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”.]
Zillow and Google both denied that they have any interest in becoming a brokerage or a MLS.
Skipping ahead to the Marty Frame Q&A…
Marty Frame just got asked if RPR was going direct to brokers and agents to bypass MLS involvement. Marty said that they’d prefer to work with MLS, but that they’re not going to be denied providing the RPR functionality to all members of NAR.
Now a senior exec with CB United is asking what the features and benefits of RPR are outside of what the MLS is already providing. RPR seems like just another website his agents have to learn and use. Lot of buzz, but awful lot of unanswered questions. He doesn’t see any direct benefit to his company or his agents.
Marty’s answer –> the real answer is walking through the demo. But fundamentally, it’s about operating at scale, building a national database, providing a level of service that can only happen at national scale, providing MLS’s to augment the service they provide to the members.
The data from RPR augments the data from the MLS, according to people that Marty have spoken to at MLS’s. Because MLS’s are fundamentally charged with providing a member benefit, just as NAR is.
[Yeah, except that the MLS is a for-profit comapny, not necessarily an Association providing member benefits… even when owned by an Association, no?]
Marty answers a question about difference between consumer websites and professional websites.
The incentives are different — serving the consumer is more of a media site; says FIND from Move is a good example of it.
But serving members is different incentive.
Media organization exists to produce its own revenue through ad sales. RPR’s goal is to serve members and reduce their cost of operation.
Plus, the fundamental goal of RPR (and NAR) is to be the authoritative source by building a national database; that becomes the place for a REALTOR to inform consumers, and the means by which the REALTOR Association (NAR) informs the government agencies, banks, etc.
Now Marty’s being told that RPR looks an awful like a national MLS, and at what point does the local MLS disappear.
Marty answers that RPR can’t become a national MLS with the staff and organization that RPR has today (only a 20 person company). So it’s a scale problem.
Second, RPR will put in writing that the agreement is unequivocal on not competing with the local MLS. [You all know my opinion on this — that non-compete simply doesn’t address the issue of the MLS’s value chain and how much of it that RPR will take over. To say RPR won’t be a MLS without getting into what the MLS actually is strikes me as incomplete; we have to understand which functions of an MLS the RPR (or similar) would take over.]
Up next is Ben Graboski from First American Core Logic.
FACL is now presenting their proposition.
They want to help their financial institution clients make better underwriting decisions; the value created will be shared between FACL and its partners (MLS’s). Reasons why FACL rocks (according to Ben):
- Deep relationship with financial institutions, and sales force.
- FACL is the best hands-down on information leadership — speed, accuracy, etc.
- FACL has reputation of being an expert, trusted data custodian.
- Legal resources to pursue and prosecute data abusers. He asks for a show of hands, and the room is… quiescent. I don’t think this crowd is going to be all that forthcoming except through Q&A. Ben makes the point that FACL goes to court to protect data; they’re passionate about it.
Ben makes the point that the MLS data is being used and abused by unauthorized third parties even today. FACL can become the police/enforcer of partner MLS’s.
And of course, revenue sharing.
Ben now talks about what FACL will and will not use the data for. They only want to use the data for things that don’t conflict with the MLS, its role with its users, etc.
They want to use it for:
Risk management, fraud detection, underwriting, asset management, portfolio review, mortgage servicing, valuations.
They won’t use the data for:
Consumer-facing uses, marketing (meaning, lenders soliciting buyers/sellers, for example, not Realtor marketing). No solicitation of agents, brokers or consumers.
So for example, Ben says listing reports are important to lenders for dealing with short sales; they need to know that short sale property is actually listed for sale.
And now Ben is talking up FACL as an institution (a bit of a sales pitch here, but that’s to be expected). FACL is #1 across the board, according to him, with deep relationships with CEO’s of large banks, chief appraisers, heads of departments like Servicing, Fraud Management, etc. These aren’t the types of relationships where FACL just provides data reports — Ben says lenders come to FACL for advice, consulting, critiques of lender programs. Some big names on this slide: Citi, Bank of America, Chase, Freddie, Fannie, etc. FACL has a staff of economists to help clients with their lending platforms, portfolios, etc.
So basically, Ben’s position is that FACL is THE leader: best data, best reputation, best technology, best sales force, best relationships, etc. [Obviously this is a knock on LPS, the partner of RPR, and since the presentation is a bit of a sales pitch to assembled MLS executives, that’s to be expected. 🙂 ]
Ben is now talking about Data Co-Op –> enables the local MLS to create a national MLS, but with local MLS fully in control of its own data and who each wants to share with. The mechanism is to enable data sharing amongst and between MLS’s; it’s a data-sharing tool.
