Once again, Nick Aufenkamp, my favorite new writer in real estate puts out another banger. And I say that even though he disagrees with my last post. This kind of civil dialogue has been missing for far too long, so I can't help but be drawn back into the debate with Nick.
This one will also be public since Nick's post was public, and I hope it will be shorter than my previous back-and-forth with him.
Nick acknowledges the power of the "MLS get out of marketing" argument that I advanced fully in my last reply to him. He admits that the logic makes sense, that having the MLS go cooperation only and out of marketing would increase his value as an agent, that the historical context makes sense, etc. But he then says he's not satisfied.
The reason is a good one, actually: the consumer loses on that transition. Nick writes:
But if you’re a consumer — not a client — this proposal sucks. With a capital “S.” Especially since, right or wrong, like-it-or-not, consumers have functionally had access to the lion’s share of MLS listing data for decades thanks to syndication to Zillow, Redfin, Realtor.com, and all the rest.
At this point, I don’t think it’s a viable option for the industry to say, “Whoops. Sorry. We gave you consumers wayyy too much, and now we need to take some data back. Access to all available properties and data like DOM and price history is now reserved for clients only.”
While such a move might be better for brokerages, MLSs, and even me personally as an agent, it feels . . . wrong.
He's not wrong. What I am advancing would in fact "take back data" from random consumers. The unrepresented buyer would in fact see less, get less. Let's not pretend otherwise.
And I applaud Nick for being so concerned about consumers; it speaks well of where his mind and heart are. I just have a very different take on the First Principles, as he puts it.
Let's get into it.
First Principles
Nick begins where he should: with first principles, that guide the rest of the thinking. He writes:
Forget the MLS for a moment. Forget IDX, syndication, Clear Cooperation, and all the rest. If we were designing a housing marketplace from scratch — one that served the public, not just the professionals who work in it — what would it need to provide?
For most Americans, housing isn’t a luxury good. It’s essential. It’s shelter. And it’s the largest financial decision most families will ever make. For a marketplace this consequential to function fairly, the public needs broad, timely, reliable access to the core facts driving the market. What’s for sale. How long it’s been available. What the pricing history looks like. What comparable homes have sold for.
These aren’t professional secrets. They’re the basic information any participant in any market needs to make informed decisions.
Nick is not asking about "The MLS" per se. He is talking about the "housing marketplace" if we had to start over.
And his point is that consumers want all of the data, not just marketing and not just what some listing brokers decide to put out to the world. He notes that public records exist and that lenders have to report mortgage data. So he writes:
The entire infrastructure of housing already operates on the assumption that the public has a legitimate interest in market information. The piece we’re debating here is whether active listing data — what’s for sale right now and on what terms — belongs in that same category.
I think it does, because a fair housing marketplace requires it. I also grant that the MLS was not originally designed to be this universal marketplace, but functionally, that is what it has become.
Then he continues to point out what I would build instead of this wide open public marketplace would create a divide between represented buyers and unrepresented buyers. And while most buyers do hire an agent, not all do, and Nick thinks that increasing agent value through gatekeeping data is not the right way to do it.
For me, the answer isn’t just theoretical. I built a business, DIY Homebuyer Academy, on the opposite premise: that consumers deserve access to information, even if they never hire me.
Why am I confident to give so much information away for free? Because I find, time and time again, when most people see the data they aren’t confident in knowing what to do with it. They realize they want professional help, and that’s when they call. This fuels my core belief that the professionals who are genuinely worth hiring are the ones who thrive when a market is maximally transparent. Lesser professionals are those who justify their business by trying to control the keys. [Emphasis added]
Nick concludes by arguing that we as a society, as a nation, need consensus at the level of first principles:
In order for this conversation to remain productive, we need some consensus at this level. We need a shared vision for what the housing marketplace ought to look like for consumers. Not clients. The full public. What rights, if any, are owed to them. What and how much data should be transparent. Even simply but objectively defining our terms about what it means to be ‘on the market.’
