My last blog post produced some new information that will be helpful for anyone who wants to dig deeper into this. In particular, Sharon Curtis of Hileman Real Estate, Inc. gave me this link for a webinar on the subject. http://www.realtor.org/about_nar/stinton_webinar_110609
In addition, at the NAR convention, I spoke with Steve Murray, the publisher of Real Trends. Below is an article that he wrote on the subject. He has given me permission to post it here. I welcome your comments to help everyone sort this out.
RPR and the Future
On November 6th the National Association of Realtors announced the launch of an important new initiative under their wholly owned subsidiary, Real Property Resource (hence “RPR”).
The news was met with both excitement and concern among members and those who supply services to the industry. We talked with several leading brokerage firms, the heads of several state and local associations of Realtors®, the heads of some MLS operations and as well as those who provide technology services to the industry. We also attended a presentation by Marty Frame, the newly appointed president of RPR and Dale Ross, the CEO of RPR. Lastly we talked with leaders of LPS, the firm that made the deal with RPR.
What is RPR and what does it propose to do? RPR has entered into an agreement with LPS, a leader in real property information and brokerage/mortgage/settlement services technology, to license real property records for most of the country and for the system that powered Cyberhomes, an LPS consumer and professional web offering. In its simplest form, RPR desires to offer participating MLS systems a swap – the real property records for the listings of the MLS. The plan as we understood it was that there would be no charge to either party for this exchange.
RPR will also license other real estate, community and neighborhood data from a variety of sources. This fits with an overall goal to be a one stop supplier of information for real estate professionals. RPR will then aggregate its real property records together with the MLS data to create a gold standard for AVM and sell these tools to leading mortgage financial institutions and others that may have interest in this kind of data. There is no plan or intent to create a public Web site (presumably they cannot compete with Move Inc’s Realtor.com). Statements that we heard from RPR also indicated that no real estate professional or homeowner detail would be sold to any outside parties.
So RPR proposes an exchange – their real property data and systems for the listings from the MLS’s across the country. Their income to pay for this will come from selling valuation tools to financial institutions.
So what are the concerns? First, is this really what they plan and what will happen if the revenues from their sales of their AVM don’t cover the costs (and they are said by some to be north of $30 million for the first five years)? Many MLS’s now have property records integrated into their MLS. Although they pay for them this is not considered a large cost. Some MLS operators already have profit making efforts marketing their own data to their members and others. Some large brokerage firms and national networks see this as yet another endeavor from NAR that while seemingly innocent, will create more of a level playing field. There are technology vendors who think that providing the data is only the first step to entering real estate technology applications (such as CRM’s, transaction management and CMA) and that RPR would have a huge unfair advantage over non-RPR providers.
So what do we think?
We assume that most, if not all, MLS’s and boards will find a way to accommodate RPR in their offer of an exchange. It could be that RPR will have to work directly with brokers and national networks to do so and there may have to be some revenue sharing to accomplish their goal. Second we have no particular insight into whether a Realtor® AVM will be competitive with those that already exist. This is a huge market with several strongly capitalized and entrenched competitors. Lastly we don’t know (and RPR likely doesn’t either) how much additional capital it will take to create the AVM and other tools and turn a profit doing so. Yes they have targets and budgets and projections, but they are not the same thing as actual results – we all know that.
Should their projections fall short of expectations or should RPR just enjoy exploiting the opportunity, they could expand their offerings to the applications side of the business in addition to the data segment and offer competitive tools. No one we talked to could do more than speculate about this possibility – but it does have several firms' attention.
NAR has a mixed record of attempting these large scale transactions. The first RIN didn’t work as they expected – that led to Move Inc and Realtor.com, which has had some successes and some failures along the way. The business of business is a different world than the business of a trade association. Few have done both well.
Will the endeavors and future developments of RPR further level the playing field? It could but much depends on whether RPR’s announced plans are really all they are going to do. We do believe that the market power of NAR will be greatly enhanced by the successful operation of RPR. Is it possible that they will find as time goes by that members will “ask” RPR/NAR to broaden their offerings in the name of greater member service? And what might those future services look like? NAR generally cannot and will not discriminate between members in its service delivery and pricing.
There are a few curiosities about this launch. First we discovered that most of the leadership of the nation’s large real estate organizations had not been contacted about RPR even several days after the announcement. You want to launch a new endeavor like this it would seem likely that you would at least want to clue these leaders in on the plan (with more to follow later of course) Second, from comments we received at the briefing and elsewhere it seemed like this all came together in a rush to make the convention deadline. Large transactions like this almost never get everything thought through well enough even when there is time. When it is hurried due to an announcement deadline frequently something critical gets overlooked.
There are good solid people involved in this deal. Many know well the talent of Marty Frame of RPR, Dale Stinton of NAR and Jay Gaskill of LPS. These are smart, thoughtful and successful leaders. Having good leadership is always a plus. So one last question we would have is how well the interests of the parties will stay aligned when the inevitable hardships and trials surface? Once again we are not sure whether or how well these interests are aligned even now.
Should the announced intentions of RPR truly be all that are in their plans, it could result in a wider array of information at lower costs for members. Should these plans fail to deliver these benefits to members while also making a profit from the sale of AVM products, then we cannot be sure that they won't use the power that they have in ways that may not be in the best interests of members and the market.