REALTORS® Property Resource: A possible business model?

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.)