He advocates for policymakers, particularly in government, to step in as Washington State did recently, but others as well with the power and influence to shape the "American housing marketplace."
Nick writes:
Housing is how most Americans build wealth. It’s where families live, where kids go to school, where communities form. It is, for most people, the single most important financial decision they’ll ever make.
Should the core facts of that market — what’s for sale, for how much, for how long — be controlled by the companies that profit from controlling access to them?
Once again, kudos to Nick for making a solid argument, well-reasoned from his first principles. Now then, allow me to respond.
First Principle #1: Consumer Does Not Equal Buyer
This is something I have noted over and over again, and one that opponents of private listings simply have not answered yet.
The entire framing of Nick's argument is that consumers are buyers, and to use his word, the "public" is composed only of buyers. Therefore, consumers and the public deserve all of the data, all of the information.
Except that we all know this isn't true. For there to be even a single buyer who wants to achieve his American Dream, there has to be a seller who is willing to sell her family home to that buyer. (Let us ignore new construction and investors for the purpose of this discussion. The issue of corporate ownership of residential housing is a whole different animal.)
For every un- or under-represented buyer who might theoretically be hurt by an MLS-as-cooperative system, there is the aged widow on social security who needs to sell the home where she and her husband raised their three kids so she can retire without starving to death.
Why would we privilege one over the other, if we are speaking of consumers?
I don't believe I need to go into long depths of logic on this point: the consumer is not only the buyer. The seller is also the consumer. The public is not only buyers, but also sellers.
First Principle #2: On Marketplaces
Related to that point, I would ask Nick and others on his side of the debate to consider what a marketplace actually is. It is a place where buyers and sellers meet and come to a meeting of the minds. If a marketplace too heavily favors one over the other, then the other side of the deal is disincentivized to show up.
Nick used a photo of the Pike Place Market for his piece, and there is the famous sign of the Farmer's Market. I've been there years ago and thought it was delightful.
If the City of Seattle forced all sellers who setup shop in Pike Place Market to significant disadvantages, whether informational or transactional, how many sellers would keep operating there? If they imposed price controls? If they never punished shoplifting? If they allowed drug addicts to freely roam the aisles and just eat whatever is displayed?
The place would be empty very soon indeed. Sellers do not go to marketplaces where they get screwed. Same goes for buyers. If they consistently get ripped off and screwed over, they'll stop showing up.
Fact of the matter is, a marketplace has to be fair to both buyers and sellers if it is to work at all.
So let's look at information asymmetry in the housing market today. Nick makes it sound like the buyer is just screwed if he loses access to free wide open data. I think it's the opposite today.
The seller puts every piece of data he has about his property out to the public. Not just marketing, but actual product data about what he's selling. And he's making that available to people whose names he doesn't know, whom he never meets.
The buyer provides... what exactly? Sure, once the buyer is ready to put in an offer, he has to provide some evidence he can pay. But it isn't as if the buyer has to enter all sorts of information about himself, his family situation, his employment, his timelines, his urgency – all information that the seller and his agent would find incredibly useful in negotiating the deal.
What does the MLS require from buyer agents today in terms of information about their clients? Answer: Nothing.
First Principle #3: Buyers Might Have Expectations, but the Public Does Not
I do feel like this point is often missed in these discussions, but it is a matter of first principles.
I believe that bona fide buyers do have justified expectations about the kind of information they should be able to get. At the same time, I do not believe that the public at large has any reasonable expectations of the same.
Nick writes:
This personal philosophy has been developed over the past couple decades of witnessing big companies and industries that have attempted to compete by withholding information, data, and access from the public. History has not been kind to such institutions. And, based upon the 235 million unique users who hop on Zillow every single month, we don’t have to do much guessing as to what the public wants and expects from our industry moving forward. [Emphasis added]
Let us leave to the side that the entire Magnificent 7 of the NASDAQ compete by withholding information. Last I checked, Amazon does not freely share their shopping data, nor does Google just post how their search algorithm works. Meta's terms of use are pretty clear about what data and information they consider to be theirs.
