Do brokers have anything to fear from Realtors Property Resource (RPR)?

A new licensing deal between the National Association of Realtors-spawned entity and real estate data provider Lenders Property Resource (LPS) is raising some eyebrows within the industry. And it’s forcing some brokers to reconsider the consequences of allowing their MLS to share data with RPR.

Since its birth in 2009, RPR has been a subject of controversy. As NAR described it, RPR would be a whizz-bang piece of software that would enable any agent to compete with flashy internet startups like Zillow and Trulia. And it would be free, funded by licensing its impressive data to third parties who track real estate.

But for RPR to be useful to agents, it required cooperation from MLSs around the country, who were asked to provide their listings for free to the new service. From the beginning, though, some brokers worried that by compiling MLSs’ data, RPR could be used to undermine the very brokers who are the backbone of NAR’s membership.

So far, neither the fears nor the promises have come to pass. NAR has repeatedly assured brokers that RPR will not compete with them. But neither has RPR managed to become self-supporting. An investigation last year of the organization’s finances by Inman News estimated that the project had cost NAR more than $58 million dollars, with another $18.5 million in funding budgeted for 2013 – all from NAR members’ dues.

Given those financial projections, data licensing deals like the one announced late last month with real estate information and technology firm Lender Processing Service (LPS) are vital to RPR’s future. Under the terms of the deal, LPS is using listing data provided by RPR to allow servicers to be notified if a property in their portfolio was listed for sale. The agreement was heralded by the two firms as a way for servicers to get a better handle on the status of distressed properties.

But real estate consultant and blogger Brian Boero, a partner at California-based 1000 Watt Consulting, wrote a blog post pointing out that the type of servicer alerts mentioned in the new RPR agreement could be used to alert servicers when any customer was planning to move. Most people who are selling a home are planning to buy another, so knowing when a customer’s about to sell allows mortgage lenders to get a jump on securing their business.

That means providing listing info to servicers could hurt brokers, many of whom have their own mortgage operations.

 “What can happen here, in consequence if not intent, is that broker listings are enabling lenders to capture mortgage business ‘upstream’ from brokers’ own mortgage operations,” Boero argued. “And if you know anything about real estate brokerage these days, you know that mortgage origination is a vital profit center for many companies.”

New Concerns

But deals like this one are almost certainly covered by the contracts MLSs signed on to when agreeing to share their data with RPR, Brian Larson, an attorney and principle of Larson/Sobotka PLLC in Minneapolis, who’s an expert in MLS data licensing, told Banker & Tradesman.

“The base contract provides for … [match and append] products where a third-party provides a list of addresses to RPR, and RPR sends them back the list annotated to indicate which properties are for sale and at what list price. [It’s] has always been part of the RPR model,” Larson explained.

That’s causing brokers to sit up and take notice. When RPR was first introduced, NAR suggested that third parties like government agencies and Wall Street investment banks who track real estate might be interested in the data. Brokers may not have anticipated their competition gaining access to it.

Kathy Condon, president and CEO of Shrewsbury-based MLS PIN, which was one of the first MLSs in the country to allow RPR to use its data, said she’s already planning to talk to sit down with RPR and review exactly how the terms of this new deal, and another they’ve recently struck with Fannie Mae, will be taking advantage of MLS PIN data.

“I give Fannie a data feed; I am wondering why they’d go to RPR for one when it would be incomplete for the Boston area,” since MLS-PIN has non-Realtor members who have opted out of providing their listing data to RPR, Condon said.

She said that while local brokers haven’t yet approached her with concerns, she knows some large brokerages across the country are very unhappy with the deal, and that’s why she’s keeping a close eye on them.

“If I find out [these are] match and append products, then it is kosher,” Condon said. “But I need to hear it from the horse’s mouth.”

But not all brokers shared that opinion. Even if the new deals do allow servicers to erase some of the head start brokerage-affiliated lenders have, brokers shouldn’t worry too much, said Peter Ruffini, a regional vice president with South Shore-based Jack Conway, Realtor, which has a mortgage affiliate.

If a servicer finds out a property is for sale when it’s listed, “Guess what? I’ve already been in contact with that customer for at least a month, prior to when it’s listed,” Ruffini said. “I’ve already had that discussion with them about our in-house mortgage brokerage and other services that we offer. That’s all front-loaded stuff. So I’m not worried. They’re still late to the show.”

If brokers are concerned about the way RPR is using their data, they do have some options, said Larson.

“Brokers are entitled, under NAR policy, to opt out of the licensing of their data through RPR. So if a big broker has an affiliated mortgage operation, it might just choose to withhold its listing content from the RPR system, and thus from the analytics generated by it,” he explained.

RPR and LPS did not return calls for comment.

Email: csullivan@thewarrengroup.com