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The Great Hamptons MLS Debate And ’The Big Shift’

Originally Posted: February 15, 2010

Joseph Kazickas

  |   11 Comments · Print Article

By not contributing to the knowledge flow, the Hampton’s broker achieves two objectives. (MLS logo)

East Hampton - 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 at http://blogs.hbr.org/bigshift/2009/12/are-your-strategic-advantages.html.

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.

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Guest (Miriam) from New York City says::
Laurie, you are right on. Hamptons real estate has nothing to do with the consumers but rather it is nothing more than the old way of doing real estate automated. If an agent from outside the area has a buyer and is working as a buyers agent that agent does not have access to listing information as they would with the free flow of access afforded by a true MLS system. They buyer's agent could have a buyer wiling to pay more and offer better terms to a seller but that buyer will never see the house because of the games that are played with commissions and other things. It is really shameful that anyone would try to convince anyone that there is no difference between a traditional MLS system and the system in the Hamptons.
Aug 3, 2011 7:32 am

Guest (laurie@options) from riverhead says::
guest from Sag Harbor: The formal MLSLI used does, indeed, keep far better data than Orex. Not only are listing price changes entered within 48 hours, but solds and under contracts by all companies are recorded, and available immediately. Not months later. If east of the canal would educate themselves on the benefit of current market data, so that consumers also receive that benefit, there would be far less skepticism regarding any market data provided. Orex does not compare from that perspective to any REAL mls system.
Aug 2, 2011 11:13 am

Guest (Guest) from Sag Harbor says::
Everyone should keep in mind that many of these 3rd party sites like Streeteasy.com, Zillow.com, Trulia.com, Redfin.com and others don't keep updated and accurate information not like the current shared listing service in The Hamptons called OREX. There is true ownership when a licensed real estate professional manages a listing to keep all data current and accessibilty available to show and sell a property. Don't be fooled by folks saying Exclusives exclude agencies from access to sell because it's not true at least 99% of the time. There will always be that unethical agent just as there is an unethical salesman in another occupation and these agents should and will be dealt with. If more agents and brokers reported these individuals for violating the NYS license law (Article 12A) and made a formal complaints to the Department of State we would see full cooperation from everyone. By the way, it's not the big real estate firms that really don't share information it's the mom and pop agencies that are threatened of there existance and seem to be the biggest violater of Article 12A. Yes, I'm an agent out in Hamptons and I witness the abuse of some of these agents. Don't let a few rotten apples spoil the bunch...
Jan 31, 2011 10:50 am

Guest (Guest) from east hampton says::
Realtors here do function like MLS - the term excluisive doesn't mean only the agency who has the listing can show/sell it. New listings are immediately co-broked with all other agencies. There may be a few holdovers from the old system who keep listings for themselves but the majority of agent/brokers open the listings to all other agencies. They want the house to be sold as quickly & efficiently as possible. That's the only way they'll have a commission. And having the listing broker & selling broker get the same split helps to have all properties shown to buyers, not just the in-house ones as happened when brokers got more for selling their own listings.
Dec 11, 2010 4:39 pm

Guest (Guest) from East Hampton, NY says::
Now that the New York companies have taken over the Real Estate market and changed the commission splits to the same formular as the Multiple Listing Service, there is no longer any motivation for an agent to sell his own agency's listings over that of the comepetition's listing so, in fact, we are paid like a multiple listing service without the benefit of the fully shared listing information from the time the property is officially listed for sale. The company's financial portion has been increased with this commission arrangement while the agent is working harder to promote and sell his own listings and earning less than we used to.We are hurting our agents and the sellers' opportunities by NOT having MLS in place since we are paid like we do anyway. Lets do it!
Oct 31, 2010 11:47 am

