Why Open Standards are Vital to the Real Estate Industry

A RESO White Paper

Released: 2018, Last Reviewed: 2024

With the tap of a button or two, your Bluetooth headphones connect to your phone, your car, your tablet. Headphone options are myriad and they are but one of a multitude of available device types that work seamlessly with the Bluetooth standard.

Competition and innovation in that market are fierce – and it’s based on an amazing consumer experience made possible by manufacturers conforming to an open standard.

The Bluetooth standard has evolved a great deal over 20 years, and its standards group has grown from five companies to tens of thousands. That is a standards success story.

Imagine if pairing your real estate applications to move your data around was as easy as Bluetooth pairing. 

That’s one of the missions of the Real Estate Standards Organization (RESO).

 

What Is an Open Standard?

There are two types of standards: open standards and proprietary closed standards.

To be an “open” standard, the development and approval process must be a consensus-based, collaborative process that is transparent to participants.

To accomplish this, RESO members participate openly in the organization’s chartered workgroups and committees where changes to standards for the real estate industry are proposed, collaborated on and voted on.

Meeting agendas, minutes and the online discussion groups are fully transparent and easily available to all members of RESO, not just members of the individual workgroups. There are democratic elections for the RESO Board of Directors, which provides final approval for new versions of its standards.

To be an open standard, it must be vendor-neutral, and all RESO specifications are vendor-neutral.

Standards documentation must be openly published, companies must be able to use the standard at no cost and the number of implementations must not be artificially limited.

The costs for RESO membership and standards compliance certification do not create barriers for startup companies, and there are no limitations on the number of standards-based implementations that may be created.

 

Reasonable Restrictions

Open standards provide for reasonable restrictions and, like other open standards groups, RESO has some reasonable restrictions on organizations contributing to and using its standards.

For example, by having members accept its bylaws, RESO ensures that members formally accept the way the company is run and standards are developed and that members cannot publicly imply that RESO endorses, recommends or supports the use of their product or service.

Members must also accept the MIPRA (Member Intellectual Property Rights Agreement), which provides many protections for RESO and its members, as well as any organization utilizing RESO standards.

For example, standards contributors agree that they will not include their trade secrets or others’ intellectual property in their contributions, and that their contributions may be used as a part of the standards.

Members have a process to follow if their intellectual property has made it into a standard’s draft. The MIRPA also makes it clear that RESO owns all the intellectual property in the standards and provides a license to use them at no cost.

When one downloads and uses RESO standards, one must agree with the EULA (End User License Agreement), which provides for the “worldwide, royalty-free, nonexclusive license to reproduce, distribute, make derivative works of, display and otherwise exploit RESO Product solely for incorporation into End Users products or services directed toward the real estate information industry.”

The EULA forbids users from creating derivative technical standards and gives RESO the ability to revoke a license if someone uses the trademark without permission, engages in illegal activities, is involved in intellectual property infringement, or tries to sell the RESO standards or derivative work as a product.

 

The Inefficiency of Proprietary Standards

The alternative to an open standards approach would be to create a proprietary (closed) standards model, which would have a creating entity retaining the intellectual property rights, such as the copyright or patent of the standards.

Proprietary standards would be created by a limited set of individuals, eliminating the ability to leverage knowledge and expertise outside the boundaries of any one organization. Standards documentation wouldn’t be openly published, limiting the number of developers that could be contributing to industry innovation.

One of the major reasons open standards are preferred is that proprietary standards are often surpassed by open standards.

History is littered with failed attempts with proprietary standards. For example, Sony’s BBeB (Broad-Band eBook) lost to the open ePub standard, and their Adaptive Transform Acoustic Coding (ATRAC) lost to the MP3 standard.

For years, every digital camera maker had their own proprietary memory card format: Sony products used Memory Sticks, Olympus used xD, and Fujifilm used SmartMedia. But in 2000, SanDisk, Panasonic and Toshiba created the SD Association (SDA), a nonprofit organization with more than 1,000 members participating in developing and enhancing the highly successful, portable and interoperable Secure Digital (SD) memory card standard. The formation of this group led to the obsolescence of proprietary formats.

A similar standards failure occurred in the instant messenger space. AOL, Yahoo and Microsoft were unable to create a single open standard, and each thought it could win with proprietary solutions. Now each are relics of early computer-based communications, as the world moved to text messaging, defined by the GSM Association standard. Another open standard, Rich Communication Services (RCS), has evolved from GSMA for the next generation of messaging.

When companies abandon proprietary standards and embrace an open one – and when that open standard is ubiquitous in its use and available on the Internet at no cost – it draws the attention of people with business ideas, as well as software developers. Having a single set of open standards creates the broadest possible developer community, which in turn creates increased competition toward building data-driven tools for the industry. The result: competition leads to innovation that benefits the industry.

