RPR a drain on NAR finances

A national property database built by a subsidiary of the National Association of Realtors that was originally envisioned as becoming self-sustaining by 2012 has cost NAR nearly $58 million to date, and the trade group is now spending more than $18 million a year to sustain the effort.

As of today, Realtors Property Resource — a parcel-based, 147 million-property database built by a NAR subsidiary of the same name — is accessible to all 1 million NAR members at no charge. But NAR members who belong to multiple listing services that are not participating in the project are able to take advantage of only some of its capabilities.

When NAR announced the formation of Realtors Property Resource LLC in November 2009, the trade association was attempting something that had never been done at the national level: integrating public property records, residential and commercial, with information gathered by Realtors and others when properties are listed in MLSs and commercial information exchanges (CIEs).

The business model for RPR depended on selling analytic products like market reports and property valuations to non-NAR members such as lenders and government agencies. MLS data includes records on the selling price of homes — information that can take months to turn up in public records. Lenders, investors, mortgage guarantors like Fannie Mae, and government agencies like the Federal Reserve would pay to harness the power of the new database, RPR backers said.

While RPR has had some success in signing up MLSs to participate, initial expectations that the database would generate enough revenue to pay for itself have not panned out.

Dale Ross, the former MLS executive who was tapped as the company’s CEO, estimated in 2009 that the business would break even by 2012, and eventually generate $60 million to $80 million in annual revenue. After covering the RPR’s operating expenses, all profits — originally projected at $8 million for 2013 — would go back to NAR to repay its capital investment.

RPR went live in September 2010. That year, RPR generated $2,000 from analytics sales. Analytics sales generated $21,173 in revenue last year. RPR President Marty Frame declined to provide revenue figures for 2012, but said they would be revealed to stakeholders at NAR’s annual meeting in Orlando this month.

“Very little revenues have been generated to date, which is disappointing,” NAR CEO Dale Stinton told Inman News in an email.

Revenue forecasts were based on “gaining a national footprint for detailed property information along with real-time data from MLSs,” Stinton said.

A few months after the company’s formation, RPR executives said they hoped to sign up half of the nation’s roughly 900 MLSs by the end of 2010. As of the end of October, RPR had agreements in place with 425 MLSs and CIEs representing about 65 percent of NAR’s 1 million members.

Despite current MLS adoption, “there are still 15-20 large MLSs who have not agreed to participate with RPR,” Stinton said. “This has prevented us from achieving the national coverage required by the big banks and federal agencies who indicated a strong desire to purchase these best-in-class, uniquely sourced analytics.”

But that has not deterred NAR from its responsibility to goals outlined in its strategic plan, including providing Realtors timely, cost-effective access to uniform real property information, Stinton said.

Webinar screen shot of RPR property detail summary page 

Realtors who are members of MLSs that license their active and historical listings data to RPR are able to see that data aggregated with public records data to create property and neighborhood reports, compare listings, generate an automated property valuation — called a Realtor Valuation Model (RVM) — and see market trends calculated from MLS data.

Webinar screen shot of RPR market trends heat map

Realtor members of non-participating MLSs will have more limited access to RPR. But like members of participating MLSs, they can access tax assessment and public property records; records on mortgages, liens and foreclosures; school boundary data; flood maps; aerial and geocoded imagery; and demographic information.

Because MLS data is often more accurate, current and detailed than public records on file with county recorders’ offices, RPR intended to produce higher-quality automated property valuations (AVMs) and market reports it would then sell to lenders, government agencies and secondary mortgage market investors.

RPR offers third parties two analytics products: the RVM and a product called “Match and Append” in which third parties give RPR a list of properties and RPR flags the status of those properties, including list prices.

“The disappointment is far less about the revenue shortfalls, and far more about the fact that this nationally scaled data could have and still can be a tremendous, reliable, real-time source of market information for the big banks and the federal agencies,” Stinton said.

“They tell us, in plain terms, that this information could considerably speed up the short-sale/foreclosure pipeline clog that has existed for several years and continues to be among the most frustrating aspects of our members’ daily business lives.”

The competition

Competition from a rival initiative by CoreLogic has affected RPR’s ability to close coverage gaps crucial to selling the analytics its business model depends on.

