A Path Forward: An Open Letter from Art Carter to San Diego REALTORS®

Lately, I’ve been asked the same question over and over again: “What is going on with the MLS in San Diego?” A simple question with a very complicated answer. I usually deflect by telling people that it’s not an easy matter and that unfortunately the courts will have to decide the outcome. Well, given the state of things in San Diego, i.e. lawsuits, counter suits, blog posts calling everyone liars, I think it is time to offer an explanation that may help San Diego REALTORS® sort through the issues and motivations.

And why should CRMLS take on this task? Because throughout the process we have been in discussion with leadership from ALL the organizations involved, had numerous dialogues with members of all parties, and think this gives us a balanced perspective on the issues and options ahead. Because what is happening in San Diego is quickly becoming the national poster child for what is wrong with all MLSs and Associations. Because we care about the voice of the broker and we want that voice heard.

I won’t rehash all the lawsuit information for the sake of this blog post; those resources can be found here. What I will do is weigh in on what has been said in the lawsuit, what has been said and written publicly by all parties concerned, and talk a little about what some will whisper but never say.

Let’s start with an abridged version of the facts of the first lawsuit. The suit was filed on January 14, 2016, by GSDAR (the largest SANDICOR shareholder) against Sandicor® and its two other shareholders for antitrust claims. The claims derive from the idea that GSDAR was defrauded of their rights to the Sandicor® database due to collusion between Sandicor® and the other two AORs (Association of REALTORS®). GSDAR believes that for the sake of providing benefits to its members, it has the right to display all of the listings in the entire MLS database on their own web portal. They want control of not only their members’ listings, but of all the listings of all agents in the county who are not members of GSDAR. They have sued in Federal court to force a change in governance within Sandicor® to stop the alleged ability for the other parties to collude and block the GSDAR business interests.

Their initial plan for this data was to operate a public web portal that would not only compete with national portals, but also be able to provide analytics that might be of monetary value to third party data purchasers. They planned to profit off of listing data from the other Associations’ members, without their consent, and with no intent to share the profits with those Associations or their brokerages. These plans were thwarted because Sandicor® forced a situation where brokers were given the option to say yes or no to having their brokerage’s listing data appear on that website.

Hundreds of thousands of dollars will eventually be spent on this lawsuit. So far, the Federal court has ruled against the case proceeding twice, but GSDAR has reworded the suit and refiled it each time. If taken to trial, and given that the allegations have already been thrown out twice, the claims might be a stretch in Federal court.

As a result of this lawsuit, the two AOR’s (NSDCAR and PSAR) that were sued have filed their own lawsuit in State court to have Sandicor® dissolved. This would result in each AOR having to provide separate MLS arrangements to their members. GSDAR is vehemently fighting this action, claiming it as detrimental to the best interests of all members of SANDICOR. The plaintiffs in this case have publicly stated that the second lawsuit is necessary because of the first.

I believe the second lawsuit IS in the best interest of all San Diego county members given how GSDAR intends to use the data from all of San Diego’s brokerages.

GSDAR wants full control over the data with no say from those brokerages that provide the listings. 

A portion of the second lawsuit states that the only acceptable solution is one in which all parties enter into a data share agreement so as to not disrupt business in the county. To complicate matters, in late 2014, over the objections of GSDAR, the board of Sandicor® voted to open merger discussions with CRMLS, the California Association of REALTORS®-endorsed statewide MLS system. This was a move GSDAR felt was not in their best interests.

So why all this commotion and expense over a public portal website? It doesn’t seem to make sense. After all, Sandicor® has had plans to operate a public facing website for years, and the prospect of a hyper-local site actually competing with the “big boys” operating nationwide seems fairly farfetched.

There are some clues to be found as to the “why” in GSDAR’s online newsletter, MLS Outlook Their admitted reasoning? GSDAR feels that there are untold amounts of money in the data that resides in MLS databases. CRMLS released a blog post about this two months ago and I won’t rehash that argument. Suffice to say, we don’t buy into that reasoning. We think that even if those untapped dollar amounts DID exist, those dollars belong to each of the brokers, and not to the MLS or the Association.