It’s kind of like an IDX for MLS’s. Interesting concept. Ben says “total control in the hands of the MLS” several times.
Now Ben is showcasing their Data Co-Op web tool; it’s a map-based data analytics tool. Consumer friendly experience, simple, intuitive, etc. With best information on REO, foreclosures, etc. etc. and can slice and dice the data. [He underestimates, I think, just how difficult a web-based GIS tool is to use for the average realtor… even though the tool is actually pretty easy. I have some experience on this from the commercial real estate world, and I have to tell you… it ain’t that easy to train real estate brokers on using web-based GIS tools. Not that it’s hard, but that the training is a big deal.]
Ben’s showing off some nice thematic maps, demographic data graphs, etc. Looks pretty solid. My opinion is that RPR’s UI and design people are better than FACL’s based on screenshots. Who knows how fast each solution is, but on the UI front, RPR spanks FACL.
Now Ben claims that FACL has the best AVM for lenders and for realtors. I suspect that LPS would differ. 🙂
Their AVM solution is consumer-facing; he’s showing off what FACL did for Prudential. ValueMap AVM is a longstanding existing product, of course. ValueMap is a framed product, so it’s designed to extend the broker/agent brand; present themselves as the expert on valuation. “Behind them we’ve got the best AVM in the business”
Up next, Q&A with Ben.
Right off the bat, Ben is asked about competition, and answers that FACL is not a MLS, has no intention to competing with a MLS, and would put that in writing.
Ben says FACL serves 50% of the MLS as a MLS technology vendor.
The Data Co-Op is available to any MLS, whether a customer of FACL or not.
Ben is asked if the MLS can restrict some of the derivative products usage. Ben is being somewhat evasive in his answer, talks about how risk-averse and conservative lenders are, and as a result how conservative FACL is. Need more research on exactly what the lenders would want to use the MLS data for; he doesn’t think there would be any conflict. But he doesn’t answer the question directly.
Ben says that in June, FACL will split into two companies: title and information. The title insurance company will keep the First American name; the information company will be named later. This seems like a good branding play for the information/data people at FACL.
Ben is asked and answers that there is no cost for the Data Co-Op for “exclusive partners”. FACL seeks an exclusive right to provide risk management solutions to lenders; those MLS’s who are exclusive with FACL will provide 40% of the revenues, and the Data Co-Op software is free. For non-exclusive, Ben says that’s fine, but the implication is that Data Co-Op will have a cost.
Victor Lund from WAV Group asks what the value of a “listing record” is — a dollar? ten cents? What is it?
Ben says that they’re having conversations with their customers; he thinks though that a full listing report could be worth $10; summary report might be $1 to $5 per report. Public data record might be under a dollar per, but needs massive volume/scale.
Ben is asked how much of a lift the local MLS data provides to FACL AVM or products in accuracy. Ben answers that with MLS data, the measure of accuracy can be improved by a couple of percentage points — probably between 5 and 10%. The data is helpful, but it isn’t as if the data suddenly hits accuracy nirvana.
Ben is asked why FACL (and RPR) thinks that it’s appropriate why the MLS’s should provide and monetize the listings data.
Ben says it’s incumbent on each MLS to make its own decisions; FACL’s opinion is that the right exists, but at the end of the day, each MLS has to decide for itself.
How does the FACL help MLS from policing the unauthorized usage of data? Ben says they know information companies that have been providing listing information to lenders; lenders come to them and ask because they don’t trust these other guys. If FACL had an exclusive agreement with a MLS, then FACL would issue a cease and desist to third parties, then follow up with legal action as necessary. FACL would do this at their cost.
Dale Stinton, CEO of NAR, is now speaking.
He starts off by showing a clip of his comments at the Board of Directors meeting in November, which was a bit on the passionate side, and explains it. He wasn’t talking about anyone within the REALTOR family; he was talking about outsiders. Dale makes it clear that the Realtor.com project and the RPR are entirely separate; one is about professionals, the other about consumers.
The confusion and conflict coming from RPR, he thinks, are the result of maybe not explaining the overall strategy of NAR better. Dale wants to broaden the conversation.
