My youngest son, Casey, was nine when I heard him tell a friend, “My grandpa, Chubby, is the man who invented real estate.”
Who was the man who invented real estate?
My dad, Harold “Chubby” Hague, a fighter pilot flight instructor, had just returned from the war to his hometown, Cincinnati, Ohio. He had no money, no connections, and only a high school education. Because so many of his veteran buddies wanted to buy homes, he obtained his real estate license.
Initially, Chubby worked for a small broker, had considerable success, then opened his own firm. He worked like most start-up entrepreneurs, putting in seven-day weeks, sometimes even working all night at the office (no exaggeration).
I remember some mornings as I was getting ready for school, Dad would pull into the driveway, shower, shave, have bacon and eggs with Mom, take me to school, then drive back to the office.
It was difficult for my father. Three big, multi-office companies dominated the Cincinnati real estate market. They preyed on little guys like Dad, pilfering agents, stealing listings, taking more and more market share.
Chubby struggled. He needed an answer. Then he had an idea.
What the man who invented real estate did.
Chubby wanted to band together Cincinnati’s small brokers to share information about their listings. He called it the Cincinnati Property Exchange. Suddenly, in aggregate, the small guys had the ability to access each others’ listings and give their agents more homes to sell than agents with larger firms.
I’ll never forget working with Dad in our basement, mimeographing copies on 6’’ x 4” sheets of paper, each with information on a listed property. Every Saturday, we would drive around to other small real estate firms, distributing the updated listing sheets.
As it turns out, Chubby was not alone in this idea (although he thought he was). A small broker in San Diego was doing pretty much the same thing at the same time. Probably others, as well.
The real estate leveler.
Of course, Casey’s grandpa (my dad), didn’t really “invent real estate,” but he was responsible for a dramatic improvement in the real estate business. He was one of the early developers of the #1 tool agents use today to sell homes.
The great leveler. The Multiple Listing Service (MLS).
The MLS is a directory of homes listed for sale by real estate firms. It’s a closed database, available only to those in the business.
When agents join MLS, they agree to submit their newly listed properties for other agents to see, and specify the commission they will pay to anyone who successfully sells that home. This “offer of cooperation” among members is the grease on the real estate wheel of commerce.
Without MLS, agents wouldn’t have a convenient way to learn about other agents’ listed properties, or an assurance that they would be paid if they sold one. But that is not why the MLS was initially developed. In the beginning, it was designed to help small brokers compete against the big guys.
History of the MLS
It started in the late 1800s when real estate brokers met informally to share information about their listings. They often made handshake agreements to pay each other when they sold one another’s properties. Most brokers worked alone from home, with the more successful brokers operating from an office with a handful of agents. There were no mega-firms or real estate franchises.
By the mid-1900s, things had drastically changed. The real estate business was dominated by large firms with many agents. These mega-firms had lots of listed properties, a huge advantage. Back then, buyers went from firm to firm to shop for homes, the way we now go from auto dealer to auto dealer to shop for a car. Firms with more listings attracted more buyers, which helped them grow by attracting more agents.
In those days, real estate firms did not share information on their listings or pay agents with other firms a commission if they procured a buyer. So the big guys grew quickly, stealing small firms’ agents, taking away listings, and driving them out of business. The big got bigger and the small got smothered.
Who really invented real estate?
Casey’s grandpa may not have invented real estate, but he sure helped save small real estate brokers. He also helped home sellers sell, homebuyers buy, and the real estate industry thrive to this day.
So when Casey proudly exclaimed, “My grandpa invented real estate,” I knew he wasn’t exactly accurate, but I also knew, as most parents do, that some subjects like Grandpa and Santa, should be fondly left alone.