RPR has little or no coverage in seven of the 20 major markets covered by the Standard & Poor’s Case-Shiller 20-city composite: New York City; Chicago; Cleveland; Dallas; Las Vegas; Portland, Ore.; and Seattle.

In at least four of those markets, MLSs have signed deals to license their listing data on an exclusive basis to CoreLogic’s rival initiative, Partner InfoNet: Midwest Real Estate Data LLC (MRED) in Chicago; Northern Ohio Regional MLS in Cleveland; North Texas Real Estate Information Systems Inc. in Dallas; and the Greater Las Vegas Association of Realtors (GLVAR) in Las Vegas.

CoreLogic declined to comment on whether it had signed agreements with major MLSs in New York City, Portland or Seattle. Partner InfoNet agreements typically last three years; RPR agreements are for one year.

Like RPR, Partner InfoNet creates analytics to sell to third parties based on MLS and public records data. Unlike RPR, however, Partner InfoNet offers MLSs a cut of the revenue generated from such sales with more generous splits for those that provide data on an exclusive basis.

Thus far, 87 MLSs representing about 500,000 real estate agents and more than 1 million active listings are feeding data to Partner InfoNet, with 51 of them on an exclusive basis.

Ben Graboske, CEO of CoreLogic MarketLinx, said most MLSs have signed exclusive deals at least partially in order to receive bigger royalty checks. CoreLogic offers exclusive MLS partners up to a 40 percent revenue split compared with up to 17 percent for non-exclusive partners.

At no charge, CoreLogic also offers its exclusive partners an AVM that incorporates MLS data, called RealAVM; listing and market activity reports; and a data licensing monitoring service that looks out for unauthorized data scraping.

“When we have an exclusive MLS participate then we have the ability to determine if there are violators of that MLS’s data rights, whereas if it’s not exclusive if we come across that MLS’s data in the market it’s impossible for us to know whether or not that data is being legitimately distributed,” Graboske said.

He declined to disclose how much revenue Partner InfoNet has generated, but said the program has been cutting checks to MLSs every month since February 2011.

Chicagoland MLS MRED signed up to Partner InfoNet on an exclusive basis in mid-2011. MRED CEO Russ Bergeron declined to share how much revenue the MLS had received from InfoNet in the past year, but said the program did give the MLS a revenue stream.

“It’s not a huge amount, but the fact that they are sharing is kind of a competitive edge they have over the RPR folks,” he said.

CoreLogic also offers other products popular with MRED members, Bergeron said, including its Realist public records tax database and its MLS Data Co-op tool — rolled out by MRED last week — which allows MLSs to share listings with up to 75 other participating MLSs.

The vast majority of the 87 MLSs participating in InfoNet are CoreLogic customers in some other capacity as well, Graboske said.

Graboske declined to name any of InfoNet’s analytics customers, but said most were lenders and government agencies. InfoNet’s most popular products are a report that validates comparable sales around a subject property, a listing history report, and a market trends report, he said.

“We continue to grow our subscribers to the Partner InfoNet solution. They are very happy with the quality of the data, the fact that they’re able to get it from a single source, and, as much as any other reason, for the fact that it provides a highly compliant solution for them,” Graboske said.

Some data providers offer outdated listing data or have questionable rights to scraped listing data, he said, and awareness of those quality and compliance issues is growing among risk managers.

“When they’re considering data sources it’s becoming a big deciding factor the kind of source they will use,” he said.

“They have come to the conclusion that CoreLogic’s InfoNet solution has very robust data rights that enable them to be very complaint and lower their risk,” he added.

Graboske noted that the market for the kinds of analytical data products that InfoNet produces is “very new” and the awareness of compliance risk is boosting demand, particularly in the last three to six months.

“All of the big lenders and government agencies are very interested in this data. It’s hard to size the market … but the demand is absolutely there and the demand is absolutely growing,” he said.

Another rival data licensing initiative is a search platform called “Find” from Realtor.com operator Move Inc. In exchange for sold and off-market listings data that may appear on Realtor.com and Move’s other consumer-facing sites, Move offers MLSs access to a database of content from Move’s network of sites.

The “Find” platform also includes a “natural language” search interface that allows MLS members to search for listings using keywords, cross reference listings with school district boundaries, environmental data and other contextual information, and facilitate the sharing of listings between cooperating MLSs, Move President Errol Samuelson said when the tool was announced. Move does not pay MLSs for their listing data.