If GSDAR were really advocating protecting their members’ rights, why wouldn’t they be willing to share the money generated by their listings with the other two AOR’s that are equal participants in Sandicor®? This is one of many unanswered questions about GSDAR’s position.

One of the whispered answers, one that seems to be spoken but never written down, is the idea that MLS services could be offered to member agents for free if the AOR was unshackled and allowed to monetize the MLS database. In order to accomplish this, data within the Sandicor® system would have to be worth millions. But the real issue is, if the data is worth millions, who should receive the benefit of those monies generated by the listing data?

It is CRMLS’s firm position that any and all profits derived from listing data monetization belongs to the brokerages that supply the listings. Additionally, all the decision-making power to monetize the listing data also belongs to the brokers.

That choice does NOT belong to the MLSs, and it does NOT belong to any Association that is a shareholder in an MLS. It is sad to see all this time and effort wasted for such a dubious business rationale.

So suffice to say…not all is as it seems with all the lawsuits and heat circulating in San Diego. And I have to believe there are better solutions to accomplishing all parties’ goals than spending the untold amount of legal fees that this exercise is costing everyone.

The easiest solution, and yes CRMLS does have a vested interest here, is to let the merger happen. Partner with an organization that has experience in dealing with the national and local issues that plague our MLS environment. Forget about the money value of the MLS database, as countless numbers of MLSs and national entities have utterly failed in their attempts to find it. Quit fighting, quit spending your members’ monies, and come together for the benefit of the REALTORS® in your county.

But then, only the REALTORS® in San Diego’s opinions count here…so start letting them be heard! Speak up San Diego.

We’re listening.

Sincerely,

Art Carter

4 comments

  • Finally the elephant in the room is described and acknowledged. I cannot understand why any broker would not want to control their listings and take part in an MLS that is of a size that might be able to compete with the Zillows and Trulias who do not have have brokerages, do not listings without our brokers’ listings which exist because of the hard work of the agents that are the front lines to the consumer.
    Lawsuits are so costly and they are paid for by members’ money, from any and all Associations that are involved, whether bringing the lawsuit or defending against it. It’s a terrible waste of resources that could be spent to better the industry, increase the benefits and/or lower the costs – of ALL Realtor members.

  • I would welcome a statewide MLS. GSDAR has acted like bully for seveeal years. They have tried to raid the membership of the other two assiciations. I didnt understand why a non-profit organization would want to eliminate other associations. This letter sheds some light. As a long time PSAR member I don’t personally mind my listings being on a GSDAR website howver. Surely there is a peaceful cooperative way to solve this issue. .

    • We at CRMLS certainly hope that a peaceful cooperative resolution can still be found. Defending Brokers rights to decide which portal websites their listings may be found on is an important fight. Unfortunately, the only true winners when these lawsuits occur are the attorneys!

  • David Silver-Westrick

    Great post Art,

    I’ve been through and helped facilitate several mergers at AOR levels and at MLS levels. Always, some agents and brokers objected quite passionately, feeling that somehow their interests were going to be compromised. Later, they mostly would acknowledge that their business was better off, they were personally better off, and their clients were better served. The other whispered secret here is that there are elements in San Diego real estate leadership who want to keep the San Diego real estate marketplace closed. Almost 15 years ago, in a prior merger discussion that happened when I was president of SoCalMLS in Orange County, I was told by members of San Diego AOR leadership that San Diego agents didn’t want “outsiders” selling real estate in San Diego. When I asked how the sellers of San Diego real estate might feel about that, the reply was “we don’t need to air our dirty laundry to the public”. Well, yes, we do. Our mutual goal should be to arrange our industry relationships so the home buying and home selling public is best served. We will all be better off if we follow that simple principle. It’s way past time to break down the artificial barriers and build a comprehensive California MLS.

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