Who should Upstream be for? That’s the question at the heart of a discrepancy Inman has uncovered between the people paying to fund the ambitious (yet thoroughly delayed) online real estate data platform and the project’s leaders.

  • Three NAR directors say they voted to fund Upstream in May 2015 believing the platform would be only for Realtors.
  • Both Upstream and NAR say the platform will be for all brokers regardless of Realtor status.

Who should Upstream be for? That’s the question at the heart of a discrepancy Inman has uncovered between the people paying to fund the ambitious (yet thoroughly delayed) online real estate data platform and the project’s leaders.

As Inman has previously reported, Upstream was conceived as an online platform that would give brokers more control over property data and associated information, letting them update it in one place on the internet and push it out to the outlets of their choosing. It remains in development 18 months after it was originally supposed to begin testing.

The board of directors of the National Association of Realtors (NAR), the largest industry trade group in the U.S., voted on May 16, 2015 to direct $12 million in funding to develop Upstream and a related project.

Yet just recently over the last few weeks, three NAR directors told Inman they voted to fund Upstream under the presumption it would be available exclusively to Realtors — that is, certified, dues-paying NAR members. NAR and Upstream’s leadership, however, disagree, saying they have always maintained Upstream would be available to all brokers, not just Realtors.

“Upstream will be available to all brokers (not only Realtor brokers),” NAR spokesperson Sara Wiskerchen told Inman in an email last month.

Upstream Pres. and CEO Alex Lange

Alex Lange

Upstream CEO Alex Lange concurred. “I honestly can’t find an instance of Upstream being restricted to Realtors,” he told Inman via email, saying there was no reference to such a stipulation in any documentation related to the project’s proposal or agreements.

But on the day of the funding vote, Inman reported that Dale Ross, CEO of Realtors Property Resource (RPR) — the NAR subsidiary developing Upstream — told NAR directors that Upstream would be exclusive to Realtors. NAR now disputes this record.

Upstream is set to exhaust its initial funding by the end of 2017. Individual brokerages have separately contributed $1 million in repayable notes to the project. NAR’s board allocated another $9 million to Upstream in May 2017. 

As Inman has previously reported, it is unclear whether the board knew about the project’s lack of progress at the time. Now it appears that at least some directors did not know even then that Upstream wouldn’t be exclusive to Realtors.

As these facts come to light, the questions now are: How will this impact NAR’s future decisions in regards to Upstream and RPR? How will NAR leadership address the fact that at least some of its board members and leadership aren’t on the same page when it comes to Upstream’s users? And most of all: how can communication between NAR leadership, its board members, and Upstream leaders improve?

NAR directors say they voted to fund Upstream thinking it would be exclusive to Realtors

Danny Frank, a Houston agent and an NAR director at the time Upstream funding was first approved in May 2015, remembers the RPR leadership team, including CEO Dale Ross and President Marty Frame, urging directors from Texas not to oppose the Upstream funding proposal in the minutes before the board meeting started.

Danny Frank

“We had some assurances from them,” Frank told Inman in an interview. “My recollection is that the Upstream part was supposed to be for Realtor members only, not for everybody that wanted to put stuff in.”

Frank voted in favor of funding Upstream at that meeting. When Inman told Frank that NAR had said Upstream would be available to all brokers, he said: “Wow, that’s not my understanding. I’m very concerned.”

Had he known that Upstream would be for all brokers, Frank said he would have “100 percent” changed his vote “because NAR is for Realtors and not for licensees.”

Wayne Stroman, a Conroe, Texas, broker and an NAR director in May 2015, also remembers Ross and Frame trying to convince the Texas caucus not to oppose the Upstream proposal before the NAR board meeting. He told Inman he doesn’t remember exactly what they said, but his understanding when he voted for the proposal was that Upstream would only be for Realtors.

Wayne Stroman

“I couldn’t imagine why NAR would want to do something for non-Realtor brokers. It had to be for Realtors,” Stroman told Inman in a phone interview.

Upon hearing that NAR had told Inman otherwise, Stroman said: “I’m not aware of that. It just seems like NAR projects morph as they go along. It’s just tough on the dues-paying member to be able to understand why so much money is being spent on these things.”

