It’s Not Just About Overlapping Market Disorder

I was talking the other day with my friend Kevin McQueen about MLS consolidation and regionalization. Both of us help MLSs through the process, and we like to talk and share our experiences with each other in order to help our clients better and move the industry forward. One of the challenges we discussed the other day was that, for MLS regionalization to gain momentum, MLS leadership at every MLS in the country – including boards of directors – need to better understand the need for MLS consolidation and regionalization. Many don’t attend industry conferences and are not aware of the larger strategic issues driving it.

When Clareity Consulting discusses the strategic reasons for MLS regionalization, we often focus on the following objectives:

1.       Reduction in cost

2.       Improvement in MLS product / service scope

3.       Associations can focus more on association functions

4.       Reduction / elimination of arbitrary information and system barriers

o   Reduction of need for multiple memberships

o   Reduction of number of data feeds for participants’ information systems / websites

o   Providing more comprehensive and accurate statistics for overlapping market areas

o   Providing wider listing exposure for sellers

5.       Reduction of the number of systems some members need to learn

6.       Improvement of MLS rule and data accuracy compliance, providing uniform rules and enforcement

7.       Providing efficiency for participants who want to be involved with governance / committees

[Update: these days I have even more goals, including driving technology provider interest in our industry.]

Many MLSs evaluating regionalization on their own initially consider only one or two of these objectives – for example, reduction in cost, or elimination of the arbitrary information barriers – and don’t evaluate the decision against all the items listed above. As a result, they might conclude something like, “We’re geographically isolated so we don’t need to consider regionalization.”

But even the list of objectives above is incomplete, focusing on local and regional needs rather than the larger threats facing the MLS industry. If one looks at the NAR’s D.A.N.G.E.R. Report, one should consider how the current splintered MLS industry is – or is not – ready to deal with the threats detailed in that report, including, but not limited to:

  • Entry by a New Player
  • Unclear End Result (Loss of Control)
  • Control of a National MLS
  • Decentralized Infrastructure Becomes Obsolete
  • Large Patent Troll Attack
  • Security Breach 

A more consolidated MLS industry would be better able to mitigate these risks.

Back to my conversation with Kevin. He asked, “How do we reach executives and board members at association/MLSs that are resistant or uninformed about the possibilities for regionalization?” Kevin suggested one way was that we could speak on the subject more at conferences. But, so many of the people who need to be reached don’t attend these conferences, and certainly wouldn’t attend a session on regionalization if they’ve already made up their mind on the subject.

We also discussed NAR mandating NAR- or CMLS-developed best practices for MLSs. While the core standards approach NAR took with associations could be useful, it leads to a very slow, incremental approach that may have been appropriate 20 years ago but is too slow to meet today’s challenges. Based on the MLS regionalization end-game described in my recent Inman article, NAR could simply mandate standards for MLS that do meet the condition of the end-game and initiate a fast process to get us there. But is a top-down mandate approach the best one?

Kevin and I both believe that the best approach is a collaborative one, where association and MLS leadership engage in a consensus-driven process for regionalization. Clareity recently outlined this process recently in an Inman News article, republished here: “MLS Regionalization – Breaking Through” Are the threats to the industry and the benefits of MLS regionalization becoming clear enough that initiative momentum will radically increase? Will leaders take an active role in designing the best possible future for their organizations and the industry at large? Or will they continue to focus on their own organization and ignore what is ultimately best for their members and the industry? Or will they wait for one of the worse threats from the D.A.N.G.E.R. Report to occur and make all of this irrelevant?

Consolidation of MLSs Requires Process

In part one of this article ("MLS Regionalization: Setting the Goal") Clareity outlined the criteria for determining the future “end game” for MLS consolidation. In this part, we will describe Clareity’s process for MLS consolidation and regionalization and how we overcome some of the common objections to consolidation during that process.

A good process for MLS consolidation and regionalization has four parts: planning, decisions, formalizing decisions, and actualization:


In the first part, planning, organizational leaders meet with a facilitator who can drive consensus on the hard issues, including goals, ownership and governance, money flow, leadership, staffing, and the product and service offerings. The facilitator provides examples of how decisions in these areas have worked in other organizations and captures the group’s consensus in a document which all participants approve of, so there is no backtracking later. The leaders may consult with their boards of directors during this phase and work to sell the consensus plan. There are other decisions that will need to be made along the way, such as specific technologies, but the above decisions are the one that will set the framework for the long term, while technologies come and go. Some groups want to focus on cost right away, but how can cost be discussed when no decisions have been made yet about the factors that drive it – leadership, staffing, products, and services? And how can one make decisions about those things until a decision-making structure has been put in place? A successful planning process is all about asking the right questions at the right time.


In the decision-making phase, the leadership of all stakeholder organizations meet together to discuss areas still lacking consensus. Having group meetings is an important part of the process because it is an opportunity to address many remaining fears, ensuring all valid issues are on the table. The facilitator can provide perspective and knows how to address common objections. The group must have trust in the process, building trust that they are all working toward a common goal: a better MLS that serves all of the subscribers in the region well. In this phase, the group can make more definitive decisions based on the initial planning, which the facilitator captures.


Next, the facilitator will use the documentation created in the previous step as the basis of a business plan. All of the planning and decisions will be incorporated into this document. A draft budget, a plan for the next steps, and a timeline for regionalization will be developed and included as well.


The final step, actualization, involves creating the company, addressing all of the legal issues, commencing initial and ongoing communications, selecting technology and contracting (or re-negotiating) as needed, and implementing MLS system changes as needed. Having top-notch legal counsel is critical in this phase, and Clareity Consulting likes to collaborate with the best in the business.


There are usually many questions and fears about MLS regionalization that must be addressed along the way. Sometimes agents worry that competitors from the adjoining MLS will sell out of their traditional area and create problems, and they need to be reassured that this has not been a serious issue in regional MLSs that have formed in the past. Other times, MLS executives and staff fear for their jobs, or board members worry about the continuation of their leadership roles –worries that can be addressed by discussing the role of service centers in the new organization and creating a plan for merging leadership. Some will worry about strife between associations in a regional MLS but having strong bylaws and intellectual property agreements can minimize that risk. Revenue traditionally shared with the association can also be a concern that can be addressed in a variety of ways and Clareity’s CEO, Gregg Larson, described one such approach at Clareity’s MLS Executive Workshop. The point is that common concerns about MLS regionalization can be addressed as a part of the process, and such concerns shouldn’t stop the process from happening.


With a sound process and proper facilitation, organizations working together can demystify and accomplish MLS consolidation and regionalization. Once fears are put aside and the MLSs commit to engaging in the process, it is generally possible to address stakeholder issues and concerns, achieving the goal of having a single MLS with strong capabilities that covers an appropriate geographic area.




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