No More Drama and Hype: Known Facts on RPR

[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.

Known Facts About RPR

The first source for facts should be the RPR Fact Sheet (PDF), published by NAR/RPR.  My other main sources for information are: RPR Webinar of November 6, 2009 (“Webinar”); the REBarCamp San Diego session on RPR on November 12, 2009 (“REBCSD”); the presentation by Dale Ross and Marty Frame to the MLS Executives session on November 13, 2009, which largely mirrors the content of the initial webinar (“MLS Session”); and an interview with Prem Luthra, Chief Strategist for LPS Real Estate Group, on November 13, 2009 (“LPS Interview”).  If there is factual information from another source, I will note it.

So here are the Known Facts about RPR, as of today.  Please note: I am only listing the facts that are relevant to the discussion; some of the details — such as percentage of counties covered in the public records data — are left out because I don’t see them as relevant to the issues at hand.  But many of those facts are available from the sources cited above.

RPR As Technology

FACT: The RPR™ will provide a single-source national compilation of tax and assessment data; property data; neighborhood, school, demographic and psychographic information; and maps, trends and reports. It will be exclusive to members of NAR, who can share its information with their clients. (RPR Fact Sheet)

FACT: Members who register with a valid NRDS ID can access non-proprietary, non-MLS/CIE sourced data; however, only MLS/CIE Subscribers/Participants will be able to view MLS/CIE sourced information. There will be no public access to the RPR™, and the database and its data cannot be shared through consumer websites. (RPR Fact Sheet)

FACT: RPR will feature complete on/off market MLS content for all property types, including all current imagery, all historical imagery, and virtual tours. (Dale Ross, RPR Webinar)  In order to collect this data, cooperation by an MLS is necessary. (Dale Ross, MLS Session)

FACT: The RPR will not have offers of cooperation and compensation. (RPR Fact Sheet)

• Question: What are all of the reports available through RPR?
• Question: What is the source of the data for some of these reports, especially CMA and Property Profile reports?
• Question: Will the terms of use of a RPR report (e.g., Property Profile report) be different from the terms of use of the same MLS report?  In case of conflict between an MLS’s rules and the RPR’s rules for usage, which governs?

FACT: The RPR’s™ national demographic information, along with enhanced search capabilities, will allow a REALTOR® anywhere in the country to provide more information to their clients. The enhanced search features will allow nationwide depth of property searches, as well as market-to-market comparisons. Advanced User Profile Features and social networking components will help REALTORS® create referral communities, as well as reverse-prospect specialized property types, such as vacation and waterfront to REALTORS® throughout the U.S. (RPR Fact Sheet)

• Question:  What are the terms of these referral communities created within RPR?  Are they governed by the offers of compensation and cooperation of respective MLS’s to which the RPR member belongs?  What if the RPR member is not a subscriber of the MLS?
• Question: Will the market-to-market comparisons require the usage of MLS data in order to be accurate?  Assuming that one market has a participating MLS while another does not, can those two markets actually be compared within RPR?

Fact: RPR will feature a Automated Valuation Model, to be called REALTOR Valuation Model, which is created by taking the existing industrial-grade AVM’s that LPS provides to lenders, financial institutions, etc. and combining on and off-market information from MLS’s for greater accuracy. (Dale Ross, Webinar)

• Question: How much more accurate will the RVM be compared to existing AVM products?
• Question: Will the RVM be marketed to brokers and agents as a derivative product if they want to display the RVM on a public-facing website, or is it a free member benefit to RPR members?

Fact: The MLS’s (that opts-in) will get a branded version of the RPR system to integrate with their MLS system. This will allow members increased efficiency by clicking right from a listing inside the MLS and landing on a MLS branded/integrated version of the RPR. (Reggie Nicolay, Comment to my blogpost)

• Question: Will the branded version of the RPR system be hosted on RPR’s servers, or on the MLS servers?
• Question: Will the participating MLS have the ability to modify the RPR code to add/remove/change features and/or data displayed to its membership?
• Question: The phrase “integrate with their MLS system” implies that RPR code will be delivered to the MLS to allow an MLS to create a customized, integrated version of a software; is that what is being envisioned?
• Question: Can an MLS/brokerage opt-in to provide the data, get access to the various data products (such as the RVM), get access to LPS public data, and so on, but opt-out of using the RPR software itself?