Since Find’s launch in September 2010, 55 MLS representing more than 376,800 members and nearly 1 million listings have signed up, Move said. The company is in discussions with an additional 66 MLSs representing 386,860 members. The most recent MLSs to go live have been the Reno, Nev.-based Northern Nevada Regional MLS Inc.; the Charlotte, N.C.-based CarolinaMLS; the Plattsburgh, N.Y.-based Adirondack-Champlain Valley MLS; and the Kingston, N.Y.-based MLS of Ulster County.

MRED said the MLS will roll out Move’s Find tool later this year. At the time MRED signed up for Partner InfoNet, Bergeron harbored hopes that MRED could also partner with RPR. MRED and RPR disagreed, however, on how broker permission would be obtained to license and repurpose listing data. MRED has had a long-standing “opt-in” policy for brokers, Bergeron said, but RPR required an “opt-out” policy.

“We told RPR we’d be happy to participate in RPR if you’ll honor our opt-in policy, but they said no,” Bergeron said. Most MRED members would probably opt-in, he added.

Jeff Young, RPR’s senior vice president of operations, said none of the company’s 425 MLS partnership agreements thus far had included opt-in language. The opt-out policy “is working very well with all of these other partnerships and we believe this is the best way to service agents and brokers within MRED,” he said.

He added that allowing an opt-in policy would mean it would take more time for a majority of listings data to appear on RPR. Realtors expect to have “a complete market picture” when accessing a system, Young said.

Frame said in MRED’s case, “plain and simple, it just means that there’s going to be a (coverage) hole and that’s going to be what it is.” He said given the size of the Chicago market, that gap will likely affect RPR’s analytics sales, but “we don’t expect things to remain the same forever.”

Bergeron said only a handful of the MLS’s 35,000 or so members had asked about RPR, though that may change now that members will have limited access to RPR and will get a taste for what it offers.

“We’ll make sure our members are aware of it. They can still get some value from it even though our listings aren’t in there. We’ll wait and see if all of a sudden there’s this huge demand,” he said.

But, he added, “the demand for what RPR offers may not be as great here because we have quite an extensive product offering,” including not just other CoreLogic products, but a slew of property information, transaction assistance, marketing, analytics, data and other tools.

Bergeron said he’s heard anecdotal stories from other MLS execs that RPR usage among their members is “very, very, very low.”

“I think a lot of MLSs offer so much today that competing with the MLS may be kind of tough. And a lot of people don’t like to try new products — that’s just the nature of the beast. Because once people get set in how they do business, they don’t like to change,” he said.

One problem with RPR, he added, is that every Realtor has access to it. “It’s hard to differentiate yourself in the marketplace if everybody’s using the same product,” he said.

Regardless, he said MRED would “like to work this out. We’d like to offer the best possible tools available so (RPR) fits with our strategy.”

MLS coverage

Growing MLS coverage has been “a slog,” Frame said. At the beginning, Frame segmented MLSs into three groups: early adopters who would be willing to try out RPR; a second tier who may or may not be supportive of the endeavor; and a third group who have a variety of objections to participating in RPR. He believes RPR is now dealing with the third group.

“Every market’s got a different issue. Sometimes (the reason) is more historical and doesn’t have anything to do with RPR. Some folks feel like they want to do it a certain way and that’s not our way of doing it,” Frame said.

For example, the board of directors of the Northern California-based Bay Area Real Estate Information Services, Inc. (BAREIS) recently concluded that a 1976 California Supreme Court decision, Marin County Board of Realtors Inc. v. Eugene Palsson, bars the MLS from licensing data to RPR because the database is not accessible to BAREIS’ non-Realtor members.

“The gist of (the court case) was that MLS information … had to be provided equally, without discrimination, to both Realtors and non-Realtors,” said Gene Laico, chair of BAREIS’ MLS committee.

“Our understanding is that it would apply to any MLS in California, which would mean that certain MLSs would not be able to provide certain MLS information to Realtors rather than non-Realtors.”

No other California MLS, most of which have both Realtor and non-Realtor members, has declined licensing for this particular concern, said Ohan Antebian, RPR’s vice president of industry relations. About 85 percent of California’s approximately 160,000 Realtors are represented in MLSs that are live with RPR, he added.

