NAR’s RPR and HouseLogic Fuels Speculation About Death of the MLS

Nov 8, 2009  |  Michael Wurzer

Last Friday, following the burst of rumors that NAR had purchased Cyberhomes to power its RPR (Real Property Resource) and  HouseLogic web sites, the cries of the death of the MLS have risen to a fevered pitch again.

Rob Hahn, founder of 7DS Associates, thinks MLSs need to be very concerned with RPR and that a war is coming between NAR and the MLSs.  Brian Boero, from 1000Watt, doesn’t use such stark language, but he, too, thinks RPR will be a “a significant shock to a system that needs it” and asks: “Will MLSs play ball?”  He then answers with uncertainty: “As with most things in this space, the outlook is unclear.”  As an agent and one of the members of the original NAR PAG that envisioned the RPR, Jim Duncan is excited by the possibilities of RPR and HouseLogic and asks some important questions, namely what will agents be able to do with the information and who will have access to it.  The comments to all three of the above posts focus in on the impact the RPR will have on MLSs.

Though I was initially going to wait for an official press release from NAR (I hear it’s coming Monday), the more I thought about it, the more it seemed appropriate to weigh in on some of the speculation about RPR’s impact on MLSs.  I’ve already written at length about both the death of the MLS and RPR (RPR or Ready?).  In fact, most of the posts on the FBS Blog have been about these same issues in one way or another.

For example, I wrote some time ago that MLS is about more than technology.  This crucial point — that MLSs enable competitors to cooperate — is where I think Rob Hahn goes awry in his post.  He assumes that the MLS is only about the software.  What Rob ignores is that the software merely implements a wide variety of business rules that were carefully crafted by the local MLS or Association in order to create the compromise that makes it possible for the competitors to aggregate their data in the first instance.  NAR understands this, though, which is why they’ve been saying that RPR is not intended to replace local MLSs and, to my knowledge, has no listing input or maintenance functions so far.  In other words, the data is going to come from the local MLSs and not brokers or agents directly.

NAR and its leadership knows how “local” MLSs really are.  The local Boards and Associations and their respective MLSs (some independently owned, others not) are run by brokers and agents competing in the local marker and who have cooperated together just enough to make aggregation of their listings possible.  Often, this cooperation results in a complex set of business rules.

This set of business rules is the heart of the MLS today and so talking about the death of the MLS means killing these local business rules in favor of business rules established by RPR.  NAR knows this is a tough challenge, and so they’re just not going there, yet.  As this issue (death of the local MLS business rules) is debated again in the coming years, I believe there are few core questions:

  • Is cooperation at the local level (agents and brokers deciding how they want to work together) necessary to aggregate the listing data or is aggregating listings now a given (a commodity, if you will) such that it can more easily be established at a national level?
  • Is a single national MLS a good thing?
  • Are there alternatives?

If you’ve read my earlier posts on these topics, you already know that my answers to these questions are:

All three of these issues are related to each other.  FBS serves over 100 different MLSs across the country.  We know how important our system is to our customers and that it’s important to have lots of cool features.  More importantly, however, we believe responding to each of our MLS customers’ needs is what differentiates us over the long term.  We provide value by implementing their business rules, which makes the cooperation central to MLS possible.  Responding to these local needs is critical.

At the same time, the lack of standards created by local control of MLSs causes pain for many bigger brokers, franchises and others dealing with multiple MLSs.  This is where standards could be of great benefit.  Creating standards, however, is very, very difficult, especially at a national level.  Of course, one way to create a national standard is to create one MLS.  The problem with that result, however, is that you create a monopoly.  I’m pretty sure what online real estate needs is more competition, not less.  Standards enable competition, monopolies do not.

Accordingly, I applaud NAR buying Cyberhomes and using it to power RPR.  As an MLS vendor, FBS loves competition and looks forward to learning more about RPR and how their tools can help our customers.  We’d love to see RPR help create a universal property ID.  We’d love to leverage data from RPR if it can in any way help improve accuracy of the MLS data.  We’re excited about the possibilities of RPR but also strongly believe that those possibilities should not be used to create a monopoly that squelches competition in the MLS software space.

For those of you interested in these issues, join me at the NAR meetings next week in San Diego for the Future of MLS panel.  The RPR and related issues should be a hot topic.