He thinks that the financial issues are peripheral re: RPR; he thinks that will be resolved to everyone’s satisfaction. “We have far greater challenges, and we have to face them together.”
The industry is being bombarded by market, consumer, and regulatory forces; “They’re coming together to create the real estate industry’s version of the perfect storm.”
For example, Dale mentions a white paper by Jack Harper, a broker from California (Jack Harper Real Estate), entitled “Is the Residential Real Estate Profession Still Relevant”.
[NOTE: This is a fantastic presentation by Dale; a very necessary discussion for the industry, and the strategist in me is thrilled these conversations are happening.]
Dale says that the threats to real estate industry are real, serious, and require change by everyone — including MLS’s. The interdependence and collaboration/cooperation between realtors, associations, and MLS’s are the key; other countries envy what the United States has.
NAR is focused on moving the brokers and agents to move into the future of real estate industry. He uses the Right Tools, Right Now initiative as an example of huge success; cost millions but was successful. The Second Century Initiatives is the big picture; RPR is a part of SCI, but it isn’t all of it.
[Wow, Dale just bashed FACL: “By the way, if it’s time to go talk to the government agencies, who do you think they take the calls from?” It is true that NAR is the #1 industry association on Capitol Hill.]
Dale now is sharing the actual NAR strategic action plan for the next five years.
1. Help the capital market stabilization: Capital Markets Stabilization and Reformation
If NAR does nothing else over the next five years, it will have done its job.
RVM is not just REALTOR Valuation Model, but the “Real-time” Valuation Model. Dale references a paper written in January of 2010, “America’s Financial Crisis: Determinining Collateral Value & Tracking Performance” by John McCrocklin. The backlog of distressed properties, Dale says, will last for five years; he doesn’t even know what “normal” is. The RPR is important in this context, Dale says.
McCrocklin seems to believe that without some sort of Real-Time valuation, the real estate and financial markets will go through another bubble, and be a final third strike. Interesting.
2. National Voter Files
NAR is creating a stronger grassroots lobbying effort with consumers.
HouseLogic is the key strategic initiative here. [I agree 100% with this; the single most important thing NAR has done in 2009 is HouseLogic.com.]
3. Realtors Federal Credit Union
This is a strategic initiative; the people on Capitol Hill are very interested in how credit unions help work through the financial crisis.
4. Broker/Agent Services and Solutions
RPR is here again. NAR wants to bundle consumer data into the RPR such that REALTORS could have access to psychographics and demographics.
He also mentions a top level real estate domain, working with ICANN.
Working with FHA to accept digital signatures — hence, NAR’s investment in DocuSign.
Dale mentions a REALTOR University — an actual accredited degree program, to raise the level of professionalism. Dale says you can’t force them, but can set a bar for them. This will be a virtual education center. [Interesting — and I know Michael McClure and some others would find this interesting.]
Dale’s position again is that this is the most unfriendly market in decades; it is unconscionable to leave the NAR members in their time of need without trying to do big things to help them. “These are not ordinary times.” He says his predecessor enjoyed the best eight years of real estate that ever was; membership went from 700K to 1.4M. Used to be 3M licensees; now 2.4M — but 1.2M are REALTORS today.
In the end, what Dale is talking about is redefining the American real estate experience. “Working together, we’re unstoppable.” The American Dream of homeownership is under attack too, he says.
This requires us to trust each other more than ever before, and share. [This is a nice call for unity; question is the details.]
Back from lunch… and continuing. Anne Bailey from Pranix is now talking.
She suggests carefully considering everything, take time, do research, then make a decision.
The Bad (she’s talking about RPR, etc.): Could change the focus and philosophy of the MLS. The MLS was built to allow professionals to exchange information; if now we’re taking data and selling it, does that interfere with the broker-client relationship?
The client (the consumer) may not have had such monetization of data in mind. (This is probably an IP issue that… may or may not be all that big of an issue, actually.)
She is going into detail about portfolio matching — one of the products that both RPR and FACL will offer to lenders. It’s supposed to be used only for risk management; how will you know if that’s it. Maybe the lender uses the data to contact the seller directly. The issue is enforcement.
Data Security: none of the companies offering the product offers data security on par with MLS’s. What about corrections in the record, once the data is sent over. Anne considers this to be important.
Integration with MLS — members want ease of use. Are members really going to go to a different website? probably not. So needs to be fully integrated with the MLS.
