My last blog post produced some new information that will be helpful for anyone who wants to dig deeper into this.  In particular, Sharon Curtis of Hileman Real Estate, Inc. gave me this link for a webinar on the subject.  http://www.realtor.org/about_nar/stinton_webinar_110609   

In addition, at the NAR convention, I spoke with Steve Murray, the publisher of Real Trends.  Below is an article that he wrote on the subject.  He has given me permission to post it here.  I welcome your comments to help everyone sort this out.

RPR and the Future

On November 6^th the National Association of Realtors announced the launch of an important new initiative under their wholly owned subsidiary, Real Property Resource (hence “RPR”). 

The news was met with both excitement and concern among members and those who supply services to the industry.  We talked with several leading brokerage firms, the heads of several state and local associations of Realtors®, the heads of some MLS operations and as well as those who provide technology services to the industry.  We also attended a presentation by Marty Frame, the newly appointed president of RPR and Dale Ross, the CEO of RPR.  Lastly we talked with leaders of LPS, the firm that made the deal with RPR. 

What is RPR and what does it propose to do?  RPR has entered into an agreement with LPS, a leader in real property information and brokerage/mortgage/settlement services technology, to license real property records for most of the country and for the system that powered Cyberhomes, an LPS consumer and professional web offering.  In its simplest form, RPR desires to offer participating MLS systems a swap – the real property records for the listings of the MLS.  The plan as we understood it was that there would be no charge to either party for this exchange. 

RPR will also license other real estate, community and neighborhood data from a variety of sources.  This fits with an overall goal to be a one stop supplier of information for real estate professionals.  RPR will then aggregate its real property records together with the MLS data to create a gold standard for AVM and sell these tools to leading mortgage financial institutions and others that may have interest in this kind of data.  There is no plan or intent to create a public Web site (presumably they cannot compete with Move Inc’s Realtor.com).  Statements that we heard from RPR also indicated that no real estate professional or homeowner detail would be sold to any outside parties. 

So RPR proposes an exchange – their real property data and systems for the listings from the MLS’s across the country.  Their income to pay for this will come from selling valuation tools to financial institutions.

So what are the concerns?  First, is this really what they plan and what will happen if the revenues from their sales of their AVM don’t cover the costs (and they are said by some to be north of $30 million for the first five years)?  Many MLS’s now have property records integrated into their MLS.  Although they pay for them this is not considered a large cost.  Some MLS operators already have profit making efforts marketing their own data to their members and others.  Some large brokerage firms and national networks see this as yet another endeavor from NAR that while seemingly innocent, will create more of a level playing field.  There are technology vendors who think that providing the data is only the first step to entering real estate technology applications (such as CRM’s, transaction management and CMA) and that RPR would have a huge unfair advantage over non-RPR providers. 

So what do we think? 

We assume that most, if not all, MLS’s and boards will find a way to accommodate RPR in their offer of an exchange.  It could be that RPR will have to work directly with brokers and national networks to do so and there may have to be some revenue sharing to accomplish their goal.  Second we have no particular insight into whether a Realtor® AVM will be competitive with those that already exist.  This is a huge market with several strongly capitalized and entrenched competitors.  Lastly we don’t know (and RPR likely doesn’t either) how much additional capital it will take to create the AVM and other tools and turn a profit doing so.  Yes they have targets and budgets and projections, but they are not the same thing as actual results – we all know that.

Should their projections fall short of expectations or should RPR just enjoy exploiting the opportunity, they could expand their offerings to the applications side of the business in addition to the data segment and offer competitive tools.  No one we talked to could do more than speculate about this possibility – but it does have several firms' attention.

NAR has a mixed record of attempting these large scale transactions.  The first RIN didn’t work as they expected – that led to Move Inc and Realtor.com, which has had some successes and some failures along the way.  The business of business is a different world than the business of a trade association.  Few have done both well.

Will the endeavors and future developments of RPR further level the playing field?  It could but much depends on whether RPR’s announced plans are really all they are going to do.  We do believe that the market power of NAR will be greatly enhanced by the successful operation of RPR.  Is it possible that they will find as time goes by that members will “ask” RPR/NAR to broaden their offerings in the name of greater member service?  And what might those future services look like?  NAR generally cannot and will not discriminate between members in its service delivery and pricing.

There are a few curiosities about this launch.  First we discovered that most of the leadership of the nation’s large real estate organizations had not been contacted about RPR even several days after the announcement.  You want to launch a new endeavor like this it would seem likely that you would at least want to clue these leaders in on the plan (with more to follow later of course)  Second, from comments we received at the briefing and elsewhere it seemed like this all came together in a rush to make the convention deadline.  Large transactions like this almost never get everything thought through well enough even when there is time.  When it is hurried due to an announcement deadline frequently something critical gets overlooked. 

