the Upstream and Broker Public Portal projects, I am not impressed. Aren’t they another example of classic industry “inside jobs”?

Here’s why I say that.

Dial back. The Realty Alliance brokers collaborate and speak out on their business issues with the MLS industry. Then they publish a list of demanded changes for the MLSs — or else.

Not surprisingly, the MLSs march on with business as usual. “What demands?” they ask.

In response, the much-anticipated “mother of all databases,” Upstream, forms.

Meanwhile, the brokers loudly state their dislike for — and their mistrust of — the portals.

So a select group of MLSs join together to offer the brokers what is described as a “hedge on the portals” — their own national portal for brokers.

Then the Broker Public Portal forms.

The much-hoped-for alternative to the portals and MLSs has arrived. Hooray!

Unanswered questions

But there are too many questions unresolved here.

• Who will govern these entities?
• Will they be bought, licensed or built?
• Who will fund their creation?
• Who will pay for them?
• How much capital will it take?
• How will they compete with existing entities?
• How will they be integrated?
• Will there be a new MLS formed?
• Who will pay for it all?

All of these questions can be resolved in due time, of course.

But here’s what I don’t get. What is the result?

Lots of feel goods and atta-boys.

Nice ideas and unquestioned brokerage industry support, but from inception, both have been practically designed to fail.

Now fast forward to recent announcements.

The MLS funds feed and cover the majority of the ongoing cost of the Broker Public Portal and the National Association of Realtors (NAR) and Realtors Property Resource (RPR) fund and build Upstream and collect fees from the brokers and agents. Really? How unbelievably bizarre are these developments?

Why in the world would you hire NAR (or RPR) and the MLS industry to build and fund anything to do with these ventures? That is equivalent to letting the fox into the hen house — building an extra room and then adding a rotisserie BBQ.

A classic inside job

So NAR funds and builds Upstream using the resources of its admittedly failed RPR technology group? Designed to make millions in profit, RPR has been reduced to a subsidized, free Realtor benefit.

Two things that make absolutely no sense here: Why contract with NAR, which basically oversees the rules and policies of the MLS industry, and then also rely on a failed technology company that has cost the industry (through wasted NAR dues) more than $100 million to operate?

Finally, a way for NAR to reposition RPR to make more money off the brokers and agents and an excellent way for NAR to ensure its ongoing existence.

This is crazy.

And what happened to the intended mission of Upstream to reshape the MLS and its role in the industry? Or even to replace the MLS with a more effective and efficient data-management system?

Upstream has stated that its charter prevents it from being what it set out to change — the MLS? What happened to that potential home run for the brokers?

My guess is NAR might have insisted on certain assurances in this partnership that if it funded and built Upstream, Upstream would agree never to become the new MLS.

And as for the Broker Public Portal, why would you essentially breathe life into a dying business model — the MLS — by using it as the foundation for a national broker portal?

By doing so, you are becoming yet more dependent on something that essentially needs to change or go away as structured today — the MLS.

So let’s follow the data. Broker’s listing data is fed into Upstream, then that data is sent to the 850 plus MLS systems. Then these MLSs feed the listings to the Broker Public Portal, and bingo, it exists.

What happens to the Broker Public Portal if the MLSs are eventually replaced by a more effective data management system and not fed by Upstream?

Oops.

Replace the MLSs when they are funding, feeding and sustaining the brokerage industry’s only hedge on the media portals? No way. So for a few dollars a month per user, the MLS buys life insurance and lives on forever.

What does this all mean for the brokerage industry?

I say it essentially means that, sadly, and for the foreseeable future, everything will remain status quo in the brokerage business. What began as a collaborative effort for change supported by many strong industry voices will once again be silenced as these ventures are tossed back into the grips of the very forces that were intending to be changed.

Oh, how soon we forget as an industry.

Does anyone not remember the pain caused by the failed Realtors Information Network (RIN) business, the FTC-DOJ (Federal Trade Commission and Department of Justice) indictment of the MLS industry, the financial drain of RPR, and, oh yes, the Homestore-realtor.com debacle?

Now, unless something changes soon, let’s add Upstream and the Broker Public Portal to that growing list.

I have never forgotten past NAR President, Bill Chee’s, classic speech that defined the “lion coming over the hill” that was supposedly going to take control of our data and destroy the competitive nature of our business.

So my question is, after all this time, have you figured out who the lion really is and has likely always been? I think I have. And it’s not IBM, Microsoft, Zillow or Wal-Mart.

Follow the roar. That lion might well be NAR and the MLS.

Kenneth Jenny is an expert in the residential real estate brokerage industry and real estate marketing.

Email Kenneth Jenny.