Would the Founding Fathers Have Founded an MLS?

September 20, 2006 |

Jm4
I live just down the road from Jefferson’s Monticello, but I must admit that I have always been a bit more partial to James Madison
(The Federalist Papers rock!).  Madison is credited with writing in Federalist #51, "If men were angels, no government would be necessary."  I think that the same can be said of the MLS.

The purpose of my two recent posts about the MLS was not to advocate its demise.  I think it needs some "customer friendly" improvements, but the MLS system has something going for it that other systems do not:  ETHICS. 

In some ways, I find myself to be a bit old-fashioned at my ripe old age of 25.  I still think that oaths and pledges mean something.  One requirement of being a REALTOR is that I pledge to abide by the REALTOR Code of Ethics.  As a Virginia Real Estate Licensee, I pledge to abide by the applicable law in the Code of Virginia.  This is important in that neither of these two pledges apply to the average homeowner or web developer.

The fact that MLS systems are run by REALTORS and agents means that the information is far more trustworthy than what a person can find anyplace else.  REALTORS and agents are actually ethically and legally bound to present a fair and accurate picture of the home to the public.  The same is not true of John or Jane Doe who want to sell their homes.

The much-talked about Zillow.com knows that it has a problem with accuracy of information, so it recently launched a feature that allows homeowners to post updated information  about their home on the site.  So instead of having inaccurate or incomplete information, we can now go to Zillow to get more complete, but potentially biased, information. 

The information is posted by the homeowners, so there is a tremendous risk that the information will be biased towards a favorable "Zestimate" of the home.  Homeowners are inherently biased in their opinions of their own homes.  In fact, I would venture to say that some are even delusional about their homes.  Not to mention the fact that some homeowners are unintentionally ignorant about some of the features of a home.  I have gone into homes where the owner says that a particular area isEthics
"finished" space, when that space has no climate control, or no flooring.  It isn’t that the homeowner is deliberately trying to deceive me about the condition of the home, he just doesn’t realize that this space he has been using comfortably doesn’t meet the standard of "finished space."  Now, imagine what happens when this homeowner has the ability to directly manage the information about his home.

Those are just the average homeowners, that doesn’t even cover the unethical or malevolent ones that will inevitably try to take advantage of the freedom to change their home information at will.  MLS systems have rules to prevent this from happening, and REALTORS and agents are legally and ethically prohibited from distorting the information that they offer.  For all the shortcomings that MLS systems have when it comes to customer-friendliness, they are still better than a wide-open format that would be very vulnerable to misinformation and fraud. 

Men are NOT angles, we all know that; and as flawed as the MLS system may be, it may be the best way to stem the rising tide of the less-than-angelic forces of Real Estate 2.0. 

 

Posted by Daniel | Filed Under Industry Issues, disintermediation 

Comments

One Response to “Would the Founding Fathers Have Founded an MLS?”

  1. jf.sellsius on September 20th, 2006 11:26 pm

    Excellent post. I agree that zillow’s attempt to allow homeowner input may cloud the value issue even more. What was once its so-called strength, objective data statistically analyzed & topped with a “secret sauce”, has given way to a rival subjective valuation sitting right beside it. What’s a visitor to make of that?
    One can see a progression to an owner driven national MLS, where the registered owner need merely insert a “for sale” price. Add a broker to the equation and you have a blueprint vastly different than the original zillow concept of Kelley Blue Book aspiration. Will Zillow please remove the mask.

    Unintended consequences: Do owners who upgrade their data risk a call from the taxman and a higher property tax bill. I can see the local tax assessors trolling the site for victims. And what’s an owner to say, when he or she was the one who upped the value?
    Do not see the incentive to upgrade data unless you want to sell—which ironically is what Rich Barton is doing as he punched in his improvements today.

    [Reply]

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