MLS executives were treated to multiple presentations about broker-backed initiative Upstream at the National Association of Realtors’ conference in San Diego, but MLS execs say those presentations left a lot of questions unanswered — or answered poorly. Upstream intends to give brokers a single point of entry to manage property data and also give brokers the choice of where to distribute it.

  • MLS executives have questions about Upstream's revenue model, how it will handle IDX, how MLSs and Upstream will work together to deliver clean data -- and whether NAR subsidiary Realtors Property Resource (RPR) can deliver on the project.
  • MLSs say they can't adequately prepare for Upstream without answers to some of these questions, but multiple presentations at NAR's annual conference did not adequately answer them.
  • Many of these questions will be answered with execution, according to Upstream and RPR leaders.

That is the opposite of what you just said. — MLS executive to Realtors Property Resource CEO Dale Ross after receiving conflicting answers to a question about whether Upstream or MLSs would handle IDX (Internet data exchange) feeds for brokers at the National Association of Realtors’ annual conference earlier this month.

MLS executives were treated to multiple presentations about broker-backed initiative Upstream at the National Association of Realtors’ conference in San Diego, but MLS execs say those presentations left a lot of questions unanswered — or, as the quote above indicates, answered poorly.

Upstream intends to give brokers a single point of entry to manage property data and also give brokers the choice of where to distribute it. The database will be built by Realtors Property Resource (RPR), a NAR subsidiary, and is slated to go into beta testing in select markets in the second quarter of 2016.

The quote above — uttered at the NAR conference’s MLS Forum — underscores MLS execs’ hunger for more solid information about Upstream.

Several MLS execs contacted by Inman after the forum highlighted a key concern: How can MLSs prepare so they can still fulfill their own obligations once Upstream is a reality?

“MLSs are the default information exchange that facilitates tens of millions of dollars of residential real estate every minute. So it stands to reason we have questions,” David Charron, CEO of Metropolitan Regional Information Systems Inc. (MRIS), told Inman in an email.

“[W]e surely support the aspirational intentions of Upstream. But we will not sit quietly when the proposed solution places so much of the broker and agent business at risk.

“More simply, legitimate questions should not be construed as opposition.”

Outstanding questions

Currently, brokers and agents enter their listing data into the MLS following MLS-specified business rules meant to create a fair and functioning marketplace where competitors can cooperate and offer each other compensation.

MLS data is considered the most accurate there is largely because of those rules, which indicate, for instance, within what time frame a listing must be entered or updated.

Upstream has said it will do the work of preparing data to comply with all of an MLS’s business rules. Given there are some 800 MLSs across the country, that is no small undertaking — even if 80-85 percent of the rules are the same, as Ross told conference attendees.

Charron asked for “concrete and transparent answers” to questions such as:

  • How exactly does Upstream plan to handle business rules for all these MLSs — not to mention the multiple jurisdictions within each MLS?
  • What about localized content that the MLS or the broker needs? How will that be included?
  • What exactly does the product roadmap look like and over what time?
  • How will the add/edit module ensure compliance requirements are met?
  • Is the local market responsible for compliance management? Which elements?
  • Some markets like MRIS reward brokers for pristine inventory (those listings that have not received a sanction). Does this go away?
  • What technology is all of this built on?  What’s the level of security, availability and integrity?
  • Many of us have invested mightily in technology. How do we maintain consistency in the interim? What are the potential implications?
  • Who are the “partners” RPR is using?
  • Unless and until all listings are entered into Upstream directly, is it the local MLS that manages IDX and RETS [Real Estate Transaction Standard] licenses? Who has the lead on syndication?
  • What indemnification provisions will extend to the local MLS? “Litigation is increasingly the price of success. My guess is there are a few waiting in the wings,” Charron said.
  • How do current shareholders and directors of local MLSs strike a balance between their fiduciary responsibilities to the current organization and their desire to see Upstream succeed? Is this even an issue? “I ask this because it is not entirely clear what the Upstream deliverable will look like when launched let alone over the course of several years,” he said.
  • Without knowing what is required of the local market, what are the costs we will be expected to bear?