 

Abandoning Proprietary Ways

Katie Ragusa, VP of Product Development for TRIBUS, shared how they moved from using a proprietary internal data structure for storing listings to RESO standards. The process of obtaining data from new sources has been made vastly more efficient, as illustrated below:

The efficiency that TRIBUS obtained in moving from a proprietary standard to a RESO open standard is striking. Reducing a 10-step data process by 80 percent to a two-step process creates an instant benefit.

And the TRIBUS experience is not unique. Homes.com, a nationwide real estate portal and one of the largest in the industry, performed a case study involving six MLSs and three MLS technology companies utilizing certified RESO Data Dictionary and Web API data feeds.

Their RESO Data Dictionary implementation, an open standard, took 228 hours on the first MLS, 46 hours on the second and only 24 hours for the third MLS they added.

The Web API implementation took 165 hours for the first MLS and only 16 hours for the second MLS.

Twenty-five development hours were reduced to just two hours by utilizing the Data Dictionary across the RESO Web API per MLS.

In summary, Homes.com obtained a 92% reduction in development time going forward to build new MLSs into the Homes.com platform utilizing MLSs certified on RESO standards.

 

The Speed Tradeoff

One common complaint about open standards is that when one needs to create consensus among many companies to create change, change occurs slowly.

For example, it took the HTML standard 15 years to evolve from version HTML 4 to version HTML 5. 

Frustrated with the lack of capability of the HTML standard, companies created proprietary technologies like Flash and Silverlight, allowing firms to fill market voids. For a time, it enabled developers to create websites with additional capabilities not available through open standards. But, as is often the case, these closed, proprietary standards became obsolete.

The money that firms invested in nonstandard technologies is lost, and the legacy software that had to be replaced with open standards required additional development costs.

How can we move forward more quickly with standards development? The answer is for all stakeholders in the real estate community to continue to increase the effort dedicated to the process.

RESO has grown by leaps and bounds with more than 800 organizations now participating, and the pace of work has increased. The number of RESO workgroups and subgroups has grown considerably to accelerate the development of standards in more specific niches, like rental properties, commercial real estate, waterfront property and more.

RESO has traditionally built standards for MLSs and technology companies, but there is a growing awareness in the brokerage community surrounding the value of RESO and the need for RESO standards.

If standards are prioritized in technology provider selection and contracts that support brokers, there will likely be an accelerated improvement in brokerage-oriented standards development and adoption.

While it may always be faster for a single company to act on its own rather than waiting for – or putting the resources into helping to develop – open standards, there’s a tradeoff for that speed: ubiquity. Having one standard that works everywhere has enormous value and a marked advantage over proprietary standards.

Ubiquitous standards attract developers, because they know their work can be used across the largest possible marketplace. Ubiquitous standards also provide efficiencies for all involved.

Pointing to the HTML example again, there was a period when each of the major web browsers introduced their own proprietary features on top of the standard. Netscape Navigator introduced an exciting-for-time “<blink>” tag that made text appear to blink. Microsoft’s Internet Explorer had a “<marquee>” tag that added scrolling marquee text on the page.

But developers disliked these proprietary extensions, because they did not work on all web browsers. Dozens of other nonstandard HTML extensions created scores of ways for browsers to misinterpret code.

Each browser company thought the others would adopt the improvements they made – despite not going through a standards process – and that typically did not happen.

The result of this lack of standards was increased web development costs for more coding, more testing and misguided experimentation beyond a typical standards process that created more broken web pages.

If browser providers had stuck to standards, the development experience would have been more efficient and reliable, leading to a better consumer experience.

In the real estate industry, companies may still experiment with innovative ways to structure and move data outside of the standards process. Sometimes that’s necessary as companies innovate with application development, but it should be obvious that the best case for development is, in the long term, to be able to create one set of standards.

 

Open Standards Takeaways

A single set of ubiquitous open standards for real estate creates:

• the largest and most attractive marketplace for innovators.
• great technical efficiencies; allowing innovators to focus on the software we see – instead of expending effort on moving data.

RESO creates open standards for the real estate industry in which:

• the development and approval process is consensus-based, collaborative and transparent to participants.
• the standard is vendor-neutral.
• documentation is openly published.
• there are no limitations on the number of implementations that may be created.

Proprietary “standards” create marketplace inefficiencies because:

• proprietary standards almost always eventually lose to open ones, especially when many companies need to work together using that standard.
• the relative speed of closed standards – remember the failures of Flash, Silverlight and proprietary web browser extensions – inevitably lose out to the more methodical effort of creating an open standard.

 

To increase the pace of standards development, all industry stakeholders should be fueling RESO with active participation in workgroups and financial backing. | JOIN RESO