Notorious R.O.B.

I’m honored to be asked to give the closing remarks at the Council of MLS conference in Chicago this year at the end of September/early October.  Since I’m supposed to be wrapping up the discussions of those few days, I can’t actually prepare anything ahead of time.  But I can sort of cheat by putting out to the industry some of the bigger issues/questions I’ve been thinking about, in the hopes that the speakers, panelists, and participants at CMLS this year might talk about some of these things.

These Seven Big Questions represent some of the really fundamental challenges facing the MLS industry as a whole.  I do not (yet) pretend to have all the answers, or even any answer (at least, not in public, heh) but I did want to start posing them to my readers.  For those attending CMLS, please give some consideration to thinking about these questions.

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I’m going to try to do a bit of a stream-of-consciousness “live-blog” here at Houston Association of REALTORS Real Estate Investment Symposium.  I put that in quotes because (a) I’m distracted often, and (b) the bandwidth isn’t the best off my little MiFi device.

I’ve already missed a couple of the early presentations from Zillow, Google, and Move, but a couple of interesting things from this morning.

Sam Sebastian from Google suggests that the future of real estate broker is as an ‘information broker’; I asked if he could elaborate on that, since the experience of the past ten or so years is the opposite: information that used to be held by realtors is now all over the public via the Internet.  Isn’t the trend more and more towards realtors becoming customer service people rather than information brokers?

The answer — and it’s a good one — basically seems to be (at least interpreting Sam) that by “information broker” he meant something more like an analyst.  That the future of the realtor is as an interpreter of all of the information and data that’s all over the place on the Internet.

Interestingly, Google’s search on real estate terms is up 20% year over year, despite the terrible market.  Incidentally, I think that’s contradictory to the experience of the other big real estate websites (or at least used to be a few years back), but I haven’t seen recent stats.

[EDIT: This is getting very long, so it continues after the fold.  And forgive me for the ugliness of the post; it's the nature of a "live-blog".]

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From the Search Engine Land site comes news (h/t: Duke Long, @dukelong) that Google has built out what amounts to the start of a national real estate search website:

The real estate listing place pages include property information, photos, map placement, Street View imagery and functionality, nearby public transit details, and even AdWords ads. Google has added links for “Directions” and “Search nearby,” as well as a “Send” link that opens an outgoing email with the place page link embedded inside. The property details in the example above are sourced from two separate Prudential Real Estate web sites, and from NWSource.com, which is the Seattle Times’ web site. It’s all presented just as you’d see on any standard MLS web site, though it lacks some of the deep information (such as square footage of individual rooms) available in a typical MLS listing.

Whee!  By the way, in case you think the Flickr image above is a Photoshop job, here’s the link to the property in question on maps.google.com: 8801 Fauntleroy Way SW, Seattle, WA. And here’s an announcements of sorts from Google Australia:

So here’s what we’ve been cooking up – in the past, if you wanted to view real estate listings on Google Maps, your best bet was to select “Real Estate…” from the “More” menu at the top of the map.

Now, simply searching for “real estate” will return, well, real estate (try it)! You could also try “homes for sale sydney” or “homes for rent adelaide“. Or while you’re at it, check out “apartments for sale brisbane“, or “homes for rent near perth“. The idea is to make it really easy for you guys – you tell us what you want, and we get it back to you! Of course, we’ll continue to work to return the best results for all your Google Maps queries, whether you’re looking for local businesses, geographic features, or your perfect home.

We also wanted to tell you about the integration of real estate listings with Place Pages. Now clicking the “more info” link next to a listing takes you to a faster, easier-to-read page that gives you all of the information we have about a listing: photos, inspection times, videos, details, a Street View preview and nearby public transit information if available, allowing you to quickly find the listing you want and click through to the sources of the listing.

The initial responses range from delighted to worried.

This is from Kathleen Buckley (@kvbuckley), a broker in Massachusetts:

From Todd Carpenter (@tcar), Social Media Manager for National Association of REALTORS:

From Bob Wilson (@bob_wilson), a real estate marketer and technologist:

There’s lots to speculate on, lots to think about, and lots to debate and argue about here.  But in a way, it’s as if the other shoe has finally dropped.  Many of us in the real estate industry have been wondering what Google plans to do with real estate, as the boys and girls from Mountain View have been moving towards something like this for a while with Google Base, Google Maps, etc.

So let’s get into the speculation.

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[UPDATED 11/20/09: More facts added.]

Earlier this week, Reggie Nicolay (@ReggieRPR), the Director of Social Media for the REALTORS Property Resource, LLC, wrote:

I happen to agree 100%.  Also, a commenter on one of my earlier posts by the name of Kris Goodfellow wrote:

Rob,
I’ve got to say, that there is much in the way of speculation and little in the way of “facts” here. DOA, really? That’s pure conjecture. Marty got a standing O today from the 2000 leaders from every state and local associations. In the big broker’s session, the comments included “WOW!” and RPR was compared to Neil Armstrong walking on the moon.
I might be just an old fashioned, ex-newspaper journalist, but I’ve got to say that a year this post is going to look as silly as the “Dewey Defeats Truman” headline. Tell the story, man, don’t try to be a fortune teller.