There are good solid people involved in this deal.  Many know well the talent of Marty Frame of RPR, Dale Stinton of NAR and Jay Gaskill of LPS.  These are smart, thoughtful and successful leaders.  Having good leadership is always a plus.  So one last question we would have is how well the interests of the parties will stay aligned when the inevitable hardships and trials surface?  Once again we are not sure whether or how well these interests are aligned even now.

Conclusion

Should the announced intentions of RPR truly be all that are in their plans, it could result in a wider array of information at lower costs for members.  Should these plans fail to deliver these benefits to members while also making a profit from the sale of AVM products, then we cannot be sure that they won't use the power that they have in ways that may not be in the best interests of members and the market.

I only have snippets of information about a new company called RPR.  It supposedly is owned by the NAR (like Move.com) and is supposedly going to try to track every real estate transaction in the US, and gather data about every single property as well.  I have heard similar goals from Zillow.

I do not have nearly enough information about this to make an intelligent opinion.  Does anyone have any facts and figures about this new company?

I attended a meeting today with Senator Jon Kyl.  He spoke about a number of topics, including health care bills, Afghanistan, and the politics in general.  I asked him specifically about the 1st Time Home Buyer Tax Credit.  He was confident that it will be extended for another 6 months.  This is good news for consumers and for real estate agents.  Now is the time to make sure those buyers don't miss out on the high inventory numbers, low prices and low interest rates!  

I also asked him about the HVCC (Home Valuation Code of Conduct) that is creating havoc with the appraisal process  for FNMA and FHLMC-backed loans.  He was not familiar with the details and wants me to contact his office with more information.  I handed him a couple of "white papers" on the subject from the NAR. Don't know if that will make an impact, but it was great news to hear his take on the tax credit extension.  

The secondary market for jumbo loans seems to have dried up significantly...I don't get it.  I think that many investors would see that market as viable...the sellers and buyers, and the properties for security, are pretty darn solid for the most part.  How do we get this particuar segment of the market to come back and thrive?

At a meeting for our company a few days ago, one of our senior executives stated that he is dedicating much of his time in the near future to help this market get back to life.  John Foltz, President Emeritus of Realty Executives, told an audience of several hundred that he has some ideas to help.

What ideas do you have?  How can the real estate community nationwide, or worldwide, help investors see the oppotunities that exist in this market?

Realty Executives Phoenix was founded in October 1965 by my father, Dale Rector.  The first office was located in Scottsdale, Arizona and started with four sales associates.  One year later, Realty Executives had grown to 19 agents and had opened a second office in Phoenix.  By 1972, the company had become the No. 1 brokerage in Phoenix and continues today to have the largest market share in the Phoenix metropolitan area.  It is also notably the 14th largest brokerage in the United States.

The success of this brokerage is attributed to the top performers in real estate Realty Executives attracts, including our more than 1,300 Phoenix-based sales associates.

This is the founding brokerage of Realty Executives International, Inc., one of the fastest growing real estate franchises in the nation.  Realty Executives International has grown to include nearly 11,000 sales associates and approximately 700 franchises globally with offices in the United States, Canada, South Africa, Mexico, Costa Rica, France, Greece, Panama, Nicaragua, Honduras, Belize, Israel, Australia, Poland, Romania and Spain. 

Since Realty Executives Phoenix's inception, nine brokers have brought individual distinction and leadership to our founding brokerage, most recently John Foltz.  John served as President and Designated Broker for the past 20 years and as an Executive (real estate agent) for 11 years prior to that.  John and I have celebrated many successes and milestones together and I truly value our friendship and his great contributions to our organization.

John will continue with Realty Executives Phoenix in a new role as President Emeritus in which he will remain dedicated and available to our Executives.  John will participate in speaking engagements, coaching programs and will head up a major project at Realty Executives Phoenix related to visioning and articulating our value proposition of supporting entrepreneurialism in the real estate profession.

As such, I would like to announce Realty Executives Phoenix's tenth designated broker and John's successor, a real estate leader chosen to carry on the integrity and distinction of the company - Dominic Scappaticci, Realty Executives Phoenix's new President and Designated Broker.

Dominic joins us from a prominent local real estate company and has a long, successful tenure with some of the nation's top real estate firms.  Coming full circle, Dominic originally started his career with Realty Executives Phoenix when he received his real estate license in 1975.  Dominic is widely known for his engaging and very personalized mentoring approach with brokers and agents.

Dominic is committed to maintaining the promise my father made when he started Realty Executives Phoenix over four decades ago - to serve the needs of the professional real estate agent.  We are the only real estate company named for our people because we understand they are the reason for our success and strong reputation.  This is an exciting new chapter in Realty Executives Phoenix's 44-year legacy.

To view my video announcement, please click on the following link: http://www.youtube.com/watch?v=DRqUSidby4w

In one of my previous blog posts I reported to you about AZ Attorney General Terry Goddard attending a Realty Executives meeting where he let us know that he personally told President Obama that his Loan Modification Program was not working. 

