I have had numerous conversations with folks regarding the REALTORS® Property Resource (RPR), NAR’s multi-million dollar initiative shrouded in secrecy. Until now, my view has been that there is no business model for it.

NAR says that RPR, which will operate under NAR’s REALTORS® Information Network (RIN) subsidiary, will give brokers better sources of data than consumers have and to make them the consumers’ ‘trusted advisor.’ NAR is supposed to announce the RPR business plan in November in San Diego. I believe two big problems face RPR: (1) NAR has trouble executing real business plans and (2) RPR has no viable business model.

As for the trouble executing, NAR is famous for the fact that RIN itself crashed ignominiously in the late 90s after trying to build some kind of national technology service thing (I was never sure what it was going to be) – the only “good thing” that came out of it was Realtor.com. (Not everyone agrees that is a good thing, either.)

But I have to acknowledge this case might be different, as the “Two Dales” – Dale Stinton, NAR CEO, and Dale Ross, former CEO of MRIS – behind RPR have some pretty impressive accomplishments behind them.

Hard so see the business model

As for the business model, I could not think of a way that it could work. Here’s why: Imagine you are a real estate broker in St. Louis. NAR promises that RPR will deliver to you much better parcel-based property data than consumers can get online. But chances are you are already getting access to property tax data from your local MLS, a service for which your MLS pays a third party, and the cost of which is included in your periodic MLS fees. Chances are, too, that if you want more data than you are getting, and if you were willing to pay for it, your MLS would already be providing it. So, RPR is offering something for which you have not been willing to pay until now along with stuff for which you are already paying your MLS. My guess is, you would decline to purchase those services if RPR offered them to you for a fee.

If you are a broker in Minneapolis, Minnesota, or Hilo, Hawaii, matters are worse. There, the MLSs have their own tax databases, in which they have built the best parcel-based data available for their areas. The only place RPR can get data as good as the MLSs provide to brokers is from the MLSs. Assuming RPR licenses from the MLSs, who will want to ‘buy it back’ from RPR? All the brokers in those MLSs already have access to it, and the cost is built into the MLS fees.

The upshot: NAR will spend big bucks offering these services and the money will have to come from somewhere: reduced costs from somewhere in the REALTOR® community; increased costs to the REALTOR® community; or money
from outside
the REALTOR® community.

I can’t imagine any reduced costs, in fact, quite the opposite seems likely (subject for another post, if we have time). There will be quite the outcry if NAR raises dues to make this a ‘core service.’ And I couldn’t think of who outside the REALTOR® ‘family’ NAR could get to ‘sponsor’ the RPR with enough money to make it fly – certainly no one out there would want to buy RPR’s parcel-based property tax record (and related) data, as it’s already widely available, much of it for free on the Web.

So, I had written off RPR. But now I wonder…

REBIG redux?

RPR might be able to get the money to pay for this using a business idea that caused quite a stir a few years back: Licensing MLS data to businesses outside of the REALTOR® membership base. Mortgage companies, credit agencies, insurance companies, and others pay a fortune in fees every year to information service providers to help them predict property values, portfolio losses, etc. Real-time MLS data is almost a Holy Grail when it comes to these types of predictions and valuations.

In the early part of the decade, REBIG LLC (a joint venture of several MLSs) attempted to aggregate MLS data and license it for exactly these purposes. REBIG did not fly. There were many problems with it; key was that many brokers hated the idea that someone would profit from their data. But the projected revenues were impressive: According to some early projections, by the third year of operations, REBIG was supposed to be making more than $150 million per year in licensing revenues from MLS data. But if those numbers were right (even if they were twice the right number), NAR could provide very sophisticated services to MLSs, get MLS data from them aggregated at the national level, and make a handy profit in the process.

Think about the strategic implications if NAR could pull this off. “If” is the key word, though.

Getting brokers and MLSs to permit RPR to license MLS data could be tough. If RPR is not an MLS (and NAR says it will not be, at least for now), providing MLS data to it will be a use of MLS data that is not part of the core purposes of MLS. Under NAR policy (which I assume RPR would honor), listing brokers have to be given an opportunity to opt out of any such use. Some brokers would choose to opt out or would work hard to keep their MLSs from signing licensing deals with RPR, even if there were clearly defined benefits flowing back from NAR. That’s because listing brokers very naturally dislike the idea that others will profit from their listings.

