NAR approves $12M/year zipLogix deal to offer free online transaction management to all Realtors

SAN DIEGO — After vigorous debate, the board of directors of the National Association of Realtors approved a proposal Monday to provide the trade group’s 1 million-plus members transaction management software from Realtor-owned firm zipLogix at no cost to members.

NAR’s three-year agreement with zipLogix charges the trade group $10 per member for the first two years and increases the rate by no more than the increase in the federal Consumer Price Index in the third year, according to NAR CEO Dale Stinton.

The deal is estimated to cost between $11 million and $12 million per year from NAR’s reserves. NAR’s membership count stood at just under 1.17 million at the end of October.

Starting in the first quarter, agents and brokers will have free access to the firm’s zipForm Plus software, transaction forms specific to their area, document storage through zipVault, and zipLogix’ transaction management system, zipTMS (formerly known as relay).

ZipLogix is a joint venture between the National Association of Realtors and California Association of Realtors subsidiary Real Estate Business Services Inc. (REBS). As of the end of 2013, NAR owned an approximately 30 percent interest in zipLogix, carrying a value of $4 million.

“The core root reason that we’re taking this direction is to keep our members at the center of the transaction,” Stinton said at NAR’s annual conference last week.

“The Internet is the world of permanent fighting. You never win. You just temporarily win a battle and go on to the next one. The transaction space — there’s no question in anyone’s mind that that’s where the next battle will be fought,” he added.

Giving Realtors both forms and a transaction platform will allow them to have an electronic contract to close in one place and provide direct value to their clients on their behalf, Stinton said.

“We think this is going to be a tremendous recruiting tool,” he added. “We think out of those million licensees out there that aren’t members, we’re going to be getting some of them back.”

Debate: the cons

The proposal was approved by a vote of 455 to 217, but not until after a spirited debate ensued among board members. Several dissenting members — though not all — were from Florida, where the state association has its own forms company, Form Simplicity.

Budge Huskey, a NAR director from the Orlando Regional Realtor Association and president and CEO of Coldwell Banker Real Estate, spoke against the proposal. Most Realtors seem to be satisfied with their transaction software provider, and zipLogix already has deep penetration, he said.

“This is a space which is currently being served adequately though other means. It seems to be a solution in search of a problem,” Huskey said.

“Quite frankly, the comments I get is ‘Isn’t this five years too late?’ It seems we’re spending money we don’t have…on people who don’t do business.”

According to Stinton, some 600,000 Realtors currently use zipLogix’ transaction forms software, and NAR expects to add 100,000 more to that figure with this deal.

One director noted that his own 9,000-member association currently pays $11 per member and thought NAR should be able to do better.

“I see it as a guarantee of a dues increase in the near future and a lack of competition in the forms area,” he said.

Another director said his biggest biggest concern was selling the product as “free” when it’s not free. NAR’s agreement with zipLogix does not include the broker version of zipForm Plus, zipForm Mobile, zipFormMLSConnect, or e-signatures from zipLogix Digital Ink or DocuSign (a company in which NAR has invested).

“Any member that gets this free service is going to have to pay an upgrade for e-signature, for mobile,” he said.

“The states that are providing these forms already as a profit service…we’re going to have to pay to contribute to our competitor,” he added.

When a director asked how much zipLogix’ mobile and e-signature solutions would cost, zipLogix President and CEO Joel Singer said, “We’ve been advised by counsel not to discuss prices.”

Stinton told state association executives yesterday the trade group hopes that state associations can cover the cost of the mobile and e-signature products using savings from the deal.

Matt Farrell, a NAR director from the Chicago Association of Realtors, said the transaction management startup Move Inc. recently purchased, Reesio, was a superior product even though zipLogix had had many more years to develop.

“My concern is we’re going to put our money in the last horse in the race,” he said.

Another NAR director from Florida, Summer Greene, said the deal did not “pass the smell test” for her.

“State associations have provided  superior solutions. Nothing is free,” she said.

“Zillow just bought dotloop, so is this a kneejerk reaction [to that]? I really don’t know what y’all are thinking.”

Debate: the pros

But several Realtors spoke up in favor of a response to Zillow’s acquisition to dotloop, some of them members of the California Association of Realtors, which partially owns zipLogix.

“Realtor.com years ago, because of our hesitancy, allowed competitors like Zillow and Trulia to gain a foothold,” said John Wong, a NAR director from San Francisco.

A director from Tennessee spoke in favor of the proposal, noting that “we beat ourselves up for being late to the game” and that “maybe we ought to look forward.”

Ted Loring, a NAR director from California’s Humboldt Association of Realtors, called the proposal “brilliant.”

“Any director that’s been around for awhile remembers the competition for the search space. It is brutal. What’s just starting is the competition for the transaction space. And NAR is promising to move in a timely manner there,” he said.

Zillow purchased dotloop not to make agents more efficient, but to acquire their data, Loring added.

“I don’t want them to have that data. I want Realtor data to remain in Realtor control and this is the best possible move to make that happen,” he said.