So let’s say I agree with both Reggie and Kris.

My take is that you kill drama and hype by showing the facts, not by calling questions and opinions “drama and hype”.  So in the interest of moving the conversation along, and also to emphasize once again that I am no opponent of RPR, I have put together all of the facts as I know them with sources, along with questions about what we do not know.  This way, anyone who is interested might be able to discern for himself what is real and what is drama.

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Without a doubt, the topic of conversation at this year’s NAR National Convention has been the REALTOR Property Resource (Link: PDF) or RPR, the ambitious $20mm program rolled out with much fanfare by NAR.  You couldn’t avoid talking about RPR even if you tried.  And I wasn’t really trying that hard, because RPR is a fascinating product, an awesome user interface, and one where the team led by Marty Frame deserves a whole lot of credit for pulling such a great product together in such a short period of time (roughly 4 months).  Despite my concerns that RPR will trigger a civil war in the real estate industry, I thought (and continue to think) very highly of RPR.

However, it is now time to bury RPR.  It is dead on arrival in its current incarnation.

Suspicious Minds

Having presented at, and then having sat through the presentation of Dale Ross and Marty Frame on RPR, at the MLS Executives Meeting at NAR yesterday, I believe that the general mood of the MLS operators ranges between open hostility to cautious neutrality.  The larger MLS’s are biding their time, to see what some of the details are, possibly to see what is being offered by RPR for early adopters.  (Full disclosure: a large MLS, MRIS, is a client of 7DS, but I am writing this post, as I have every post on this topic, based on what I personally saw and heard, and public information, as opposed to anything discussed with them.)  The smaller MLS’s are worried what RPR could mean for them, and miffed that there is no revenue sharing arrangement for the sale of “their” data.

Brokerages are not bursting over with enthusiasm either.  They also wonder what’s in RPR for them, since they feel that the data that the MLS is supposed to provide RPR belongs to them.  The broker-owned MLS’s can’t make a decision without getting their shareholders on board, and the mood appears dark, to say the least.

The fatal flaw of RPR, I think, is the lack of revenue share.  Brokers, MLS executives, and Association executives might all look with favor or at least interest on a proposal that promised revenue streams that would allow them all to either make greater profits, or reduce the cost of service to their members.  Dale Ross made it crystal clear to the MLS executives that there is no revenue share for them; he urged them, in fact, to cooperate and collaborate with RPR for the good of the members because RPR will provide tools to help the members of MLS’s become better practitioners.  Ross’s concession that maybe five years down the line, after RPR’s revenues and profits are stabilized, he may consider revenue share did not, it seemed to me, to go over all that well with the audience.

Trouble is, those types of answers do not appear to assuage the suspicion on the part of MLS executives and brokerages that what NAR intends to do with RPR is to create a national MLS.

Into this environment of suspicion comes a critical piece of information.

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Dale Ross

Dale Ross takes the podium; he’s an imposing man.

He says it took 4 months to negotiate with LPS/Cyberhomes.  There are seventeen separate agreements, which cover topics like license terms, source code ownership, and so forth.

Ross stresses that while RPR has partners, they are partners via contract rather than by having equity shares in RPR.  RPR is 100% owned by NAR.

He says NAR put in $20mm over 5 years.  The business model is data sales to government and Wall Street.  Ross says LPS came to NAR and said, “there’s a way to use derivative analytics data products”; LPS has these relationships already set up, and has a huge marketing arm.

He feels there seems to be a need in the market for RVM, a value for each of the 147mm properties in the country.

1. Take the LPS records
2. Take the MLS data, and merge it together to form RPR record
3.  Then do analytics
4.  Create derivative data product; sell that product

$250mm spent by Wall St. on real-estate related data; LPS believes that in the 4-5 yr cycle, $60-90mm market for the analytics product; split is 50/50 between LPS and RPR.

License agreements what RPR can and cannot do with the data.  Ross stresses that no raw data will be given to anyone; only custom, derivative datasets.

No fee to MLS for the public records; but there will be a fee for integration.  (Wonder what this means?  Integration of the public data will be custom by MLS?  No API access?)

Ross says RPR is NOT exclusive with LPS.  (So in theory, First American or Claritas can sell RVM or RPR data to corporate clients?  Could Altos be licensed to sell RPR data to agents and brokers?)  He notes that RPR’s license with MLS is also not exclusive.  (Hmm — what does it mean that RPR’s license with the MLS is also not exclusive?)

Ross says there will be no revenue stream back to the MLS.  The benefit to MLS is that RPR believes it can help the MLS cut some of the costs on public data.  Plus, the toolset (the website) will help MLS save money, and Ross thinks RVM will be popular with agents and appraisers

Marty Frame

Marty Frame sounds tired.  And bored.  It’s as if he’s been giving this presentation over and over and over again to dozens of people and groups.