Final point under “The Bad”: Anne says once you enter into a contract, it’s very hard to extricate yourself. Members have gotten used to it, etc. [Yeppers — this I agree with.]
Then Anne’s big issue: “The Ugly” — unapproved derivative products. None of the agreements do anything to address the ability of the MLS to approve derivative products.
Plus, no guarantees of what the data quality, timeliness and depth of the data being provided by the RPR/FACL/etc. The goal is to empower the individual agent, so shouldn’t the data have high quality?
Now she’s doing a compare & contrast — this is really good stuff. I hope she or HAR makes it available online.
Anne is now presenting a “Contract Checklist” for the MLS. A really nice list.
- MLS retains license
- Detailed description of derivatives
- Content destroyed at termination
- Detailed description of applications (“We’re ok with you using our data for an AVM, but not with anything else” — the application for the customer.)
- MLS choices on which area to participate
- Broker and MLS choices on which areas to participate — with broker opt-out. [Does this extend to consumer opt-out?]
- Approval of products “sold” to brokers and agents.
- Broker opt-out.
- Define restrictions on use of RPR/Move/FACL “stuff” by MLS participants and subscribers
- RETS or MLS choice for data exchange
- Eliminate duplicate listings
- MLS approve additional databases in local market
- Define “free” products
- MLS has to assume the cost of data aggregation — is this okay with you?
- Revenue share
- Public records quality, depth, timeliness — do they match up with what you already have?
- Technology provided in exchange.
- Key terms:
- Contract length
- Right to cancel contract immediately; vendor should be responsible for policing
- Immediate injunctive relief
- Need a process to manage data quality, correct errors.
- Branding — should have rights for MLS and brokers to brand the technology
- Most favored nations clause. Meaning, you might want a clause that says if vendor offers someone else something better, you get it too. Or something similar like that.
So… what’s next?
Anne suggests reviewing the MLS philosophy; things are different, data is everywhere.
Need a careful assessment.
- What is value-add for the members
- Assess data quality, timeliness, accuracy
- Consult brokers
- Create checklist
Integration with MLS — remember that the user doesn’t want to go to three, four different websites.
Then she says negotiate a fair agreement, not one way or the other way.
During Q&A, Anne says that because RPR allows limited distribution to consumers, the law will force the MLS to make RPR data available via the VOW. That reaches back to the DOJ action.
A little break for clarification from Marty Frame: RPR will not sell anything to realtors.
Then another question from the audience, which is actually for Marty: what if RPR’s business model doesn’t work, and the revenues can’t cover costs? Marty says we’ll cross the bridge when we get to it.
I ask a question about “integration with the MLS” — Anne’s view is that any/all of these should be integrated “as deeply as possible”: single signon, interactive data display, etc. Which means that extrication will be next to impossible. [Which makes the whole ‘immediate cancellation’ issue sort of moot, no?]
I’m skipping over the entirety of the legal issues of the contract because… well… it won’t be relevant to anyone who isn’t a decisionmaker for a MLS.
But Brian Larson may have a recap of that in the next few days.
I missed a bunch of stuff, but back with the liveblogging. This panel is interesting. Bob Hale of HAR, David Charron of MRIS (disclosure: MRIS is a client of 7DS), and Russ Bergeron of SoCal MLS are discussing a bunch of issues.
Russ gets the first question, “current viability and future prospects of the MLS business”.
He says yes, the MLS is viable — they’re focusing on the data repository piece. The primary purpose of the MLS is to aggregate data, have it complete, have it accurate, then distribute it. Normalizing and cleaning data to deliver to the wide variety of applications are key.
Russ says RETS might not be the survivor data standard; CARETS is using its own standard and its members are accessing it. He thinks RETS has not kept up.
Bob gets the next question about “What’s the future of the business, there’s a NEED that isn’t being fulfilled”.
He starts out by saying HAR is lucky: one association, one MLS, without a single dominant broker. So everything they do is from ground-up from the agents, managers, and brokers. Out of these groups come what the agents want, then the staff of the MLS develops what the members want.
Bob mentions that they post the financials and the budget, including salaries of the 12 highest employees, to the members of the MLS behind password protected site. The transparency has resulted in very positive response — the books are all online.
Next is for David: “So what’s the future of the business and future viability of the MLS?”
David says “we’re never more relevant and more valuable than now”. He credits NAR and RPR for triggering the latest round of discussion; he suggests looking at the offerings now from the big guys. The value of the MLS has never been stronger.