FACT: Customizable reports for the REALTOR: CMA, Buyer’s Tours, Property Profile, etc. all for free. (Marty Frame, Webinar)

Usage of RPR and Membership Facts

Fact: The Terms of Use for the RPR web tool is finished, but not yet public (Reggie Nicolay, REBCSD)

• Question: When will these Terms of Use be posted for review?

Fact: The sharing of RPR information does not extend to public display via website.  Members cannot take the public data and display it on a “public-facing” website.  Members can create and print out reports for clients.  (RPR Fact Sheet, LPS Interview)

• Question: Is there any limit on “printing out” reports for clients?  Can such reports be provided to consumers who are not “clients” — prospects or website visitors?
• Question: Can members create derivative products using RPR data, which they can then display on a consumer-facing website?  For example, could a RPR member take the foreclosure data off of RPR and create a “Distressed Property Index” for his market area and publish that to a brokerage website?

Fact: There’s a wide gray area in between the two poles: display on a public-facing website is definitely prohibited, while printing out reports to show a client in person is definitely allowed.  But it is not clear, for example, whether a RPR member can put together a public-facing webpage with a PDF of all of the neighborhood information. (LPS Interview)

• Question: Can there be different license terms for MLS data, governed by rules/decisions of a particular MLS?  Or a brokerage?  In other words, could a MLS/brokerage have looser or tighter restrictions on where its data can be used by RPR members?
• Question: Who will decide when a particular use constitutes a violation of the RPR Terms of Use?  Will there be mechanisms for appeal?  Who will be the final arbiter — RPR? NAR? LPS?

Fact: The agreement between LPS and RPR contains policing responsibilities on the part of RPR to ensure that members do not violate the terms of the data license between LPS and RPR.   (LPS Interview)

• Question: What exactly is meant by “policing responsibilities”?  Do they extend to participating MLS’s?  Do they extend to brokerage firms, or to agents?
• Question: What is the penalty for violation of the RPR terms of use for a member?  For RPR itself if its members are found to be violating the LPS Data License Agreement?

Fact: There will be a VOW (Virtual Office Website) API for RPR, strongly implying that members will be allowed to share RPR data with clients via a VOW (Marty Frame, MLS Session).  SEE UPDATE BELOW.

• Question: What is the exact definition of a “VOW” as used by RPR/LPS in this regard?  Is it simply a consumer who has provided a valid email address, or does a VOW Subscriber actually have to meet state regulations on having formed a client-realtor relationship?
• Question: If a participating MLS has different rules for VOW than the RPR does, whose rules will govern?  In other words, if a member cannot offer a VOW feed to a consumer who hasn’t signed a Representation Agreement, but RPR does not require such an agreement before providing the VOW API feed, what happens?

UPDATE! Fact: (Source: Michael Wurzer’s FBS Blog)

• Application Programming Interfaces (APIs) — (Note: An API is a way two systems (such as RPR and the MLS or a broker back-office system) can talk to each other.)
  • Marty said there will be an API for the public records and MLSs will be able to pull the public records into their own system.  MLS systems also will be able to link to the PDF market and listing reports (though they won’t be available in HTML, just PDF).
  • RPR hopes MLSs will help RPR with authentication by using single sign-on (SSO) standards, though they’ll adapt to whatever the MLS will provide.
  • There will not be an API for any of the third-party licensed data (including listings), just the public records.  If you want to see the other data, you must login to RPR.
  • API documentation should become available in the next 30 days or so.