BAREIS’ Realtor members will still have access to RPR through the database’s designated website.

Frame said RPR meets with leadership, staff and members of hold-out MLSs regularly. “We hope and we think that someday they will come along,” he said.

RPR has made some strides in terms of coverage. It now has signed agreements with major MLSs in 13 of the 20 markets in the Standard & Poor’s Case-Shiller 20-city composite:

• Atlanta (where Georgia MLS is live);
• Charlotte, N.C. (where CarolinaMLS is in the launch queue);
• Detroit (where MiRealSource MLS is live);
• Minneapolis (where NorthstarMLS is live);
• San Diego (where Sandicor is live);
• San Francisco (where the San Francisco Association of Realtors MLS and Northern California Commercial Association of Realtors are in the launch queue and East Bay Regional Data Inc., Bay East Association of Realtors, and Contra Costa Association of Realtors are live);
• Tampa, Fla. (where the Pinellas Realtor Organization is live);
• Boston (where MLSPIN is live);
• Denver (where Metrolist is live);
• Los Angeles (where several MLSs are live, including the California Regional MLS);
• Miami (where the Miami Association of Realtors is live);
• Phoenix (where the Arizona Regional MLS is live); and
• Washington, D.C., (where MRIS is live).

Usage

According to RPR, of the Realtors who have access in current, live markets, 25 percent come to RPR on at least a monthly basis. Of that 25 percent, 65 percent come at least twice a week, and of that 65 percent, 20 percent use RPR daily or every other day.

In the real estate industry, there’s a segmentation between technology users of any stripe and non-users, Frame said. For instance, historically some 30 to 40 percent of MLS members don’t even sign in to the MLS every year, he said.

“We’re swimming upstream against a sea of habits. If you’re exposing people to it and they don’t come back, you’ve a product that’s not working,” he said.

Therefore, Frame said his preferred usage measurements for RPR are the rate at which people get exposed to the product and the rate at which engagement stays high after they’ve been exposed.

“Our repeat users come back on average three times a week. We have to get more and more people exposed to what is available to them. The product tends to perform nicely after that happens,” Frame said.

He said the most popular activity for agents on RPR is, “by far and away,” pulling reports. “They’re very attractive, compelling and full of information,” Frame said. RPR offers property detail reports, seller’s reports, market activity reports, and community reports that combine MLS data and public records information for Realtors in participating MLSs; reports for Realtors that are part of nonparticipating MLSs do not include MLS data.

Screen shot from RPR seller’s report 

The Spokane Association of Realtors in Washington state, Denver’s Metrolist, and Sunnyvale, Calif.-based MLSListings have been particularly energetic in marketing RPR to their members and providing them with training, Frame said.

He said that about 40 percent of Spokane AOR’s 1,350 members use RPR at least a couple of times a week.

Michael Bentson, the Spokane trade group’s IT manager, said the association didn’t have ready access to, and therefore could not provide, analytics on how many members used RPR or how often, but said usage was high. He attributed that to the “single sign-on” feature of RPR provided by Clareity Security. About 60 of the 425 participating MLSs have single sign-on, according to Frame.

“RPR is just one click away from our listings without the need for members to log in separately. This, more than anything, has driven the high usage of our members,” Bentson said.

“This is a very quick, easy way for our Realtors to have access to all the data in one place,” he added.

According to Metrolist data, 2,041 (13.6 percent) of their 15,000 members visited RPR in the past 30 days, averaging 2.6 visits each. The average visit lasted 8 minutes, 45 seconds with 5.82 page views on average per visit. Three-quarters of the visitors were repeat users. The vast majority of the traffic (83 percent) to RPR came directly from the MLS.

In May, Metrolist integrated “deep links” to RPR from its MLS, allowing its members to go directly from an MLS listing page to the matching RPR property detail page from the MLS system.

Screen shot of Metrolist listing page 

“Due to the deep links from our MLS listing detail pages, the vast majority of page views are individual property detail pages within RPR,” Metrolist spokeswoman Melissa Olson told Inman News.

Screen shot of corresponding property detail page on RPR

In California, MLSListings was with RPR from the very beginning, first beta testing the product in the spring of 2010 and then becoming the first MLS to go live in September 2010. Thus far, MLSListings has renewed its one-year agreements with RPR twice.

