There’s always something to howl about

Do you want to know how cool ARMLS could be? Sell it as a business and see what someone who is working for money can do with it.

Here’s a true fact of life: Not-for-profit “businesses” suck. Don’t believe me? We’ll discuss it after you get back from the Department of Motor Vehicles.

To be fair, I’m willing to regard the Arizona Regional Multiple Listings Service (ARMLS) as something of an exception, at least as administered by Bob Bemis. Under the last guy, it was run like the Mayberry Jail. This was not entirely a bad thing for me at the time, but it was nothing at all like a business. And the Bemis ARMLS is no business, even now, even if it is significantly more efficient — which is not entirely a good thing for me now, alas.

But: ARMLS is a sleepy not-for-profit fiefdom that has been thrust by fate into the data-processing business. As an MLS, it’s not awful. But as a data-processing business — it sucks!

Why? For the same reason every other not-for-profit “business” sucks: Profits and losses are the guideposts to customer satisfaction in business. Without them, a not-for-profit “business” cannot ever hope to achieve customer satisfaction — which is not to imply that most of them are even trying.

Here’s the news, by way of Inman: ARMLS, now owned by four Phoenix-area Realtor associations, is to be sold for $4.75 million to the Arizona Association of Realtors instead.

First, metropolitan Phoenix Realtors will be robbed of an extremely valuable asset, and then all the other Realtors in the state will subsidize us hotshots in Phoenix, but that’s all just good old-fashioned Rotarian Socialism, to be expected from any crime syndicate with “Association of Realtors” as a part of its name.

And, as you might guess, the grand plan is to create a statewide Arizona MLS, so every neck can be conveniently strangled with one noose. ARMLS über alles.

But that’s all just the garden variety stupidity we expect from any not-for-profit “business”. We know from organizational theory that every sort of “service” organization comes to be a force of evil deployed against its own supposed “masters”. Do you disagree? Clearly you’re not spending enough time trying to renew your driver’s license.

I like Bob Bemis, along with the people I know in the Arizona Association of Realtors. Nice folks. Matters nothing. An organization is either focused on making money or it is not. If it is, it will either achieve customer satisfaction as a secondary consequence of the pursuit of profits, or it will be bought out by someone who can make money by delivering satisfaction to his customers. But if it is not, whatever agenda is motivating that organization instead of money will cause it to achieve a nearly-universal customer dissatisfaction. It may even come to regard customer hostility as a proof of its “success”.

All of that is baked in the cake. If you’re not pursuing profits, you’re racking up losses, or, at best, doing nothing at all. That’s the way the world works.

So selling ARMLS to the AAR is twice stupid: Some people will get robbed and others will reap the spoils of the robbery, but the motivations of ARMLS will not have changed. They will still and always have zero incentive to find the path to optimal profitability that would result from achieving the greatest attainable level of customer satisfaction.

Still worse, since ARMLS will never have that incentive, every potential innovation in the collection, filtration, interpretation and dissemination of real estate listings data will be inhibited if not entirely frustrated. Why is ARMLS — and every other MLS system — so bad at being in the data-processing business? Because they’re not in business, that’s why. Real businesses work for money, and they go head-to-head against competing businesses who are also working for money, and the business that comes home with the most money is the one that does the best job of delivering the best goods at the best price to the paying customer. Where does innovation come from? Greed.

Without the profit motive, ARMLS is just a better-behaved version of the Department of Motor Vehicles. It’s good enough for us schlubs who have no idea at all what we might be missing out on, but it’s not even close to being good. It can’t be. It has no incentive to pursue profits, and, lacking that incentive, it cannot benefit from the positive and negative feedback that only comes by way of profits and losses. This is straight out of von Mises: Without a price-based marketplace, every sort of organization lacks a rational basis for making choices or plans.

This is all just sad, and the saddest bit of all, perhaps, is me lamenting this missed opportunity. ARMLS should be sold to the highest bidder, period. Every MLS system should be. The data-processing business — amazingly enough — is done best by people who are already successful in… wait for it… the data-processing business. This is stone obvious, isn’t it?

Here’s the real tragedy, though: There is so much wonderful stuff going on in every other branch of data-processing that this latest dumbass move — deck chairs on the Titanic — makes it all too plain that we are missing out on a lot of sweet technology, even if we can’t quite say how it might emerge from a free real estate listings marketplace.