Guest (laurie@options) from riverhead says::
James T., you deserve that choice, particularly from large companies that routinely use the MLS in adjoining areas, but refuse to input YOUR properties- without having you sign off that you are aware of this omission. The biggest advantage that an MLS has in all areas but the Hamptons is that there are rules in place that require a seller to decline the opportunity- in writing- for MLS/Realtor.com exposure, so that it's assured that the seller has been made aware. Few opt out when offered the choice. When all member companies follow the rules with the idea of fiduciary at the forefront, as is the case in most areas, the result is that there is one reliable source for sellers and buyers- in addition to the numerous beneficial sites that provide the additional exposure (but, are absent input rules, so less consistent). Further, due to the input rules, all solds are available well before public records, so the data is right there for consumers when needed. The avoidance of an MLS (from its own members) appears very simple: while these companies seek to gain buyers for your property, they seek it absent an accompanying Realtor, so do not want input requirements that put your property in the laps of the 24,000 Long Island Realtors with potential buyers for your property. It only takes one. There is no requirement to join an MLS, but when a company does join, it's not an arbitrary choice to put this house in, but not that one- that choice belongs to the seller, as it should. Just an opinion.
Mar 12, 2010 8:57 am

Guest (JamesT) from East Hampton says::
I find this story and the underlying premise held bu primarily the dinosaur agencies of the South Fork quite a perplexing issue. I am not a realtor, but alas, a home seller and have moved and sold 12 primary residences in my lifetime and to think that the "Exclusive" listing serves my interests is absolute hogwash. Realtors are suppose to have a fiduciary responsibility to their listings and the exclusivity you tout goes against that grain. My home searches have been conducted online for the most part for the past 10 years. I have found myself on realtor.com, zillow, and now that I am looking here, have found eastendhomefinder. All of these 3rd party websites provide variety, choice and flexibility. Each has driven me to a local agent and finally to the local agent's site. I have found six of my past ten properties on 3rd party sites and four of them were eventually found by a local agent after visiting one of his/her properties on the aggregator's site. I need information, I want to see all my choices and my options. MLS gives me that, and 3rd party sites that aggregate listings have done that as well.
Mar 11, 2010 4:31 pm

Guest (hamptons Broker) from East Hampton ny says::
And what about the resistance towards working with those agents from "up the Island" or other parts of the region that somehow manage to find out about the Hamptons' properties? How is it legal for agencies to refuse to deal with them except on a referral basis? When they bring a buyer, how is it serving the seller's best interests to say "We don't want to work with you?"
Mar 3, 2010 2:04 pm

Guest (Southampton Agent) from Southampton says::
AnnMarie; You ar getting at the real problem. You say: The big question is: If you are withholding information that could lead to the sale of a property in a faster amount of time for what could be a larger amount of money by opening up the information to thousands of agents- Where are the ethics? It is not a question of "ethics" -- the larger agencies in the Hamptons are simply breaking the law, and the smaller agencies are getting damaged and the buyers/sellers are damaged.
Feb 18, 2010 11:03 am

Guest (AnnMarie) from Hampton Bays says::
I can see no reason to a listing agent would want to withhold any information that would lead to the sale of a home. How can we say that we are working in the best interest of the seller while holding back information? How can we say that we are working in the best interest of the seller without using an MLS system that opens up their listing information to approximately 24,000 agents? Knowledge is power and we really need to educate the sellers. I have seen people put more research into buying a new television or car then listing their home with an agency. This in many cases their home is their largest asset. The big question is: If you are withholding information that could lead to the sale of a property in a faster amount of time for what could be a larger amount of money by opening up the information to thousands of agents- Where are the ethics?
Feb 18, 2010 9:37 am

Guest (laurie@options) from riverhead says::
Well, THAT'S a cerebral take. And, hits it on the head: an intentional blocking of knowledge flow, to the detriment of the seller...limiting competition that would benefit that most (agreed: along with their buyers) important participant. The damage being caused by a specific contingent extends to homeowners in trouble at this juncture, as data is a gyration for values needed for loan mods or short sales- the harm being done is just more obvious, and the motivation for this behavior more reprehensible. Talk about biting the hand that feeds you.
Feb 15, 2010 3:45 pm


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