Stroman said he would have changed his vote had he known this. “The only way that you’ll make the Realtors happy is if they figure out how we’re going to recoup the money spent on the development from non-Realtor members,” Stroman said.

Diana Bull, a Santa Barbara, California broker who says she’s been an NAR director for the last 31 years and a member of RPR’s advisory board since 2009, also seemed astonished to find out that Upstream would not just be for Realtors.

Diana Bull

“This is really an anomaly,” Bull told Inman. “For NAR to fund millions of dollars for Upstream … for brokers who are not Realtors … it’s something that I really have to look into and it’s something that I should know about being on the RPR advisory board and being in the positions I hold.”

She, like Frank and Stroman, believes other NAR directors also voted in favor of Upstream funding thinking it was going to be a tool only for Realtors. “It was never discussed that non-Realtors would have this benefit after we have funded millions of dollars for Upstream, now twice,” she said.

Had Bull known Upstream would be open to non-Realtors to use, she told Inman she would have at least have asked a lot more questions before the funding vote. “There should have been an analysis of what brokerages would that be who are not Realtor members,” Bull said.

Frank added that had NAR directors been clearly told that Upstream would be for all brokers regardless of Realtor affiliation, he believes the funding proposal would at least have garnered more discussion on the meeting floor.

“I think it would have changed a lot of people’s perception of what was going on,” Frank said.

Wiskerchen told Inman that the final Upstream agreement stipulated that Realtor members would receive preferred pricing, and “access to certain features that non-members do not.”

Lange, however, told Inman that “there is not a reference [in the Upstream agreement], nor do we have plans, to provide or restrict access to features based on affiliation.”

According to Lange, Upstream will charge brokers tiered pricing based on agent count. He confirmed that Realtors would get a discount over non-Realtors. But when Inman asked for details on the savings in an email, Lange did not respond.

RPR’s comment about Upstream access in 2015

During the open discussion before the Upstream vote in May 2015, Frank Gregoire, an NAR director and appraiser, asked NAR’s leadership team if all real estate specialists that were members of NAR would be able to use Upstream and AMP.

Gregoire told Inman last month that at the time he wanted to make sure the platforms would be available to all NAR members, including appraisers. He wasn’t interested in whether the platforms would be available to non-Realtors when he asked the question.

Dale Ross

Nonetheless, RPR’s Ross seemed to take the question that way in his response to Gregoire. Inman reported that same day that Ross told the directors that brokers would have to be Realtors to participate in Upstream. (Whether MLS subscribers who used AMP had to be Realtors depended on MLS rules, Ross said at the time.)

When Inman asked last month why that stance on Upstream participation had changed, NAR’s Wiskerchen pointed to what Inman had reported and said it was “a mistake” that “unfortunately we did not note … when it was originally published back in May 2015.”

Inman asked Wiskerchen for clarification on whether the “mistake” was that Inman had reported what Ross said inaccurately, or if Ross’s assertion that Upstream would be limited to Realtors was, in that moment, erroneous. Inman also inquired whether there was a record or transcript available to show what Ross had said for clarity. (Frank said minutes from the meeting noted that Ross had spoken at the meeting but not what he had said.)

NAR responded that it had “no additional information,” but said it was “incorrect to assert that NAR’s BOD [Board of Directors] voted to approve Upstream funding based on misinformation. All parties have consistently and extensively communicated Upstream’s value proposition and availability to all brokers since 2015.”

She added that “[former NAR CEO] Dale Stinton corrected any information that may have come from Dale Ross misunderstanding [Gregoire’s] question at the May 2015 meeting.”

Gregoire told Inman he spoke to then-NAR President Chris Polychron following the vote in May 2015 to clarify the answer to his question, not Stinton. Gregoire said he could not remember what either Ross or Polychron said, but said the response he received was to his satisfaction. Inman reached out to Polychron for his recollections on the exchange, but did not receive a response.

NAR says Upstream funding went through in November 2015, contrary to records

In Inman’s conversations with NAR, the trade group said that the NAR board had approved Upstream funding in November 2015, not May 2015. Wiskerchen wrote:

“That vote in May 2015 was to sign a non-binding Letter Of Intent (LOI) that authorized NAR to ‘negotiate in good faith to formalize a written agreement (the ‘Definitive Agreement’) that will govern the Project Upstream.’ This contained no reference to detailed requirements of any kind, but rather stated, among other things, that membership requirements are to be negotiated.”