Want some examples?

Software engineers already know how to correct commonly-repeated errors in end-user-submitted content. No more misspellings, just like that. No more misplaced homes on the map, and no more useless driving directions, since Google already writes better directions than you can.

More: The software of massively large datasets is just in its infancy. What could young coders do with the ten years of data ARMLS currently has available? What could they do if they were free to mash-up that data with other databases?

Still more: The market value of that dataset could be so large that you, Joe Schlub, Realtor, might just get a free ride in exchange for your listings. It’s plausible that MLS vendors would pay you for your contributions to their databases.

There’s much more that I can only speculate about. The interesting thing about entrepreneurs is that they think up all the things you come to take for granted, yet you had no notion of — and perhaps no awareness of a need for — those things until they were lain at your feet, in exchange for your money.

And none of that can happen so long as ARMLS is being run like the Department of Motor Vehicles.

No worries, though. The Arizona Association of Realtors is telling data-processing entrepreneurs everywhere that there is a business worth at least $4.75 million up for grabs in Arizona. Because that’s the end of this line, no matter what: ARMLS can become a business, or it can be disintermediated by an even-better business. Sic semper tyrannosauris. Thus always to dinosaurs…


6 Comments so far

  1. Robert Worthington July 26th, 2011 5:56 am

    If we all pool our money for a downpayment, the ARMLS could soon be the (BHMLS) Bloodhound MLS that wouldn’t suck. I would even go as far for bloodhound to start its own national mls that also wouldn’t suck.

    At least we’d all have what we really want in an mls, including no mandatory NAR, regional, and local board scamming fees.

    Your thoughts?

  2. Greg Swann July 26th, 2011 9:28 am

    > ARMLS could soon be the (BHMLS) Bloodhound MLS that wouldn’t suck

    I think you’re too young to remember this, Robert, but when AT&T’s monopoly on the nation’s telephone system was abrogated, the screams of outrage were deafening — for about 18 months. That was how long it took for most people to realize that telecommunications technology had been stunted for decades. We have no way of knowing how much better real estate listings technology could be, but we will never find out until we work up the guts to get out of the free market’s way.

    Meanwhile, my take is that the argument in this post is devastating. I think it’s bulletproof. Would-be disputants may not even be aware that I’ve cut off their escape routes until they make the effort to think up objections. My guess is that they’ll put their fingers in their ears and wheedle “la la la la la” in preference to admitting that the argument made here is consistent with their own political and economic views in every other branch of the economy. Silence is the guilty tribute hypocrisy pays to the truth. That much is shameful, and very destructive to the egos of the people left seething in silence. I feel bad for them, but it’s a very simple thing to make the pain stop: Just tell the truth.

    Don’t hold you breath waiting for that to happen, but despair you nothing: Nature is just, and the truth will out. No one chooses to buy a bruised apple if a fresh one can be had for the same price — or less. Whatever ARMLS does now, some bright entrepreneur — probably not me, but there are several candidates in our sidebar — will put them out of business in due course.

  3. Michael Cook July 26th, 2011 8:44 am

    That is an interesting thought. If someone offered them $5MM or even $6MM, would they sell?

  4. Greg Swann July 26th, 2011 9:03 am

    > If someone offered them $5MM or even $6MM, would they sell?

    If is worth $1 billion, what is the MLS system serving the sixth largest city and the 14th largest MSI in the country worth? At least $10 million, yes? That’s only one percent of Zillow. No way to know without a price system — without competitive bidding — but that won’t happen. ARMLS belongs to the members of the four local associations, but nothing, not even a $10 million offer, will stand in the way of their being robbed of their property. The NAR and its tentacles are run by sweet, nice people, but, even so, everything they do is corrupt.

  5. Jim Klein July 28th, 2011 9:13 am

    Man, what a piece (and followups)…”stone obvious.” If people would take those fingers out of their ears and understand that this applies to every single aspect of the economy–which means every single aspect of their lives–then maybe we could get somewhere.

    That’s not to say we’re not getting anywhere; it’s just the wrong direction.

  6. Greg Swann July 28th, 2011 10:14 am

    If you search Twitter for ARMLS, you can see all the sweet, gentle lemmings celebrating their proud acquisition of a well-bruised apple. This is the genius of Karl Marx. A police state cannot persist? It can if the prisoners are also the guards.