Instead, I find the assertion that 235 million unique users hopping on Zillow is a signal for what buyers want to be... questionable. (Speaking of Zillow, this is the same company who presented at AI Investor day that they have an unbeatable data moat compared to all of their competitors, yes?)
I wrote about the phenomenon of Zillow voyeurs in this post last year and observed:
However, a college student looking up the price of her boyfriend’s family home is not in any possible definition of the word a “consumer.”
Zillow’s spokesperson says open access to this information is important to a fair housing market. But I can’t imagine a definition of a “housing market” fair or otherwise that includes a 27yo looking up where her friends live to find out what they spend on rent, to extrapolate how much they make.
Those aren’t consumers.
Consumers are people who are actually in the housing market in some way. Either they are actively looking to buy, sell, rent, or lease a property… or they’re close to doing so.
Given that only about 4 million homes trade hands these days, and the population of these United States is some 340 million or so, and ~75 million are under 18, it is ridonkulous to believe that 235 million of them are "consumers" hopping on Zillow.
This isn't to bash on Zillow; God bless them for being synonymous with "real estate." This is to point out that the vast majority of those 235 million unique visitors are mere voyeurs. And I am quite uncertain as to what kind of expectations and rights they have to knowing everything about my house.
As Nick writes:
Who are “consumers”? They are the public. Specifically, the public who are interested in buying a home but have not yet engaged the services of a real estate broker. [Emphasis added]
I agree. The public who are interested in buying a home have some justified expectations. I just do not believe that Nick believes that 235 million people a month are interested in buying a home. Does anybody?
If You Want a Public Utility, Then Let's Have a Public Utility
Based on these first principles, I am specifically arguing for MLS as a cooperative and against the MLS as a public utility. What Nick is arguing for, whether he realizes it or not, is for the MLS to be a public utility because real estate agents are licensed by the state.
Except that every single state licensing law was created to protect consumers from really bad outcomes: fraud, malfeasance, and the like. These laws were not created to make pseudo-public employees out of real estate professionals.
That brokers and agents are made responsible for consumer protection does not therefore mean that they are or should be made responsible to give consumers rights to data, to information, to things they did not create, did not contribute to, and do not pay for.
This was the debate back in 2006-2008 when Congress held hearings and the DOJ and FTC were being asked to look seriously at whether the MLS should be made into a public utility. The response of the industry back then was (and I think still is the last I checked) that the MLS is a B2B facility created by professionals who do all of the work putting the information in to help each other be more successful professionals. Consumers do not contribute to the MLS; why then do they have a right to it?
The response from those advocating for wide-open access was, "Fine, we'll make you a public utility." Okay, well, if we're doing public utility, then let's do public utility.
In practical terms that means that consumers can have access to the MLS, but will need to pay for that access. Water is essential for life, but you still gotta pay the water bill. Electricity is essential for life, but if you don't pay the utility bill, your power gets cut off and your lights go dark.
In practical terms that means the MLS Board must be disbanded and appointed by the governor, like the real estate commission. A public utility must be accountable in some fashion to the electorate after all. Brokers and agents have the same say as all other voters in the area in how that public utility works, what it should charge, and what its rules are.
If Nick wants that world, then we can have that discussion. Brokers and agents will put data into the MLS, and it will be widely available to the public because "housing isn’t a luxury good" but essential shelter. Okay, cool – pay the MLS utility bill and you can have the data. Metered, mind you, just like electricity and water. You don't get to pay $5 and then use 100,000 gallons of water. You don't get to pay $20 a month for an IDX feed and get 3 million listings; you get ten. Or five. Or whatever the regulated rate is.
The MLS utility payment from consumers can then be split between those who actually generated the data in the first place – you know, the brokers and agents who actually produce the data? And soon, all of the FSBO sellers who upload data into the MLS since they cannot be prohibited from a public utility.
That at least is a conversation worth having.
It's Not a Gift if Accidental
Given those first principles, I propose what I propose because I wish to save the MLS as at least a cooperative platform. The days of the MLS being the data backbone to the internet are over, because sellers (and their representatives) do not have a huge interest in participating in a marketplace that is tilted against them. Again, a marketplace must be fair above all.