‘Our no. 1 competitor is beginning to look more like a trade association than a business’

Leading up to the vote, NAR leaders made clear — without actually naming their opponent — that the deal was also to counter what they see as encroachment from media and technology behemoth Zillow Group. The company acquired transaction management firm dotloop over the summer, raising concerns about Zillow Group’s role in the industry.

“I actually have a theory that our no. 1 competitor is beginning to look more like a trade association than a business,” Stinton told state association executives Sunday.

“The difference is they are asking people for a lot more money than we are.”

“The listings battle has shifted to the transaction,” Stinton added. “We all have to be moving forward in the same direction or they’re going to get us.”

Elizabeth Mendenhall to assertion that a portal (Zillow) is the only entity to have raised the RE bar: “Challenge accepted.” #narannual

— Andrea V. Brambila (@InmanAndrea) November 13, 2015

NAR is prepared to fund the zipLogix offering “in perpetuity” from NAR’s reserves, Stinton said, though the current agreement with zipLogix is for three years.

The trade group hopes to create “one, Realtor-friendly platform” by integrating with other initiatives under the Realtor umbrella, possibly including realtor.com, Upstream, Advanced Multilist Platform (AMP), and companies that are part of NAR’s REach tech accelerator, Stinton said.

“There is absolutely no doubt in my mind … that there will be plugins, places to symbiotically create even more member benefit,” Stinton said.

“Everything will be done in a way that they can all play together.”

ZipLogix’s zipForm software is already integrated with NAR-owned database Realtors Property Resource (RPR), NAR-backed moving app Updater and REach participant Deductr.

ZipLogix also has integrations with DocuSign, NuOffer, Offer Runway, BackAgent and SkySlope. The latter two are transaction management platforms. Singer said the company would continue to support such integrations.

“We recognize that we’re not going to be the only transaction platform on Day One,” he said.

“We already power a lot of transaction platforms with zipForms. We are unlikely to power dotloop, but very likely to power [Move Inc.-owned] Reesio.”

Singer, who is also CEO of CAR, emphasized zipLogix’ Realtor-friendly credentials when speaking to association executives at the conference.

“This company is 100 percent Realtor-owned. Our design and our goals are to increase Realtor profitability,” he said.

“Quite frankly, that limits what we can do. We have this amazing data. We will never sell that data to the detriment of our members.

“We recognize that it is the intellectual property that so many of you spend so much time on when it comes to creating those standard forms. That intellectual property is sacrosanct.”

Making digital transactions the ‘industry norm’

Competition between NAR and Zillow Group may benefit the real estate ecosystem in general. A seamless digital transaction is harder to achieve when the agent on the other side of the table isn’t on the same platform, or on any platform at all.

“While the actual [transaction] forms are standardized in given markets, the digital platforms on which those forms are completed and communicated with the other necessary parties in the transaction are not,” Russ Cofano, former senior vice president of industry relations for realtor.com operator Move Inc., told Inman in an email.

“In many cases, once an offer is submitted, the transaction takes various forms of analog and digital work product through disparate systems. This causes great inefficiency, and where there is inefficiency in today’s world, there will be innovation to solve that pain.”

Electronic, standardized forms are often mentioned as one of the top benefits of belonging to a Realtor association.

“With this announcement, it is clear to me that NAR, through its state and local organizations that vend forms, does not want the forms value proposition to members to be diminished,” Cofano said.

“Moreover, it’s an acknowledgement of the importance of a common platform to begin the sale process so that downstream digital collaboration on the actual transaction can become an industry norm. There is a lot of work to do but this is a giant first step in the right direction.”

Singer told Inman he hoped local associations would take this opportunity to digitize the forms they currently only have paper copies for, such as noise disclosures. ZipLogix would charge a one-time fee for the digitization, he said.

Competition and innovation

Cary Sylvester, vice president of industry development at Keller Williams, commended NAR for adding value to members, but also encouraged associations to continue to offer and support multiple platforms for forms.

“That’s the surest way to drive innovation, encourage competition and create opportunities for brokers and agents to differentiate themselves in the market,” Sylvester told Inman in an email.

Keller Williams’ eEdge platform is powered by dotloop.

Singer noted that funding from NAR will allow zipLogix to expand its product development in an environment where competitors are funded by venture capital.

“We’re going to be able to compete with more scale and increased and accelerated development,” he said.

ZipLogix is currently in talks with Form Simplicity, a rival owned by Florida Realtors. Singer said he hoped the negotiations would “come to a positive conclusion” by the end of the conference, but did not elaborate on the content of the talks.

NAR will give credit to all three tiers of the organization — local, state, and national — for the new member benefit, Stinton added.

“The virtuous benefit is that we’re all on the same platform and we don’t have the cost of duplicating all those others,” he said.

“I do understand the short-term pain, but I hope they’ll see the long-term gain.”

Email Andrea V. Brambila.

Editor’s note: This story has been updated.