WHOA! RPR will provide an API for VOW technology vendors.  That’s news.

Member Contacts and Networks built into RPR — why exactly is this tool here?

Expert moderated discussions???  What could Marty mean by this?  Who moderates?  Who are the experts?

Q&A

I’m not going to cover every question, or every word of the answer here.  But these are what I find interesting, and the answers I think are interesting.

Question is what is the critical mass for RPR.

Ross says rollout will be by regions.  So if California is first, then RPR will do California first.  The way he phrased it is interesting: “If REALTORS want it, then the MLS’s cooperate, then we can do California”.

They have a plan of action; they know who the largest MLS’s are; they are talking to everyone and will be contacting MLS’s with live demonstrations and how the system will work.

Question: Will a REALTOR have access to the entire country?

Ross: Yes, the whole country.  But business rules are being worked out.

NON-REALTOR members get less access.  (I didn’t know they would get ANY access.)  I guess these would be the appraisers and such?  Or simply Licensees.

Question: I should give you my Sold Data because…

Ross: It’s not for you, but for your membership.  Because RPR will give your members tools to make them better practitioners.

This tool isn’t built for you and me, but for Gen-Y; they’re entering the industry and they’re going to be consumers.  They’re used to having data, so we need to do this for them.

Question: What do people who are members of NAR (REALTORS), but not subscribers to the MLS, get?

IF you belong to NAR, but not to the MLS, then you get everything in the application, but NOT the MLS data.  They will, however, get the RVM.

So either way, even if MLS’s don’t participate,

Question: The MLS data is what drives this; but you said no revenue share for MLS.  Why is that?

(CLAPPING by audience; I think this group is more hostile to RPR than one might imagine.)

Ross says he’s willing to look at revenue share 5 years out, depending on what the revenue looks like.  I don’t think he won this audience over with that.

Marty Frame just said that RPR will do a bunch of data cleansing and data normalization on MLS data.  WOW.

Question: Can brokers opt out?  Can MLS’s opt out?

Brokers can opt out.

The MLS can opt out and terminate the license agreement if they choose.  Hmm.  I’d like to see the termination provision.

Adjustments to the system “stick” only to your individual change.

The Q&A ends.

Thoughts

That was quite a bit to try and take in.

The three or four key takeaways for me are these:

1.  RPR seems pretty deadset against revenue share.  The notion that MLS’s should cooperate even though there’s nothing in it for them, because there’s a great wonderful doodad for the membership seems… optimistic.  What’s truly amazing about this is that Dale Ross said several times that “we (RPR) can’t do it without you (MLS)”.  I have to wonder, okay… can they (MLS) do it without you (RPR)?

2.  RPR will provide a VOW API.  This strikes me as important, because it’s the first I’ve heard about a way to get data out of the system.  But at the same time, it strikes me as important because if broker/agent websites start pulling VOW data out of RPR instead of out of the MLS, that’s yet another customer touchpoint lost to the MLS.  If RPR can provide a VOW API, why couldn’t it provide an IDX API?

3.  People who are REALTORS (aka, members of NAR) but not subscribers to the MLS will get everything sans MLS data.  That means all of the public records, all the school info, all the demographic and psychographic info, etc.  Wow.  I’m trying to figure out how a smart REALTOR could leverage this to his/her benefit.  One consequence here is that companies like Onboard and eNeighborhoods simply have very little value in the post-RPR world.

4.  This group, the MLS executives, appeared to me to be largely hostile and at best skeptical.  If RPR really wants to launch this by April 1st of 2010, Marty and his team have their work cut out for them.  The civil war I predicted isn’t quite civil war… but this has the smell of the Missouri Compromise era.

-rsh

As many of you know, I wrote a wee little post the other day about REALTOR Property Resource or RPR.  That was the first post based on my impressions from a webinar held on November 6th.

With some further thought, and with the ability to review the actual webinar/webcast itself, I have some further questions.  And I’d like to keep each post to one question, so every post doesn’t end up being 3,000+ words.

So today’s question:  What else did LPS get besides $12mm to participate in RPR?

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On November 6th, at roughly 3:15PM Eastern Standard Time, the National Association of REALTORS declared war on the rest of the real estate industry.  To be fair, NAR probably did not realize that it did so.  Judging by the initial responses, it doesn’t appear to me that most people see what I saw.  But, probably because of my twisted nature and my penchant for focusing on the dark side of human nature, I am predicting nothing short of civil war in the real estate industry going forward unless REALTORS Property Resource (or RPR) in its current form is immediately scrapped.

What brings forth such hyperbole?

RPR, or REALTORS Property Resource, was a project shrouded in secrecy.  Brian Larson’s post of October 19th, 2009 is a pretty good pre-unveiling summary of the questions and concerns around RPR.  Brian Boero’s initial take is a very decent summary of the post-unveiling.  But since Brian is a much nicer, much sunnier, much more positive guy than I am, I believe what you’ll get from Brian is the “Glass Half Full” vision.

Strap in for the darker vision.

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