MLSListings has about 15,000 members, about 900 of which the company believes are not Realtors. In the four months between June 10 and Oct. 28 of this year, 3,200 (or just under 23 percent of the Realtor subscribers) visited RPR, which MLSListings President and CEO Jim Harrison described as “quite a bit.”

“When they apply themselves to it they do find it pretty valuable,” he said.

The RVM and comparative market analysis tools, as well as the property detail reports, are particularly popular, Harrison said. “The reports make them look good to their clients.”

Those 3,200 people averaged visiting RPR only three times in four months, however.

“That’s not a lot of traffic, but all I can do is look at the stats of what we have,” Harrison said.

He speculated that usage reflected business activity. They use it “when they have a need for it, maybe when they have a listing presentation. It really has a huge feature set,” Harrison said.

He said it’s hard to tell whether RPR adoption is growing among MLS members. “It looks like it’s kind of dying down, but it may be because business activity has been dying down as well,” he said.

On average, members spent 6.5 minutes on the platform per visit. “When they go into the MLS system, they don’t spend a lot of time there either,” Harrison said. They get what they want from it and go.

MLSListings’ Realtor members log in to RPR from the MLS through a single sign-on interface in which members type in their NRDS (National Realtors Database System) ID when they first access the system and then access RPR by clicking a button.

“I think right now the biggest (usage) hurdle is that it’s something you have to log in to and go through the registration process,” Harrison said. “But RPR is working with us to find a solution to that issue.”

In the first few months after RPR was announced, RPR execs said there was a potential for MLSs to save a combined $25 million to $50 million a year by participating in RPR.

Harrison said he didn’t think MLSListings had saved any money because of RPR — the MLS has kept its subscription to CoreLogic’s Realist product, for example — but he said he saw some opportunities for RPR integration into the MLS that could save the MLS money in the future. He’d like the ability to pull RPR reports and automated valuations right from the MLS, for instance — features the MLS might otherwise have to pay for elsewhere.

Frame said Harrison was not the only MLS exec to ask for such connectivity between the MLS and RPR and that’s something the company is working on.

Harrison is on RPR’s advisory board and says RPR’s growth and rate of MLS adoption is “pretty impressive.”

“If you really want to overpower the consumer and have more data than the consumers … you can really apply yourself to this product and be a lot more informed,” he said.

In his opinion, the $58 million NAR has spent on RPR is “money well spent,” he said, because it’s “a massive project to build” and it’s a really huge tool for our customers.”

“If we want Realtors to have the tools to do the best job they possibly can, I think it made a lot of sense for NAR to venture” into this area, he said.

“$58 million seems like a lot of money, and it is a lot of money, but it takes $12 million a year to run our MLS system,” he said. “That’s a fraction of what it costs to run (the 900 or so) multiple listing service systems” nationwide.

RPR was originally slated to launch to all Realtors, regardless of MLS participation, in the fall of 2010. That rollout date was later postponed to fourth-quarter 2011, and RPR is only now launching to all Realtors today.

Young said that at the beginning of 2011, the focus of RPR shifted to integrating MLSs feeding listings data into the database and providing their members training and support.

“As we got into the nuts and bolts of what it takes to provide the support we decided to do a phased geographic launch” as MLSs signed up, he said.

“As we got to May and June of this year, we realized we were about to have about 70 percent of licensed Realtors (participating) and said now is the time to expand … and make sure the other minority percent of the Realtors are able to get the benefit. So, it’s really more of an evolution about how best to get it to members.”

“We didn’t just launch it to a million people and then enhance through local partners,” he said, but rather built up relationships with individual MLSs.

“It took a little bit longer, but doing things right does take a little bit longer and I think we really did it right,” Young said.

Frame added, “Your job is to be flexible. You can’t be rigid and say it’s my way or the highway. People who have failed in these licensing endeavors, it’s generally because of that.”

While RPR has fallen far short of its revenue goals, its backers say it has achieved its primary goal of offering Realtors a member benefit at no additional charge that helps them do business. RPR helps Realtors stand out as experts who know more than their Internet-savvy customers, supporters say, and offers Realtors a comprehensive source of property information that is available in one place and is an alternative to information that is already publicly available from various third-party vendors.