30 Responses to “NAR’s RPR and HouseLogic Fuels Speculation About Death of the MLS”

  1. Mike,

    Another great post and point of view.

    Information maybe global, but real estate is local. I do think that one day the MLS will be replaced with some other system, but I don’t think this is the killer app, that several others have speculated.

    I’m in the MRIS footprint and find them a strong company, but honestly the problems caused by trying to serve multiple states is more significant than the benefit. To see agents come from three hours away and another state is a nightmare. Even though the MLS system is the same, the local customs weight heavily on how that system is used.

    My point is that regional markets need regional data sources. I see RPR is just a database of those local sources. Not much more…

  2. David Harris says:

    As with every “threat” to the future of the MLS they never address the quality assurance aspect. More than just listing entry, the MLS applies critical quality controls that have helped it remain an important part of the real estate transaction.

    In some ways the MLS is like a neighborhood HOA. Everyone loves to hate them, but you know what a neighborhood without one looks like.

  3. John Mijac says:

    I was in the initial beta test group and my feelings remain the same: without local oversight and constraints on the originating data, all we would have is garbage in and out. Your comments are concise and to the point;and as you know I am in you camp with regards to questions 1, 2 and 3. Universal property ID? A great idea whose time has not yet come (too bad), but let’s see how these new tools live in the marketplace. They will only survive if they give more value than they cost.

  4. james says:

    In california calredd is monopolizing everything and making realtors replaceable parts. Soon, they will roll out their monopoly VOW and all ca realtors will have the same back office systems and consumer facing monopoly website. I predict half of the realtors in ca will be gone within 24 months.

  5. […] Data? Monday, November 9, 2009 7:50 am Author: Michael Wurzer | No Comments I wrote yesterday why NAR’s RPR won’t mean the death of the MLS.  Today, I want to ask some more important questions regarding the terms on which MLSs will allow […]

  6. […] are a number of speculations that this will be a MLS Killer,but NAR is assuring it’s membership that this  is no more than a tool for Realtors®.  […]

  7. […] are a number of speculations that this will be a MLS Killer,but NAR is assuring it’s membership that this  is no more than a tool for Realtors®.  […]

  8. Danny Loftin says:

    Mike,
    I get very excited every time I see that you have commented in your blog again. You have more insight than almost anybody in the MLS world. I can’t wait to hear the juice on what happens in San Diego, as I would love to attend, but, alas, I cannot. I hope you can throw us a few bones while the event is in progress, and look forward to your views on what Hat Tricks are on the way from the NAR. Again, thank you thank you thank you !!!

  9. […] are a number of speculations that this will be a MLS Killer,but NAR is assuring it’s membership that this  is no more than a tool for Realtors®.  […]

  10. Mike,

    Nice job, makes a real difference when you apply logic and reason when answering the burning questions. Jeffrey

  11. Rob Hahn says:

    Mike –

    Great post as usual fully of calm wisdom, as opposed to my little hyperbole-laden sturm and drang. Having said that… I still think you may be dismissing RPR as a threat to the MLS too easily.

    First, the idea that the MLS is the “complex set of business rules” rather than a technology tool used by realtors in day-to-day life is… I think a bit fanciful. When the server goes down, the agents and brokers aren’t saying, “Well, the MLS isn’t down, because the MLS is a complex set of business rules, and we can make those work over the phone”.

    Second, the success of something like Loopnet illustrates just how successful a “quasi-MLS” can be without these various rules and the big one of offer of cooperation and compensation.

    Third, the way RPR works goes a long way towards eliminating the “quality control” function of the MLS because the property information is already in the system. All that an agent has to do is put in the price, flip the status to “Listed”, and away we go. Maybe enter some modifications if there’s been a change to the type of furnace or something.

    Given the latest post (about questions to MLS’s before they work with RPR), I think you’re more aware of some of these issues.

    This topic will be something we get on for weeks ahead. 🙂

    -rsh

  12. Kris Berg says:

    As a working girl, I am having a hard time getting my head around this. If the site’s functionality is as robust as I have read (still attempting to plow through the webinar), then kudos, and I would love that on a local level. But from my view in the (unenlightened) cheap seats, exactly how does this better serve me?

    Without the show instructions and offer of compensation, so what? More importantly, what agent needs a national system? I don’t give a flip what is listed in Topeka, unless of course I am thinking of buying in Topeka, in which case I would call a local agent.