So RPR as REBIG redux might not work. But I had not considered it previously because I was blinded by my own experiences with REBIG. I wonder what other business plan possibilities for RPR I’ve overlooked. With smart people and lots of money at their disposal, the Two Dales may yet have something very interesting to tell us in San Diego.

So now, all of a sudden, I’m kind of curious and excited to see what they announce. I’m trying to be more open to the possibilities of RPR, too. What do you think?

-Brian

(Disclosures: I was an employee of REBIG for nine months and did some legal work for its founders early in its formation. My firm has done legal or consulting work for some of the MLSs to which I referred above.)

Reader Interactions

Comments

  1. That was a fun brainstorming session. As discussed, we could take the scenario further – for instance once all the MLS data is in one place, create value-add features, at some point add MLS-like features, then turn on direct listing maintenance…

    And in exchange for the data usage, what if the core (National MLS) service were free?

    We can spin these scenarios out far and

  2. A couple of possibilities, both centering on the border-less (or national) scope of RPR: (a) RPR could provide an API to MLS vendors for including property records in the MLS system; and (b) RPR could provide agents access to MLS data they otherwise wouldn't have through their local or regional MLS.

    Even though both already exist in some form, they don't exist in border-less

  3. @Mike: I guess my question has never been, "Can RPR add value?" It has been, "How will RPR be paid for?"

    You said "RPR could provide agents access to MLS data they otherwise wouldn't have through their local or regional MLS." That's true, but the question is whether brokers in the local market will be willing to pay RPR for that service when they

  4. One of the coolest notions about the whole idea is we really can only scratch the surface with a standardized national database of real property.

    From an investment vehicle standpoint, I would imagine a solid business plan outlining the initial capitalization, on-going expenses, and potential near-term revenues would sell very well in the venture world.

  5. @Troy: I think U R right. But I wonder if NAR will avoid VCs and their focus on taking company to IPO or acquisition.

    If NAR wants strategic value out of this, maybe it will keep itself directly in control (unlike what happened when NAR took REALTOR.com into the public-company space)?

    -Brian

  6. WOW is this a real world business model? The current business model for most MLS’s in the country is paid for by a broker and all agents licensed with the broker type of revenue stream. Even if we could get 800 MLS’s, 100's of vendors and 1,000,000 REALTORS to agree, how would the model survive as a pay for service? Today I'm guessing only one third of the membership actually uses the

  7. I see the MLS subscriber as a key participant but paying a small piece of the revenue. One step forward, imagine a world where the MLS subscriber was actually compensated directly for updating and maintaining accuracy of the information. Kind of 'adopt a highway' program with direct pay-for-performance.

    The commercial aspects of this homogenized data is almost too vast to

  8. I’m looking at RPR from another perspective: that is, the plan is a giant step for NAR to free itself from the limitations of being a geography-based association in an internet-centered world. NAR was founded on a ‘market area’ structure which has been outdated for more than 50 years. It is also limited by a real estate licensed-based membership model, and we all know that the real estate

  9. MLS data is ridiculously valuable. The richest, cleanest and most up-to-date information available related to real property in the world. While the primary reason this quality emerged is because it provides brokers with a significant value-add, I've long felt that brokers, associations and MLSs are leaving serious $$$'s on the table that could arise from packaging the data to third

  10. As a former colleague at REBIG (hate to admit it most times) I have to say I have similar thoughts regarding what the end game thinking is for RPR and how they may intend to monetize it. Should be interesting in San Diego.

    I also agree with your comments regarding the value to brokers and agents, in that, I don't see any real, new compelling values that are not being provided

  11. As an MLS that recently provided their members public record/parcel based data for all 100 counties in the state, and did not hit their members up for any additional fee's to access, I also wonder what benefit will be derived from providing the 'national' data based on the old adage of "Real Estate is Local". Although that cliche may have lived and died, I realize that many

  12. An MLS exec suggested privately that RPR could do a trade with MLSs:

    1. RPR signs national licenses with public records providers, buying out their MLS contracts and licensing their data (a) for RPR's own system and (b) to sublicense to MLSs.

    2. RPR GIVES public record data to MLSs, substantially reducing their costs or providing a new valuable service, if MLS does not

  13. Thanks for mentioning our MLS here in Minnesota. We do have a record for every piece of property at least in the 13 county metro area through our property tax data base. We have all the data we need. sadly they did not include a report writer. I have been able to get all of the charts and graphs I need for my blog by exporting the data into MS excel. Most agents don't know how to do all of

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