The BOD then voted to approve Upstream funding during the November 2015 annual meeting.”

The statement contradicts NAR’s 2015 annual report and the materials provided to attendees at the trade group’s May 2015 and November 2015 board meetings, both of which Inman attended.

As shown below, the May materials reference the $12 million funding proposal for AMP and Upstream; the November materials don’t appear to mention Upstream funding.

Screen shot of Upstream proposal from the May 2015 NAR Finance Committee Report

On the day of the May meeting Inman reported that NAR had approved Upstream funding and received no correction requests from NAR. A past Inman report also shows that the funding discussed at NAR’s November 2015 meeting was related to zipLogix rather than Upstream.

Inman asked for further clarification from NAR on these points and asked NAR for comment on the concerns expressed by NAR directors Frank and Stroman.

Inman also inquired whether anti-trust would be a concern if Upstream were restricted to only Realtors, given that Upstream is being created as a collaboration of competitors and requiring Realtor membership would mean tying that service to another service (i.e. association membership), and if that was why a Realtors-only requirement was not included in the project’s final agreement.

After receiving these questions, NAR declined to comment further for this story, other than this statement from spokesperson Wiskerchen: “NAR’s purpose in creating RPR, as well as resulting evolutions, has always been aligned with our mission — to support the business of our Realtor members. There is nothing more that we can add to your story.”

What’s next?

If at least some NAR board members wanted to challenge the trade organization on this discrepancy, knowing now that Upstream will not be exclusive to Realtor brokers, what are their options, if any? NAR declined to comment on that question.

Russ Cofano, an attorney with more than 25 years of experience in the real estate industry, told Inman that, speaking generally in regards to nonprofit trade associations, it would be “extremely atypical” for an association to include a process in its governing documents to cover a situation where the board of directors makes a decision either without all material information or on the basis of receiving inaccurate material information.

Russ Cofano

Russ Cofano

He said that, in such a case, directors could have recourse through a corporate law concept called “Ultra Vires.”

“It means that the entity is prohibited from doing things outside of its granted powers or outside of the authority and process of its governing documents,” Cofano said, adding: “It’s conceivable that Directors and/or members of a trade association could have recourse if the organization took action as a result of a Director vote that was later deemed invalid.”

Frank doesn’t know what NAR directors could do about the Upstream vote at this point, though he does think that they “would be outraged” to find out that Upstream will be for Realtors and non-Realtors alike.

Bob Goldberg

“If we were misled, where’s the fiduciary responsibility of NAR to present the truth?” he said.

“NAR has some explaining to do. I’m anxious to see what our new CEO is going to do, how he’s going to react to this. Where’s the transparency?” he added. “[Current NAR CEO Bob Goldberg] has talked about changing the direction that Dale [Stinton] had been doing. I’m coming with open arms wanting that to be the case. I want NAR to be the best trade association it can be.”

Both Frank and Bull worried that Upstream will once again come to NAR for more funding.

“It was supposed to be 100 percent [self] funded by now, which it is not,” Frank said.

Lange said in August that Upstream will start charging brokers in the latter half of 2018.

Upstream has yet to launch in any form, though according to Lange it will soon launch a scaled-down “pivot” version of Upstream, in which multiple listings services (MLSs) feed listings to Upstream, rather than the other way around (which was its original intent).

Lange said the platform is “ready” with three MLSs: Arizona Regional MLS, NorthstarMLS in Minneapolis and NTREIS in Dallas, and that the next step will be to onboard pilot brokers in those markets “followed by any other brokerage that wants to participate.”

“Our team is coordinating those engagements as we must configure their rosters, integrate any new vendors and train their agents and back-office team members,” Lange said.

California Regional MLS (CRMLS), Realcomp in Michigan and West Penn MLS will be next, he added.

RPR did not respond to requests for comment for this story.

Were you at the NAR board meeting in May 2015? Please tell us about your experience below or send us an email.

Email Andrea V. Brambila.

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