David says that there is a need for a single search in one place that hasn’t been filled; he points out that those who haven’t immediately said Yes to RPR have been seen as obstructionist. That is unfair, he says, because the MLS’s all deal with licensing contracts all the time; it isn’t obstructionist, but careful. The alternatives are out there, and the industry will get there in six to eight months time. He’s excited about RPR, the alternatives,
Russ says that RPR’s provision of data to Realtors is just fine; they balked at the license grant to RPR where SoCal has no control. He also says that RPR really isn’t free, since NAR dues were raised by $16 per year three years ago.
He loves Move’s new FIND search technology; it’s what he’s been looking for all these years. He says that the MLS vendors are paying attention; but simply may not be as pretty as what RPR has.
Bob Hale is asked what the RPR offers HAR what it doesn’t already have. Bob says not much — just some datasets. He then says they spend a LOT of time doing consumer research, then delivering tools to the agents based on what consumer research says. He believes that because the MLS’s haven’t paid attention to what consumers want, and have lost so much.
He points out that consumers don’t go to broker sites; they don’t go to franchise sites. They go to third party consumer sites. So the MLS has lost listings.
Bob then says, “How much are we going to give away before we wake up.” His position is that the MLS has given away far too much.
David says the future of the business is largely a subscription-based business, with revenues expanded via neighboring markets. Either consolidation, or tools or things like MLS of Choice. Mining the data will become increasingly important. He thinks that alternative revenues will grow over time.
Russ agrees with Bob that the MLS gave away the listings business — if they had created a consumer website back in 1995 when SoCal put listings online for agents, they would totally dominate the consumer web.
David makes the point that just because RPR announced that it wants to be a national repository doesn’t mean it will be; that will take time.
He thinks that MLS vendors (as opposed to operators) should be paying close attention to what’s going on, because there will be a race to the bottom.
Russ makes the point that real estate is a regulated industry, and that as a result, the MLS can’t do some of the stuff that guys like Google and Zillow and so on can do. He is challenged by moderator that maybe the regulation is an excuse for the industry not to do something; David answers that there is a liability issue that brokers will face.
They’re asked how this meeting will change things for the three MLS’s — Russ says we’ve all been thinking and looking at the RPR issue for quite some time. He sounds like SoCal will be going into serious real negotiations. But they’ll also be looking at delivering real value to the members, especially in delivering statistics and data.
David is asked about national MLS — will it happen? Is bigger better?
David says that there will be a national MLS at some point. Who can say what will happen five to seven years from now? But he’s not worried about it; he’s focusing on doing his job locally.
Russ says, national MLS… probably not. But national or super-regional database, yes. If you have a common database, who cares about the delivery mechanism?
They’re asked about more of a focus on rental property, since the economy is leading to rentals by consumers. Are they concerned about sites like Craigslist?
David says Yes, I’m concerned, and we’re going to do something about it.
They’re asked if there should be a minimum standard of what a MLS should provide.
David says No, because that’s what competition is about. Plus, he says his brokers are enlightened, and will let him know when MRIS oversteps.
They’re asked about leadership; why does the BusinessWeek article not mention many people in NAR, at MLS, etc.
Bob Hales says this is critical — MLS and NAR people need to be leaders. They need to speak out and not be afraid to be wrong. Dale Stinton is being a leader — whether you agree with him or not, Bob says that Dale is a leader.
Russ agrees with Bob that Dale is a leader. But that we have to be very careful what the consumer wants. Bob says that one thing we can do is to do surveys of consumers, then educate the agents on what it is that consumers want.
I’m up now, so will not be blogging this.
11 thoughts on “Very Slow Live-Blog of #HARREIS”
Rob you Rock! thanks for keeping us informed
Love “Live Blogging” Rob, and appreciate you doing this, but Eeeeek! The length of this is gonna kill it's effectiveness, don't ya think? What Plug-in are you using to get this feed?
Stay on “The Edge” My Friend!
Rob – nicely done. Plus, it may be your shortest post yet.
It was great meeting you at REIS, thanks for being there and I really appreciated your insight!
Rob: Thank you so much for the informative, down-to-earth, thought-provoking information you post about NAR and RPR. Love your blog!!!!
Actually, I think it was Robert Heinlein who coined the phrase. Sorry to be pedantic.
Actually, I think it was Robert Heinlein who coined the phrase. Sorry to be pedantic.
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