Well, yesterday he met with Treasury Secretary Tim Geithner and US Attorney General Eric Holder and others to coordinate proactive strategies and strengthen efforts to fight consumer fraud in the housing markets.  The meeting also included HUD Secretary Shaun Donovan, FTC Chairman Jon Leibowitz and Financial Crimes Enforcement Director Jim Freis.  11 other state Attorneys General also attended.

The Federal officials committed to the state Attorneys General that they would work with the states to take additional measures to curb abuse by coordinating information and resources across agencies.  This also includes alerting financial institutions to emerging schemes, stepping up enforcement actions and educating consumers to help those in financial trouble avoid becoming victims of a loan modification or foreclosure rescue scam.

Goddard noted after the meeting that the participation of three of Obama's Cabinet Secretaries along with the chairman of the FTC demonstrated a strong commitment by the Administration to seriously attack the problem of mortgage fraud in partnership with state governments.

According to Goddard, providing reasonable modifications to borrowers before they become delinquent is the most powerful tool available to stem the tide of foreclosures.

Let's hope President Obama and his Cabinet are sincere about their dedication to getting loan mods done more efficiently and prior to delinquencies. 

Great news from the Case-Schiller Home Price Index recently! It reported rises in home prices from Q1 to Q2 in major cities! This is a great consumer-confidence builder and solid data.

However, this could have and should have been reported 3 months earlier!! By mining the proper data from your local MLS, you could be the authority on this information. For example, the Cromford Report in the Phoenix market has reported these upticks for 3 or 4 months now. As you probably know, your pending sales pipeline is probably one of the best tools for your area.

Pricing is actually a LAGGING or TRAILING market indicator, and there are several ways to track pricing, all with their pros and cons.

Average Sales Price: skews upwards, due to higher priced homes.

Median Sales Price: skews downwards, due to large mix of REO and foreclosures.

Case-Schiller Index: generally 4 months behind the market.

Average Sales Price per Square Foot: not perfect, but probably the best indicator.

You can be the source of data for your local press and in your blogs if you just know where and how to get the data. How are you using market data to your advantage?

This past Sunday, President Obama and his family came to AZ for a brief vacation.  They stayed at the Phoenician Resort, which was built by the 1980s Savings & Loan Crisis Poster Boy, Charlie Keating.  He took the family to the Grand Canyon, and then spoke to the Veterans of Foreign Wars Convention attendees in Phoenix.   All of this was closely watched by the worldwide press.  There was one thing that they missed, though...

Yesterday, Realty Executives held an educational event that was attended by nearly 500 real estate agents in the Phoenix area.  The featured speaker was AZ Attorney General Terry Goddard.  According to Mr. Goddard, he had just a few moments with President Obama when he was in town, and took the opportunity to get some choice words to him just as he boarded Air Force One to head back to D.C.  The Attorney General revealed yesterday that he was able to make one statement: "Your Loan Modification Policy is NOT Working."  

The audience's response was applause and cheers!  What Goddard told the President was old news to everyone in the audience, and they were pleased that this important and critical message was delivered directly to Obama from someone with some clout.  Let's hope that the President heard the assessment and does something to fix it.  Even though the President's policies are aimed to help keep families in their homes instead of facing foreclosure, it is obvious to real estate practitioners that more must be done.  I applaud AZ Attorney General Goddard for representing the real estate industry's sentiments by directly informing President Obama about where he may need to reassess his policies and programs.

Do you have a loan modification horror story?  Please share it with me, so I can continue the dialogue with Attorney General Goddard and the President.

We all found out yesterday that the New York Times successfully asked 40 other news organizations to suppress a news story about one of their kidnapped reporters for the last 7 months.  I completely understand them wanting to protect their employee and not endanger him, but this is a very scary example of a double standard that is unacceptable.

I am concerned that a "monopoly" of news organizations could essentially get together and create an anti-trust situation, where they would collectively decide what "news" should or should not be disseminated.  I am not naive about the fact that most news IS manipulated in some form, but the suppression of information by a collective of news organizations in a variety of countries is a little too much to ignore.  They even got some bloggers to remove their posts on the subject.

I question the subjectiveness of their actions; would they have done the same thing if it had been a politician or business person that had been kidnapped instead of a reporter?  I doubt it.

Your thoughts?

I have found that most agents and brokers who are listing REOs from a variety of different banks and asset managers are not aware of some risks they may be facing.

Many banks and asset managers require indemnity statements to be signed upon taking the listings, that essentially place all of the traditional seller liabilities on the listing agent and broker.  Our industry has spent endless time and effort over the past decades getting our contracts to effectively shift significant liability to the seller for property condition issues and other items.  These REO indemnity clauses undo all of that, and the broker's Errors and Omissions policies generally will not cover these issues. 

I am curious if any other REO listing agents and brokers have realized this and are taking any actions to protect themselves.  Do any of you have any experiences with this or any examples of what is being done to mitigate these new liabilities?