- The Great Hamptons MLS Debate limps on. In several recent postings on Broker's Outlook
, contrasting viewpoints concerning MLS have been in sharp evidence. Positions can be broken down into two constituent categories: those against MLS are largely locally entrenched real estate agents and brokers, while those favoring MLS appear to be anyone else who cares enough to express an opinion. So what gives?
As a real estate professional and business person I can understand both sides of the argument. It wasn't until I came across a body of theoretical thinking (by way of a Tom Friedman op-ed piece in the New York Times
) from my college friend, noted business analyst and writer John Hagel
, that I came to understand why we'll see MLS, sooner rather than later, in the Hamptons real estate market. Hagel calls the phenomenon behind this drawn conclusion "The Big Shift."
Hagel posits that the source of strategic advantage traditionally lays in controlling a given set of knowledge stocks - stocks that in our newly flat world are becoming less and less valuable with time. In the future, value and advantage will lie in contributing to, and harvesting from, knowledge flows. And I buy into it.
The Big Shift is an inevitable evolution in the way business manages and derives value from information, information which is becoming ubiquitous in the new, flat world that has been created by the internet. Hagel observes that until now, businesses "have focused on two forms of strategic advantage: structural and capability-based. The Big Shift challenges both. It undermines traditional approaches to structural advantage by systematically reducing barriers to entry and movement. Static capabilities are also increasingly vulnerable - they represent knowledge stocks that depreciate at an accelerating rate. Unless they are rapidly refreshed by knowledge flows, these capabilities rapidly lose their power to differentiate." Hmmm. Read more here from the Harvard Business Review
Let's understand The Big Shift within the context of the closed and cozy Hamptons real estate business and why MLS, or some equivalent solution, is inevitable.
Founder of Rosehip Partners, Joseph Kazickas proposes the real reason there is no MLS yet is because sellers don't have sufficient leverage. (JMK)
Traditionally the storefront real estate broker (the structure) was the exclusive source of information (the knowledge stock) regarding real estate in any given geographic market. The business model was set up so that there was no way for an interested party to access information, the knowledge stock needed to make educated and informed real estate decisions, without using the store, the structure Hagel alludes to. As that real estate knowledge stock loses value because of aggregator websites, those new structures embodied by Zillow, Street Easy, Trulia, that 800 lb. gorilla Google, and even newer, as yet unimagined, websites that will be created to more fully meet the needs of information hungry consumers (but, alas, which will do little to engender broker brand loyalty), pressure mounts on those opposed to MLS to somehow preserve a model that has provided a return on their investment in structure (those expensive Main Street offices, as an example). Not surprisingly, rather than contribute to the knowledge flow (MLS) the legacy model brokers are choosing to continue to hoard their knowledge stock.
Now, this behavior must serve a purpose, but whose? By not contributing to the knowledge flow, the Hampton's broker achieves two objectives: to at least marginally protect his ever depreciating knowledge stock, and more importantly, to deprive new entrants the knowledge flow needed to operate and compete in our local real estate market, something which MLS enables. In my opinion this choice may well prove fatal to those brokers in the end, because such a strategy comes at the expense of the home seller and his interests, the most important elements in the equation. By restricting the distribution of that knowledge stock, and by not contributing to the knowledge flow, the broker limits the markets access to it. This is not only a self-engineered impediment to the goal of selling property, but runs against the Broker's whole raison d'etre (to distribute information), placing him in a perverse conflict with the needs and wishes of the seller. This is unsustainable if only as a matter of course.
Yet, there is no real out cry from the beleaguered seller. Might it be that buyers and sellers just don't care enough to demand change? I don't think so. Marshaling sellers to a call for change would be almost impossible to orchestrate, so those who oppose MLS can act as they please for the time being.
But the real reason there is no MLS yet is because sellers don't have sufficient leverage in the form of viable, alternative solutions to the legacy business model, a model which is blatantly placing it's own economic interests ahead of theirs. When those alternative solutions emerge, and rest assured they will, anyone standing in the way of the Big Shift today will be locked out of any future debate about MLS. It will have long been over and decided by then.
The author of this opinion owns this website, and is a partner in the real estate brokerage Rosehip Partners.