    We are seeing the law of unintended consequences in So Cal. Reciprocal agreements allow agents from eight hours away to list homes they will never see in neighborhoods and markets with which they have no familiarity. And they do this in their own MLS, not mine. These same agents can similarly submit offers on these same properties from the comfort of their far-away office. Level of service is degraded, and our perceived collective professionalism is taken a notch down yet again. It’s carpet bagging opportunism, pure and simple, yet where are the ethics and excellence in this system that our trade organizations profess to protect to the death?

    Several times a month now I hear from an irritated client who wants to know why I haven’t shown them a certain home located a block from my office, only to find that the home is not listed in my MLS but by an agent seven counties away in his own. Unless I am cross-checking my inventory with a third-party web site each time, this will continue to happen. Yet, a consolidated statewide or national depository is not the answer.

    Michael has it right. Local control and standards are the ticket. I can no more represent a client in the Silicon Valley than I can in Belgium. It would not be in the client’s best interest, and it certainly wouldn’t be in the industry’s best interest.

    And yesterday I get an email from my local association telling me I now have access to homes for sale in Hawaii. Whoopee! Is anyone paying attention to what the members really need/want?

    Somebody is going to make a lot of money off of the RPR — a lot of somebody’s I suspect. I will not be one of them, yet this is somehow being touted as a big benefit to the members. Last time I checked, I’m a member; I don’t see it.

    I know I digress, but I had to get that off my chest.

  13. Rob, the RPR won’t have all the data without the MLS data. You’re greatly underestimating the quality control and business rules for maintaining the data. Just flipping a switch to “for sale” is nowhere near reality. That’s one of the reasons I’m looking forward to our meeting in San Diego, so we can get on the same page regarding what an MLS system does and the power already available in MLS systems today.

  14. mwurzer says:

    Kris, as a successful broker, your views are the most important. Let’s hope your leadership is listening.

  15. Matt Cohen says:

    Rob,

    Regarding flipping the switch to “for sale” and depending on public records data, please see the following article: “Realtor Sued For Misrepresentation When Assessor’s Record are Incorrect” http://realtytimes.com/rtpages/20091103_realtorsued.htm .
    I understand that this is just anecdotal, but it points to an issue that would need to be addressed. The quality of tax data – even assuming you have negotiated for the best possible source of tax data – is not always very good.

  16. Bob Wilson says:

    kris hits upon the delta between what the public wants from an info standpoint and what they expect from the agent with regard to service.

    Can RPR bridge the gap? I believe that is what they intend to do now that the reciprocal agreements between MLSs have opened the door.

  17. Duncan Logan says:

    I think Chris Berg nails it. There is far to much activity going on which has no positive affect on the experience for the consumer or agent.
    This move by NAR won’t increase transaction volumes, shorten sales cycles or make it easier to differentiate between good agents and bad ones.
    Consumers (and agents) want cool tools with accurate data at a local level on a single site.(RPR is not open to consumers) They want experienced professional agents with excellent local knowledge who are allowed to act purely in the customers interest and not sub guided by alternative agenda’s driven by rules and regulations. (which the consumer does not care about) Most importantly the consumer wants the deal to happen as quickly and painlessly (as does the agent) as possible.

  18. It seems that a war would only come if RPR eventually developed its own, separate input system and back-end. Then it really would become a competitive alternative to the local MLS systems.
    The question is does NAR have the both the intention and political ability to follow through and create a National MLS even if they wanted to. That seems unlikely.

  19. Broker says:

    There are many great benefits to having a national MLS. This system should never replace local MLS systems but instead be a stand alone additional tool for NAR members. NAR would also have a very valuable asset that thousands of companies would kill to have access to this system.

  20. […] the blogging community offered their viewpoints including Jim Duncan on Agent Genius, Rob Hahn and Michael Wurzer . There is no question this is big news. There is no question that NAR having access to this much […]

  21. Neil says:

    The MLS will be replaced in the future by Zillow or some such database, and the quality controls will be included. There is no practical difference between items on sale on Craig’s List or Ebay than on the MLS. Houses are more complex, but all the information about them can be confirmed or denied via county records and home inspections. Other controls and affidavits can be put in place when we reach the day when consumers can deal with each other direcly – sellers and buyers – without realtors getting in their sorts. So the conversation about a national MLS is misdirected; the real conversation is about a national database that is free and open to all citizens, buyers and sellers, which will dramatically negate the need for real-estate brokers in geenral, unless the wealthy still want that type of botique solution to their real-estate transaction needs.