Fact: A REALTOR (i.e., a member of NAR) who is not a subscriber to the local MLS will have access to RPR.  They will not, however, be able to see the MLS data.  Conversely, A subscriber to the local MLS, who is not a member of NAR, will not have access to RPR. (Dale Ross, MLS Session)

• Question: Who polices when a MLS subscriber who is not a member of NAR accesses RPR?
• Question: What sort of authentication will RPR feature?  Is it simply the NRDS number and password?  Or something stronger to authenticate proper access?
• Question: What sort of penalties attach to allowing someone who is not authorized to access RPR to access it, for example by sharing NRDS/passwords?

UPDATE! Fact: No Authoritative Record.  In response to my question as to whether RPR will be establishing an authoritative record from the various sources of data (public records, MLS, loans, etc.), Marty said no.  RPR will present the various sources of data side by side but they won’t try to reconcile them. (FBS Blogpost)

RPR As A Business

Fact: RPR is a wholly owned for-profit subsidiary of NAR, incorporated as an Illinois LLC, and expects to turn a profit in year four of operations: $2mm in Year 4, $8mm in Year 5. (Dale Ross, MLS Session)

Fact: NAR has purchased “certain assets” — confirmed as the assets of Cyberhomes (REBCSD) — for $12mm from LPS (NAR Press Release, Dale Ross, MLS Session).  The codebase of the RPR software, including the underlying assets of Cyberhomes, is 100% owned by RPR. (Neil Pinchin, REBCSD)

• Question: Did LPS retain any intellectual property rights to any of the pre-existing Cyberhomes codebase?  If so, which rights, and to what code?

Fact: The deal with LPS over sale of Cyberhomes assets and the creation of RPR was done over a 4 month period (Dale Ross, MLS Session)

Fact:There were seventeen (17) agreements in total, from License Agreements, Source Code Agreements, etc. (Dale Ross, MLS Session)

• Question: Do any of these licenses have default provisions tied to the success of RPR in signing up MLS participants?

Fact:The partnership between LPS and NAR is via contract rather than a joint venture or other equity-based partnerhsip. (Dale Ross, MLS Session)

• Question: What are the termination provisions, if any, in the partnership agreement?
• Question: Does the partnership contract carry a term or is it perpetual barring default, as the Realtor.com agreement with Move is?

Fact: NAR’s total investment into RPR project is $20mm over five years, including the initial $12mm for purchase of assets. (Dale Ross, MLS Session)

• Question: Is the $20mm figure the total investment for NAR, or the initial investment?  Are there provisions for additional investment in case RPR does not show a profit on schedule, or the burn rate is more than expected?

Fact: The business model for RPR is to take the public data from LPS, combine it with MLS data from participating MLS’s, create derivative data products, then to sell these data products to various institutions, including government agencies such as Fannie Mae, The Federal Reserve, etc. as well as financial institutions. (Dale Ross, MLS Session)

Fact: No raw MLS data will be provided to data customers; only the derivative products will be sold. (Dale Ross, MLS Session)

Fact: RPR plans to roll out on a market-by-market basis.  For example, if California signs up with RPR, then California data will be the first to be processed by LPS/RPR. (Dale Ross, MLS Session)

• Question: LPS currently sells its data to these various institutions.  What is the expected increase in value for RPR-derived data that includes MLS data?  In other words, if LPS can sell its unenhanced home pricing trends data to Goldman Sachs for $1m per year, for how much does LPS believe it can sell the MLS-enhanced home pricing trends data to Goldman Sachs?
• Question: Market-by-market implies that RPR does not need 100% national MLS data coverage before it can be “rolled out”.  Is the RPR-derived data valuable on a market-by-market basis, or does it require national coverage before the buyer institutions (e.g., Fannie Mae, Goldman Sachs, etc.) see value in it?  Put another way, will RPR be selling the “California Home Pricing Trend” data package (I’m just making up a derivative product here) to its institutional customers, or does RPR need to wait until it can assemble the national trend data?

