"If a spectacle is going to be particularly imposing I prefer to see it through somebody else's eyes, because that man will always exaggerate. Then I can exaggerate his exaggeration, and my account of the thing will be the most impressive." Mark Twain
Since NAR's announcement of RPR, I have heard and read mostly churn: the Pollyanna churn, the Chicken Little churn, and the consultant churn. Rob Hahn even reported RPR's death. To paraphrase Twain, I consider that report an exaggeration, but I believe the reports of RPR's birth are exaggerations, too.
In fairness, Rob today published an excellent summary of statements the RPR players have made. The fact remains: we know so very little about RPR, mostly rumors and posturing. Even the statements of the RPR leaders cannot be taken at face value until it actually delivers a service and a contract for MLSs and brokers to sign. While MLSs and brokers wait to learn details, I suggest two useful exercises.
What we know (or think we know) about RPR
You can see NAR's press release regarding RPR and the webinar where NAR announced it. My post of October 19 provides background, and its speculation regarding business model proved more accurate than I had expected. Rob's post today is a great summary of statements made so far about RPR (and I expect it will be updated from time to time).
Here are a few things that we do know:
- NAR says RPR will be a NAR member service, with part or all of its capabilities available to all REALTORS® with no fee.
- RPR says it wants MLS data to create "derivative products," so far principally described as property valuation tools that RPR would sell to players in the mortgage lending industry. (RPR has not mentioned derivative products for other industry segments, including home insurance, retail marketing, etc.)
- RPR says its revenues from derivative products will be $60-80 million per year, which will allow it to break even after three years.
- MLSs and listing brokers will have to consent to RPR using MLS data for derivative products. (NAR General Counsel Laurie Janik has confirmed this publicly.)
- Some folks perceive the RPR user interface and the data behind it to be potentially very valuable to REALTORS®.
What we do not know about RPR
Among other things, we do not know:
- The licensing terms RPR will offer MLSs in return for MLS data – to which uses RPR may put MLS data, duration of agreement, duration of license, restrictions, revenue shares, etc. If RPR asks your MLS to license its active and sold data to RPR, how long is the term of that agreement? When the agreement ends, does RPR stop using your MLS's data, or is the license perpetual? Can RPR use your MLS's data for any type of derivative product, or just specified uses? Will derivative products expose actual listing records to mortgage lenders and others, or will they just provide conclusions based on analyses of those records, or something else? If brokers determine that a derivative product is having a destructive impact on their real estate market, can they opt out of that product? Can the MLS?
- What kind of deal RPR will propose to brokers if their MLSs refuse to send listings to RPR. If an MLS says 'no' to RPR, RPR could seek listings directly from brokers in that market, but what incentive do the brokers have to cooperate? What kinds of deals might RPR have to offer brokers to get them on board?
- Whether there are other businesses willing to offer MLSs and brokers deals in return for the right to use MLS data in their derivative products. (See my further comment below.)
- Whether brokers will attach such value to RPR that they will permit RPR to profit handsomely from brokers' listings.
- Or even whether MLSs have to license MLS data for their broker participants to get all the benefits of RPR. (I noted in a comment to an earlier post that RPR might offer MLSs a quid pro quo.)
If RPR has competitors for MLS data and derivative products, the landscape could be very different. RPR CEO Dale Ross says there will be no revenue share for MLSs, but I assume that's just his opening position. After all, I remember when Realtor.com said it would charge brokers $3 per listing to put their listings on the web, then did an abrupt about-face when another national aggregator offered to pay MLSs for listing records. Ironically, that aggregator was Cyberhomes.com, then a listings website operated by MLS vendor Moore Data (now LPS). (Technology from the current incarnation of Cyberhomes will be at the core of RPR.) Perhaps First American, the only other national provider of real estate public records and related analytics, will have an offer for MLSs and brokers.
MLSs and brokers right now should...
Reserve judgment and ask lots of questions. I recommend two further exercises:
- Shape RPR's terms before it makes its first offer to your MLS. Think and talk with your peers and advisors about terms you would like the RPR 'deal' to include and let RPR know. Consider all the ways RPR could conceivably use listing data; how you would distinguish acceptable classes of derivative products from unacceptable; whether you will accept the RPR system and services as sole payment for your listing data or will expect a revenue share or licensing fee; how long the relationship will last; what will happen if/when it ends; and others.
- Talk to other companies that develop and sell analytical tools that could benefit from the incorporation of listing data. Any real estate broker will tell you that you can get a better price and terms as a seller in a multiple-offer situation. That gives you leverage if and when RPR knocks on your door.
I'd love to hear your thoughts!
(Under 1,000 words, too!)