I said I wouldn't write about OpenRE until more details were available, such as rules and the tech platform they ultimately choose. But I got an email from a longtime reader, as well as numerous phone conversations over the past couple of days, that made me think there is something worth at least discussing: motives.

It seems clear to me that OpenRE is an anti-Compass play, since we don't know what the actual rules are yet but there is enough information out there to reach the conclusion. The question is why. What is the goal of the founders of OpenRE, and how such a goal might be achieved?

To simplify the entire issue, which is only possible if you cut through the noise and ignore the propaganda from all sides, it comes down to a rather simple question:

Can listing inventory be used for recruiting and retention of agents?

OpenRE says No. Compass says Yes. Things appear overcomplicated because of the 100+ years of history we've built up, because of the systems and categories and mental models we all have built up around how residential real estate is bought, sold, and marketed. But they're really not that complicated at the core.

So, let's spend a brief (?) few moments at least understanding the motives of everyone involved and look at the incentives. As Charlie Munger said so famously, "Show me the incentives, and I'll show you the outcome."

OpenRE Incentives and Motives

What makes this difficult, and possibly upsetting to the very smart people behind OpenRE, is that in order to understand the true motives and incentives, it is necessary to ignore numerous public statements.

For example, it is necessary to ignore repeated statements and promises that OpenRE is not a MLS but a partner to the MLS that works alongside the MLS.

It is necessary to ignore what OpenRE itself openly states as the motivation behind its creation:

Open Real Estate exists to maximize opportunities for both buyers and sellers. In creating a platform that puts its agents in control over how listing information is shared, Open Real Estate protects marketing choices for sellers while providing buyers with access to the broadest possible inventory. This helps real estate professionals better serve both their listing and buyer clients.

We know this is not true, because who is allowed to join OpenRE:

All licensed and participating residential real estate brokerages or franchises, and their corresponding agents. Open Real Estate is an open environment that welcomes all interested in supporting its founding principles.

"Providing buyers with access to the broadest possible inventory" is not consistent with making it impossible for buyers to join OpenRE. Nor is it consistent with not allowing FSBO sellers, house flippers, or builders (who don't have a licensed brokerage division) to join OpenRE.

We are forced to ignore what OpenRE claims is the problem it is trying to solve:

Real estate markets work best when homes are easy to find, and buyers are free to compete. As many sellers conclude, a property achieves its true market value when the full market can see it. Any friction introduced into the open marketplace is not in the spirit of providing the best opportunities for sellers or buyers. Efficient, transparent, and robust markets produce the best possible price discovery for homes, and a well-functioning housing market promotes affordability and helps address supply and demand imbalances over the long term.

Since real estate brokers and agents create neither supply nor demand, it is unclear how OpenRE could possibly solve affordability problems. But set that to the side.

The problem, we are informed, is to remove friction from the open marketplace.

Step one is to make sure all property for sale are available, so no hidden listings.

But step two of that open frictionless marketplace is to make sure all buyer data is available, so no hidden buyers. After all, real estate is a two-sided marketplace. It likely matters to the seller whether the buyer is a Wall St. hedge fund or a first-time homebuyer who might or might not qualify for the mortgage.

Clearly, the idea that licensed professionals must share their buyer client information with other licensed professionals (or with the seller) has never been, is not now, and never will be any part of any industry infrastructure we would create.

So it's not really about removing friction from an open and transparent marketplace.

Unfortunately, today’s real estate marketplace is deteriorating as large amounts of available inventory is being cloistered and marketed privately to a limited group of buyers, relegating the public marketplace to be forever known as the market of last resort. These conditions create friction and opportunity for discrimination and potentially other unlawful behaviors. It can also cause a breakdown in the aggregation of data on home pricing and sales, with downstream consequences on the ability of banking, appraisal and insurance companies to properly value real estate and protect buyers, sellers and homeowners.

First, as to "cloistered and marketed privately to a limited group of buyers" issue, the MLS with mandatory submission rules exists. That the MLS is weakening that mandatory submission is obvious, but it is also obvious that the MLS could strengthen it.

Second, the idea that "these conditions" create opportunity for discrimination and other unlawful behaviors is to simply accept that licensed real estate agents don't care about the law, have no ethics, and no idea of fiduciary duty to their clients. That's fine by me, since I think imposing fiduciary duty on real estate agents may have been a mistake, but let's at least be open about what we are assuming about agents in order to believe this.

"Without strict rules and guardrails, real estate agents will swindle everybody because they are straight-up crooks!" is the assumption. Maybe it's the correct assumption since the people behind OpenRE are far more familiar with what agents are like than I am. But let's be honest about the assumption.

Third, as to the breakdown of aggregation of data for banks, appraisers and insurance companies to use... again, the MLS exists already. Those companies do not care that much about public display or private/public marketing of properties; they just want the data so they can do their analysis.

Naturally, then, given that the MLS already exists, already aggregates data, already makes sure that all subscribers have access to that data, and has mandatory submission rules... what is the need for OpenRE?