Facts about the Relationship Between RPR, MLS, and LPS

Fact: LPS did not sell any assets connected to its Data Analytics Group, and no employees of the Data Analytics Group or the LPS Sales & Marketing teams went over to RPR.  Instead, LPS will partner with RPR to create the data products (via its Data Analytics Group) and to sell the data products (via its sales and marketing people).  RPR does not today have any staff that does either Data Analytics/Productization or Data Sales & Marketing. (LPS Interview)

Fact: LPS granted RPR a “fairly broad set of rights” over the public information data it is providing to RPR. (LPS Interview)

• Question: As touched on above, what are the exact rights granted to RPR and its members?  How will those rights be monitored?  How will they be enforced?  How will they be adjudicated, and who has final say on whether a particular usage does or does not constitute violation of the terms of license?

Fact: While LPS is totally committed to the success of RPR, and to the partnership, LPS is not prohibited from doing business directly with an MLS, should an MLS opt-out of working with RPR.  (LPS Interview)

• Question: If LPS is not prohibited from doing business directly with an MLS, is there any non-compete or non-solicitation clause in the partnership agreement with RPR?

Fact: RPR is not exclusive with LPS; RPR’s license with a participating MLS is also not exclusive (Dale Ross, MLS Session).

• Question: What does this mean?  Does it mean that RPR could enter into agreement with, for example, First American to package/productize and then sell RPR-derived data exactly as LPS has?  If RPR’s license with an MLS is also not exclusive, does it mean that an MLS can both participate in RPR and enter into a similar agreement with another third-party vendor, e.g., First American, Nielsen Claritas, Altos Research, etc.?

Fact: According to the Q3, 2009 earnings report for LPS, the “Technology, Data and Analytics” segment generated $186.3mm in revenues.  Of that, $103.0mm was from mortgage processing, and the rest — $83.3mm — was due to “strong growth in Data and Analytics Services” (LPS Q3, 2009 Earnings Report)

• Question: What portion of that $83.3mm was from the sale of real-estate related data products?

Fact: LPS Real Estate Group will create data products and sell them to the real estate vertical. (LPS Interview)

• Question: What are these data products that will be sold via LPS Real Estate Group to the real estate vertical?  Who are the target markets?  Brokerages?  Agents?
• Question: Will the MLS-software owned by LPSREG (Paragon) be enhanced with RPR data or RPR-derived products?

Fact: Revenues from RPR derivative products to government/financial institutions will be split 50/50 between LPS and RPR (Dale Ross, MLS Session); revenue share from sales to real estate organizations/companies/agents between LPS REG and RPR is not yet determined.

Fact: There will be no revenue share with a participating MLS or with a participating brokerage. (Dale Ross, MLS Session) However, RPR estimates that the value of the free public information via RPR, as well as the RPR user interface software, will save MLS’s from between $25mm and $30mm per year. (Dale Ross, Webinar)

Let Us Kill The Drama Dead!

While I think I may be leaving out some key facts, I’ve listed all of the ones I know of today.  The questions are mine and mine alone, although others who have been and are participating in the conversation might have more of their own.

I wanted to do this because I’m really not that interested in drama or hype; I am interested in the truth and additional facts about such an important initiative.  If there is an “atmosphere of fear”, then by all means, let us dispel it so that meaningful conversations and debate can take place.

As I’ve said time and time again, I am a fan of the RPR software — it is a brilliant piece of software engineering.  The people behind it are some of the most impressive talents we have in the industry.  I find some of the business arrangements and relationships befuddling, and I stand by the statement that the incentives for all of the various players do not appear to be in full alignment.  But those are based on the known facts.  I am entitled to my own opinion, but I am not entitled to my own facts — no one is.

The first step, then, in clearing the air of all drama, hype, fear and suspicion is to understand all of the facts.  I have started it; I hope those who are more knowledgeable, who are in possession of the real facts, would take the time to answer questions, dispel myths, and reveal the facts that the real estate community needs to know in order to form their own opinions on the issue.

Thanks,

-rsh