A national property database to be rolled out by a new subsidiary of the National Association of Realtors in April could give its members a bigger say in property valuations — if their multiple listing services agree to participate, backers say.
NAR’s Realtors Property Resource (RPR) database will attempt something that’s never been done at the national level: integrate public property records, residential and commercial, with information gathered by Realtors and others when properties are listed in multiple listing services (MLSs) and commercial information exchanges (CIEs).
Although the database will offer sophisticated search capabilities for property information, including details about active and sold listings, it will carry no offers of cooperation and compensation.
Rather than serving as a "national MLS" — an idea many Realtor associations and MLSs might see as too radical and decline to participate in — RPR’s backers say it will be a research tool to help Realtors analyze market conditions and value properties on behalf of buyers and sellers.
MLS data is often more accurate, detailed and current than public records on file with county recorders’ offices, and should improve the quality of market reports and automated property valuations produced using the new database.
RPR’s backers say lenders, mortgage guarantors like Fannie Mae, and government agencies like the Federal Reserve are interested in harnessing the power of the new database.
In fact, the business model for RPR depends on selling analytic products like market reports and property valuations to non-NAR members such as lenders and government agencies.
NAR has invested $12 million to acquire technology and data aggregation services from LPS Real Estate Group, including code developed by LPS Real Estate for its Cyberhomes.com consumer Web site. NAR expects its new startup company, Realtors Property Resource LLC, to lose another $9 million in the first three years of operations before becoming profitable in 2012.
According to Dale Ross, the former MLS executive who’s been tapped as the company’s chief executive officer, there’s a potential for the business to generate $60 million to $80 million in annual revenue. After covering the company’s operating expenses, any profits — projected at $8 million for 2013 — would go back to NAR to repay its capital investment, Ross said in a webcast presentation to NAR members.
Nonmembers won’t be allowed to access the RPR database itself, but will be able purchase "derivative" products like automated valuations. NAR says the revenue generated by that business model will allow it to provide members with free access to the database beginning next year.
Ross said he has talked to the heads of Fannie Mae and its regulator, the Federal Housing Finance Agency (FHFA), as well as Federal Reserve Board member Elizabeth Duke, who expressed interest in the idea.
"They all said if we had had this model four or five years ago, maybe some of the problems that we incurred in the real estate market in the last year or so could have been alleviated," Ross said.
The kind of insight that can be extracted from the RPR database "has significant value to the federal government, it has significant value to Wall Street," Ross said. "As we have talked to some people in Wall Street as well as the federal agencies, they (have indicated they) will participate in buying that analytical product."
Unlike automated valuation models (AVM) in use today, which may rely solely on public property records, RPR-based valuations will also take into account more recent sales entered into the local MLS but not yet on file at county recorders’ offices.
In addition to tracking down more recent "comps," or comparable sales, RPR’s AVM will consider details on active and sold listings from the MLS that aren’t found at all in public records, but which can be vital in making a valuation.
Those details may include concrete information like a property’s asking price or the amount spent on a kitchen remodel, or more intangible factors like a Realtor’s assessment that a property has better-than-average "curb appeal."
The combination of real-time MLS data and public property records into a single database is so unique, backers of the project have coined a new acronym to describe the property valuations that can be derived from it: "Realtor valuation model," or "RVM."
"We believe the analytics that come from the integration of MLS and public records data contained solely in RPR will become the new gold standard for analytics, and can provide the revenue for the system, allowing us to offer it to (NAR) members for free," said Jeff Young, a member of the RPR LLC management team.
Young, a former broker-owner and past president of the Michigan Association of Realtors, was hired by NAR last year to help develop RPR. Young said he joined the project because he saw it as a way to help Realtors maintain their central role in the home transaction process.
Realtors — real estate agents and brokers who are NAR members — will be able to access the RPR database as soon as it launches, regardless of whether their broker or MLS is a participant.
"This has to be a member service first," Young told Inman News. "So, on day one, Realtor members will be able to (access public records in RPR) to do research, and be of more value to consumers."
As an incentive for their participation, RPR will provide data at no charge to MLSs, commercial information exchanges and real estate brokerages that agree to contribute listings data to the database. Ross, the co-founder of the Metropolitan Regional Information System (the country’s largest regional MLS), said there’s a potential for MLSs to save a combined $25 million to $50 million a year by participating in RPR. …CONTINUED