  22. mwurzer says:

    The MLS will be replaced in the future by Zillow

    How long do you think it will take for this to happen? Zillow has been around for a few years already, and the vast majority of listings on Zillow are from MLSs.

  23. Neil says:

    I don’t know how lomg; I am not educated in the vicissitudes and particulars. I plan to do more research and write some articles (I am a professional jounalist). What I do know is how history moves… I cannot think of any other item for sale in our world that has its access blocked by needing a person to enter a password to show the inventory. Can you? I am the author of several books on innovation, so have studied extensively about how history moves. I will learn more as I prepare to write a legitimate article on this subject.

  24. Duncan Logan says:

    Neil, I think you are mixing two items here. Information and Service.
    I think you are right, freedom of market information is inevitable in real estate. Sooner the better!
    However, I don’t think that will be the end of the real estate professional. The transaction is still too rare an occurrence for most people (unlike buying a plane ticket) and too large to risk screwing up. I think the role and fee structure will change but I don’t think they will go the way of the travel agent.

  25. Neil says:

    Duncan,

    You make good points. I agree the real estate agent will not go the way of the travel agent for quite some time, if ever. But I do think there is a dormant class of people, a formidable one, that would not need an agent tomake a home transaction. At the end of the day, the real-estate transaction process is simple. Not as simple as buying a plane ticket, but simple nonetheless. I have a chapte in one of my books about it. The Innovator’s Toolkit (Wiley). I am NOT promoting my book!I am sincerely interested and passionate about this topic, which is why I used it as an example in my book about how to functionaly analyze a process and identify the value-added versus non-value-added aspects. Nice chatting!

  26. mwurzer says:

    Neil, sellers have long had the option of selling their own house, but the percentage of for sale by owner listings stubbornly remains between 10%-20% in every market across the country. This has remained true even with popular sites likes Zillow, Craigslist, Trulia and others. I believe this is for two reasons: (1) agents add value in creating markets; and (2) creating markets takes a lot more than a web site.

  27. Neil says:

    MWurzer,

    We haven’t reached a tipping point yet. Until there is a open national database, or even a controlled local database (not craig’s list), it will be difficult for an owner to sell w/o a broker. As far as agents addign value, not when you apply Lean business criteria. But I don’t wan to get into that converstaion and all of its details. I know my position is controversial because it attacks people’s livelihood – but I think I can assure you that if there were a proper national database, or when, then at that time there will be few brokers who will get anywhere near their current commissions. The value-added just isn’t there. REaltors drive people around. They engage in passing offers from one agent to another. They post and remove signs. They put boxes on doors. They provide boiler-plate contracts, etc. They print out comps… This work is not worth their fees, and the only reason they can get the fees is because of the MLS system. As soon as that becomes open and democratized, brokers will suffer greatly. it is what it is.. I am a journalist and my profession has been challenged commensurately; newspapers have sgut down because news is available on the Internet. Expert bloggers give better information than journalists, for free! As for agents creating markets, no way. Buyers and sellers create markets; agents attach themselves to buyers and sellers, the market. I need a contract which I can get. I need a home inspection, which I can hire. I need title insurance; I need a closing… I need to make an offer… I donlt need an agent for any of this. But I do need an agent to get exposed via MLS. I think the tide will turn at some point and brokers will be hurting. For now, all is well.

  28. People have been making your same agruments for years, and yet competitive markets have proven them wrong. Anyone can start a listing sharing service to compete with the MLS and many have, yet MLSs persist. You hit on the end reason — critical mass — but ignore the value added by brokers and agents in putting together all the pieces to create critical mass and the resulting market for real estate. The stock market analogy is instructive. Even though some people execute their own trades, the majority do not, and, regardless, the stock markets persist to execute the trades between the owners of the stock and the buyers. So, too, will brokers and MLSs continue to create the market for buyers and sellers of real estate.

  29. […] will have a big impact in the decade to come.  Most notably, Zillow scares the pants off NAR, which has launched RPR in an attempt to create a better database.  Because we all know it’s all about the data, […]

  30. […] NAR’s RPR and HouseLogic Fuels Speculation About Death of the MLS […]