No answers

But it appears MLSs should not hold their collective breath for ready answers. In response to an inquiry from Inman with Charron’s questions, Upstream leaders sent the following statement from Upstream board member Cary Sylvester of Keller Williams:

“We are committed to building a system that will enable the entire industry to evolve and reorder the flow of our number one asset: our listings. We are also committed to working with MLSs across the nation to support their local policy, procedures and requirements,” she said.

“Upstream is new and different and we don’t have all the answers yet; and this keeps us agile to create the best solution to meet those goals. What we do have is a structured discovery process we’ll work through with each MLS.”

‘How do we work together?’

Jim Harrison, president and CEO of Silicon Valley-based MLSListings Inc., is on RPR’s board of directors and told Inman his MLS will be one of the pilot markets for Upstream.

But he has similar unanswered questions about Upstream.

“How do we work together with Upstream and RPR to maintain the integrity of the data?” Harrison said.

“We’re constantly hearing from agents about corrections that need to be made to listings. That’s an ongoing thing. People don’t change statuses all the time, they don’t have photos, they put things in remarks that don’t belong there, they have branded photos, misstating the price, misstating the compensation to the cooperating brokers.

“We have to work out the procedure for how do we work together to keep the data clean.

“There’s a bunch of work to do here. We’re not afraid to do the work; we just want to get prepared,” he added.

Avoiding roadblocks

“Trying to speculate what MLSs will need to do to be ready for Upstream is a challenge,” Merri Jo Cowen, CEO of My Florida Regional MLS, told Inman in an email.

“We will fully support the initiative and do not want to put up any roadblocks accidentally by not being ready.

“I think that the unanswered questions, while some may be premature to expect, is what is causing stress for associations and MLSs. Not every MLS will have the resources to prepare and it’s even harder to prepare with so many questions.”

Her concerns are about the project’s “technology readiness, how the agent and property data will flow, preserving the local business rules to meet the highest data quality goal, and how the changes will impact license agreements,” she said.

Upstream should make use of MLS expertise, according to Cowen.

“There is a desire [among MLS execs] to get questions answered and to participate in the conversation somehow for what-ifs and ‘have you thought about this?'” she said.

“We know it is coming and can contribute to initial success through our experience.”

Who handles IDX?

Among their many services, multiple listing services provide IDX feeds to their members, allowing agents and brokers to show pooled listings for their market on their public-facing websites.

So, if Upstream is now the starting point for data, and RPR only thinks it can get about half the industry to use it (RPR President Marty Frame said he thought 500,000 to 600,000 users was achievable), where does that leave IDX?

As noted above, Ross gave inconsistent answers to that question — first saying IDX would stay as it is, but then saying brokers would get to choose whether Upstream or their MLS would handle IDX.

Ultimately, Upstream board member and secretary Craig Cheatham told the group, “The intention of the Upstream board is to leave the MLS as it is and to leave IDX fully within the purview of the MLS.”

But the exchange raised eyebrows for some MLS execs.

“IDX, up until now, has represented broker reciprocity sourced from the MLS with the majority of available listings,” Lauren Hansen, CEO of Information and Real Estate Services LLC (IRES), told Inman in an email.

“If Upstream offers an alternative method for delivering listings to broker websites with 50 percent to even 60 percent of the listings, perhaps it should be called something else.

“Or maybe it is combined with MLS data to get the complete picture. I don’t think brokers want half of the listings on their sites.”

‘Will the brokers’ expectations be met?’

Upstream started out as a mysterious initiative portrayed as brokers’ answer to the many grievances they had against MLSs.

Then, Upstream partnered with RPR — an entity that promised to be profitable only to cost NAR nearly $122 million to date.

In that context, and with so little specific information about the project, it’s not surprising some MLS execs are apprehensive about what exactly Upstream will deliver.

