Editor’s note: This story has been edited to correct that Saul Klein, chief executive officer of Point2 Technologies, would participate in RPR if he ran a large MLS, and that Rob Hahn, managing partner of 7DS Associates, would not.
NEW YORK — National Association of Realtors subsidiary Realtors Property Resource LLC says it will include non-compete agreements when entering into one-year licensing agreements with multiple listing services that agree to contribute their listings data to its national property database.
By promising not to compete with MLSs — and allowing them an opportunity to make a quick exit from RPR if they aren’t satisfied with the results — company executives say they are out to sign up half the nation’s roughly 900 MLSs by the end of the year.
Since NAR formed RPR in November, officials at some MLSs have complained that NAR hasn’t offered to share RPR revenue with them, and expressed reservations that RPR might offer competing services (see story).
Participation by MLSs is considered vital, since RPR needs their active and sold listings data to generate "Realtor valuation model" (RVM) property valuations and other analytics products it plans to sell to lenders, secondary mortgage market investors and government agencies.
NAR hopes the database will eventually generate $60 million to $80 million in annual revenue, allowing it to recoup an initial outlay of $12 million up front and recover a projected $9 million loss during the first three years of operation.
Although NAR has not offered to share revenue with MLSs, RPR executives say MLSs would get free access to a public property database of 147 million residential and commercial properties and analytics capabilities the company has licensed from LPS Real Estate group.
RPR plans to sell analytics derived from listings data to generate revenue, but only NAR members and members of participating MLSs will have access to the database itself, the company says.
RPR intends to start Beta testing in March with about a dozen MLSs and 25 to 50 users at each MLS, said Dale Ross, RPR’s chief executive officer. Depending on the results of Beta testing, all members of those MLSs could get access in May, with additional MLSs coming on board in the second quarter.
Industry experts attending Real Estate Connect this week said MLSs are likely to weigh participation on a case-by-case basis. MLS executives know there is value in the data they are being asked to provide to RPR, but may not be capable of "monetizing" it themselves.
"There’s value in the information, and if you play a part in getting that information out there, (some MLSs believe) you should be getting part of the revenue," said Saul Klein, chief executive officer of Point2 Technologies. …CONTINUED
Rob Hahn, managing partner of 7DS Associates, said MLSs will have to ask themselves whether they have the ability to monetize their listings data themselves, or whether they would be better off partnering with RPR.
Asked if he were running a large MLS if he would participate in RPR, Klein said he would; Hahn said he would not.
Brokerages will also have the option of withholding their listings from RPR even if the MLS they belong to chooses to participate, said Brian Larson, an attorney who works with MLSs, further complicating the process of bringing listings data into the RPR database.
Many MLS executives have been reluctant to say whether they will or will not participate in RPR until they see terms they will be offered in licensing agreements that are expected to be mailed out next week.
Licensing agreements with participating MLSs will include written assurances that RPR will not provide services to consumers, is not seeking exclusive rights to MLSs data, and "will not compete to provide MLS services in your market, period," said RPR President Marty Frame.
But the definition of what constitutes "MLS services" could vary from market to market.
Lisa Herrin, vice president of product strategy for Hawaii Information Service, said the parcel-based MLS system already offers its subscribers access to public property records.
She questioned whether RPR will agree not to compete with Hawaii Information Service in providing data and analytics to non-NAR members, which she said account for 50 percent of the MLS’s revenue.
Frame said RPR will not sell access to public property records and listing information.
"We will produce analytics, but they will not reveal listing information," he told Herrin.
Frame said the licensing agreements RPR enters into with MLSs will provide very specific definitions of the analytic products RPR intends to produce in order to generate revenue, although the definitions won’t include product names. …CONTINUED
Herrin later said she was only "satisified to a degree" by Frame’s response. Although Herrin would not entirely rule out the possibility that Hawaii Information Services will participate in RPR, she expressed concerns that the initiative would "bastardize" her company’s revenue.
Frame said Hawaii Information Services is unique, not only in being parcel-based but in the range of products it offers for sale.
It would be impossible for RPR "to define MLS services as ‘anything you do,’ " Frame said.
In panel discussions at Connect, Ross and Frame emphasized that RPR’s primary goal is to provide more tools to Realtors by making information drawn from many sources available through a single point of access.
Although RPR wants the primary point of access to the database to be through participating MLSs, all NAR members will have access to the database through a dedicated Web site that will be offered in a phased rollout beginning in July.
"The name of the game here is to make the real estate practitioner more productive, so that when they engage with the customer, they’ll know more about the property than anyone else," Ross said.
In addition to providing access to public property records in all markets and current and sold listings data in markets with MLS participation, RPR will provide information on loans used to purchase a property — whether the property is in default — and the borrower’s credit score. Those are useful tools to Realtors engaging in short sales or working with distressed property owners.
One interesting twist is that consumers who are registered users of Virtual Office Web sites, or VOWs, will have the same ability as Realtors to generate comparative market analysis reports (CMAs) and other analytics reports that rely on RPR data in PDF format.
In addition to CMA reports, registered VOW users will also be able to produce buyer-tour reports, property sheets, and neighborhood reports that draw on RPR data as PDF documents, Frame said.
Frame said that capability is not likely to be controversial, because consumers will not be able to search the RPR database itself even if they have registered as VOW users.
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