“The whole point to RPR is to offer Realtors a dynamic set of technology tools so they can be as informed or better informed as consumers and … position themselves as experts in the market,” Young said.

He noted that RPR has not caused NAR dues to increase and estimated that the service costs members $18 a year in dues, which given that a single property tax card could cost $5, makes it easy to see whether members are getting their money’s worth, he said.

“If you see for your $18 a year something that benefits you and helps you put a deal together, that shows RPR is of value to you,” Young said.

“It’s very important for us to build a business model that funds RPR as a NAR asset, but for us what is important is that it’s a member benefit,” he added.

NAR wants to make sure members are benefiting from the tool, “and if they’re benefiting, that it’s funded properly,” Young said. “Now let’s just grow it to what it has the potential to be,” he said.

The tool’s value is apparent in that only two MLSs have not renewed their agreements with RPR, he said.

“We define success as ‘Does it help an agent with their clients and customers? Does it save them time and money? Does it empower them that it’s equal to or better than the research that is available to consumers on the Internet?’ and the answer to that is absolutely,” Young said.

All along, RPR has been rolling out supplemental tools to its six constituents — agents, brokers, MLSs, appraisers, associations, and commercial professionals — at no additional charge, he said.

“They don’t add to revenue, but they add to value for Realtors,” he said.

RPR recently rolled out a commercial application in beta and last year launched broker tool sets. By second-quarter 2013, RPR will launch appraiser tool sets and association dashboards that will allow associations to see usage metrics and market statistics, Young said.

As RPR launches to all Realtors, the company sees the opportunity for agents and brokers to become advocates of the tool with their MLSs. The launch also allows individuals or associations that had previously been interested in RPR to finally use it for their business, Young said.

“There’s a real interest. A lot of associations really want to add this into their complement of resources … whether or not their MLS is involved,” Young said.

The most recent MLS to sign on with RPR is the Houston Association of Realtors. HAR — the second-largest local Realtor association in the country with 24,000 members — had been in negotiations with RPR since 2010.

“The membership at the very beginning was very cautious about what RPR was. With different projects that (NAR has) had, we didn’t know if it was going to be a long-term deal,” said HAR Chairman-elect Danny Frank.

But where RPR was a couple of years ago is not where it is today, Frank said.

“Today I think it is a viable product that will do our membership good. It’s evolved. It was a very minor tool when it first came out. It wasn’t in my opinion something that was useful by everyone, but now I think that it is … just because of the tools, the functionality, the usability factor, the ease of use, the data it will supply to an agent to make them more informed,” he said.

“It’s a very useful tool that our membership will come to find they will be using a lot. It started off as a very young child and ended up as a thriving adult product now. It just grew up.”

RPR expenses

NAR got the RPR project off the ground by acquiring a data platform from Lender Processing Services Inc. to assist its development of the RPR database.

The 2009 LPS technology acquisition cost NAR $12 million. RPR received capital infusions from NAR of about $10.9 million in 2010 and $16.6 million in 2011, primarily for startup and operating expenses, according to a finance committee report presented at NAR’s midyear meeting in May. NAR’s board of directors approved $18.5 million for RPR in 2012 and another $18.5 million was proposed for 2013.

Thus, by the end of this year, NAR will have spent some $58 million on RPR with that number possibly going up to $78.5 million at the end of next year. The funding of RPR comes from NAR’s operating budget, NAR said.

Based in Chicago, RPR’s biggest expense in 2011 was salaries and fringe benefits for its 42 employees, a cost of $5.57 million; its second-biggest expense was technology services: $4.92 million.

Any revenue generated from sales of analytics is split equally between RPR and LPS.

Frame said RPR has not given up on achieving profitability someday, but whether that will be anytime in the next few years depends on further MLS adoption to boost RPR coverage.

“The question is how marketplace involves, how our product involves. It’s a dynamic model, so like with any startup you do what you’ve got to do and you shift where you need to shift strategies with owners and partners,” Frame said.

But overall, there’s been a lot of progress, he said.

“I don’t think you can point to any other endeavor in our industry other than Realtor.com that has signed up so many other MLSs … and had so much data involved,” Frame said.

“Nobody else, other than Realtor.com, has come close in terms of MLS participation. Having 65 percent or so (of Realtors) is a big accomplishment. Did it happen later than we thought? Yes. Are we going to keep going? Sure.”