On the one hand, some MLS execs worry that, once Upstream is in the picture, the “MLS will be nothing but a rule enforcement agency with little teeth,” Carl DeMusz, president and CEO of Northern Ohio Regional MLS, told Inman via email.

“That is nothing but an insecurity, but who really knows how things will settle. This is an obvious perception when the MLS is not the primary database and becomes just another feed option.”

On the other hand, MLSs do want to work with Upstream, and a poorly delivered product could do more harm than good.

While NAR’s political advocacy prowess is “enviable,” its “forays into the technical arena have been less successful,” Charron said.

“Doesn’t mean it can’t be done. It just means that those of us who live and breathe this stuff every moment of every day have the experience and therefore the legitimacy to ask the important questions.

“Relationships with big brokers are certainly assuaged with the level of investment NAR is making with Upstream. Is it sustainable? Importantly, will the broker’s expectations be met?”

‘The proof is going to be in the pudding’

At the NAR conference, tech company exec and blogger Greg Robertson noted “a palpable sense of betrayal” among MLS executives “of what RPR was going to be.”

RPR President Marty Frame said he understood the emotion, but “there’s not a lot I can say to make it all better except to say we’re an MLS-dependent business,” he said.

“We’re an MLS-dependent industry. The proof is going to be in the pudding. It’s really an execution thing.”

Frame noted that Upstream, and a related project, RPR’s Advanced Multilist Platform (AMP), “will have to fund themselves. Upstream has a fee structure built into it by contract and … we won’t do [AMP] if it doesn’t work.”

NAR is funding Upstream through the development phase over the next 2.5 years, according to Bob Bemis, RPR’s new vice president of business technologies.

But “NAR expects to be repaid for their development costs” and therefore Upstream leaders “will need to generate revenue to be able to pay NAR back for their investment in Upstream and to pay for the continuing costs of Upstream,” Bemis told conference attendees.

‘What’s the revenue model?’

But exactly how they will do that is still up in the air, causing additional uncertainty among MLS execs. NAR’s contract with Upstream is for seven years.

“RPR was started to make money. That revenue model failed. Now they’re contracting with Upstream. What’s the revenue model?” Walt Baczkowski, CEO of the San Francisco Association of Realtors, told Inman.

RPR has a low usage rate among members, he said. If Upstream suffers the same fate, “my biggest fear is that in three to five years, there could be a change in leadership” that decides they don’t want to keep paying for the product, cans the whole thing, sells it or raises dues to pay for it, he said.

RPR execs say Upstream will have to pay for itself, but “I heard that about RPR when it started, too,” he said.

Another open question: Will brokers want to continue to pay their MLS fees on top of their Upstream fees?

When asked this question at the MLS Forum by an MLS exec, Ross said, “The broker doesn’t pay the MLS, the agents do.”

That response was met with audible disagreement from the crowd.

‘Like using a cannon to kill a mouse’

SFAR’s Baczkowski is on the RPR and AMP advisory boards. He questions whether Upstream is necessary.

“Why are you building a front-end piece to put all the property into Upstream when you already have the MLSs, you already have the front ends out there,” he said.

“Why create another data entry point?”

His MLS does not have any problems with brokers, he said. SFAR MLS doesn’t send their data to anyone unless the broker specifically asks them to, he added.

He believes issues brokers have with MLSs stem from smaller MLSs with only a few hundred members. To create Upstream to deal with those MLSs is “like using a cannon to kill a mouse,” he said.

Other MLS execs disagreed — somewhat.

“Upstream obviously makes sense in some markets or this initiative wouldn’t be coming to life,” Hansen said.

“In other markets where MLSs are doing a good job of meeting broker needs and subscribers belong to one MLS, it could be viewed as an extra layer.

“Let’s give them time to work out more details and develop their proof of concept with the 10 or 12 alpha and beta markets mentioned.

“In general, MLSs want to support what is best for their customers. We always have.”

Email Andrea V. Brambila.

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