Nick suggests that while the MLS became the backbone of the internet by accident over 25 years, it's a happy accident that is a real public good:
But not all accidents are bad. Think about the creation of penicillin.
Over the past 25 years, this “accident” has given American consumers something almost no other country has: the ability to see virtually every home for sale in their market, in real time, from their phone. Try doing that in France. Or Japan. Or the UK. You can’t. The American homebuyer has more access to active listing data than buyers in almost any country on earth.
That transparency wasn’t planned. But it’s real. Millions of people depend on it.
I will note at the outset that penicillin may have been discovered by accident, but it was not then given away for free.
But let's go with the argument that we shouldn't change the MLS because millions of people depend on it.
In my view, that isn't a gift. A gift implies knowing consent. "Oops, I left my laptop at your house by accident" does not imply I am giving you my laptop. What happened here is not an "accidental gift." What happened here is far more akin to adverse possession: a homeowner discovers that a group of homeless people have been squatting on a part of his backyard that he hasn't paid any attention to for years. Or maybe he saw them, but didn't really care. But at no point did that homeowner gift the land to them.
Is it malice to kick them off of your land?
On Gatekeeping and Controlling Access
Finally, let me address this very valid point that Nick brings up in a couple of places.
Nick writes that he himself gives away the information for free:
Why am I confident to give so much information away for free? Because I find, time and time again, when most people see the data they aren’t confident in knowing what to do with it. They realize they want professional help, and that’s when they call. This fuels my core belief that the professionals who are genuinely worth hiring are the ones who thrive when a market is maximally transparent. Lesser professionals are those who justify their business by trying to control the keys.
I applaud Nick for this strategy, but I rather think he proves my point.
By leaving marketing up to each broker, we open up even more competition between brokers and agents. Some, like Nick, will put all of the information online and out to the world because they will compete on being genuinely worth hiring. That will work with some buyers and sellers. Others will not.
And the free market will tell us which way is more effective for marketing professional services. If gatekeeping is a poor strategy, then it will stop.
Neither the MLS nor the government need interfere here. Buyers and sellers will tell us all what they want. We as an industry simply need to listen to the market, not of voyeurs, not of the "public at large" but of actual participants in the market: buyers, sellers and their representatives.
Wrapping Up, or The Restoration
I fully admit to enjoying this vigorous, thoughtful and civil debate here. I am hopeful that Nick and I are advancing the conversation somewhat. It's the only way to progress forward: honest debate.
We agree on a lot. We both want a fair and open marketplace. Where we differ, when it comes right down to it, is in the mechanism of creating and maintaining that marketplace.
However we got to where we are, Nick favors maintaining the status quo. I get that. But he is ignoring the fact that the status quo requires top-down control, whether by an MLS board or by the government backed up with real consequences. That control is impossible today, because technology has evolved and moved on.
Which means that by trying to hold on to the status quo, what some MLSs are doing today is destroying the marketplace that exists. Again, a marketplace requires two sides: a buyer and a seller. If the marketplace is overly unfair against one or the other, it will cease being a marketplace because people will go somewhere else they perceive to be fairer, to be more to their self-interest.
Isn't that why Nick wrote his first post in the first place? Because he saw big brokerages going private and talking about creating their own new MLS?
That is why I see my proposal as restoring the MLS. Because it would preserve the MLS in some fashion, instead of having it fracture into a dozen pieces.
The MLS as it currently operates cannot exist for long; the accident of history no longer holds when the fundamental technologies have changed so much. Government can interfere, as it has in Wisconsin and Washington and other states. I have written thousands of words explaining why government action will not achieve the goals of its proponents but make things worse instead.
The only logical answer, holding to first principles of a marketplace, is to recognize that times have changed, that there is real value to a B2B cooperative network, and that the way to survive is not by doubling down on failed strategies, but to do less and do it better.
The answer, as always when it comes to marketplaces, is to let the free market work.
-rsh
