NAR makes it rain to the tune of $20MM for the boys at RPR!

I’ll be the first to say that technology can be sexy. Especially, when it’s technology that you wished you had. That kind of thinking makes me wonder if NAR didn’t fall in love with the idea of the REALTOR Property Resource and make a mistake by funding it completely alone.

A luxury once tasted, becomes a necessity. Not sure who coined that, but it’s very true. Use the new iPhone and it’s the next item on the shopping list; buy a GPS and it’s hard to imagine getting around without it. Now put yourself in NAR’s position. There are some awfully talented guys who used to run Cyberhomes. They have been with Fidelity, have been with LPS, and they’re used to selling to REALTORS with sexy looking technology. (LPS is a MLS provider.) Now take these Cyberhomes guys, put them in a room with some REALTORS who run the Association, and the Association’s big fat checkbook and what do you think the outcome will be???

I’m thinking a $20MM company replete with Cyberhomes guys and paid for by Joe and Jane REALTOR. Note that the CEO and a VP are actually brokers, which makes me feel a lot better. Of course, the details are not there for us to see. I mean, sure, there are a few extremely vague agreement drafts floating around there, there are likely some coders integrating data, maybe a few social media evangelists (we met Reggie of RPR in a previous post), and other than that, a whole lot of sealed lips.You can get some great info over at MLS Tesseract if you want to bone up on the current state of RPR. The lack of communication and attempt to get buy in is for some other posts so back to the main thought of this post.

Did NAR fall in love and blow $20 large on RPR? I think they might have.

But why do you think this Joe? Aside from the obvious reasons that we all sell locally (so why do we need a national system) and the fact that the resources they are aggregating are already out there, FOR FREE; Well, I was reading press releases and news stories about the past wonderful experiences that NAR and business partner/related tech companies have had and a few things popped up.

Remember HomeStore.com? Remember the CEO of HomeStore.com who was sentenced to 15 years in a Federal facility for defrauding investors. The outcome, just a little loss of $100 Million dollars to investors and stockholders. No biggie there. I mean it wasn’t Enron and at least NAR wasn’t the sole owner of that baby, who by the way is now called Move.com. Just for your reference that Move stock is now trading at about $1.30 per share down from it’s all time high of something like $102. (Note that Move.com is currently worth less than 70% of LoopNet and less than 50% of CoStar.)

So then I decided to check out what NAR had said about Realtor.com. How was this such a success when HomeStore and Move were disasters less than ideal engagements. Here is what I found interesting that either NAR has forgotten or the fun bunch from Cyberhomes helped them over look. My commentary in blue.

Directly from the Press Release

…
History of REALTOR.com
In November 1996, the Board of Directors of the National Association of REALTORS® approved an agreement between the REALTORS® Information Network (RIN)—NAR’s wholly-owned subsidiary–and RealSelect, Inc. to take over the operations of NAR’s official Internet site, REALTOR.com. At the time, many business models were considered to finance the development of REALTOR.com.

NAR’s Leadership Team decided against using dues dollars or asking for a special assessment of the membership to fund REALTOR.com. While Homestore and its investors have spent hundreds of millions of dollars to build and operate REALTOR.com, no NAR funds or NAR member dues dollars have ever been used for the creation or operation of the site.

Remember the fraud guy and the hundreds of millions of dollars. Seemed like a good idea then. With the current load of fraud ala Madoff, Standford, and the list continues, it SEEMS LIKE A BETTER IDEA NOW.

…

Key Provisions in the Operating Agreement
The operating agreement negotiated more than eight years ago contained a number of important provisions ensuring NAR’s control over the content and operations of the site. Those provisions remain in full force today and continue to guide the relationship between NAR and Homestore (NASDAQ: HOMS), which owns RealSelect.

Homestore operates REALTOR.com as a business. Its separation from NAR allows the company to make decisions that could potentially pose difficult problems for a trade association on business terms. These include the pricing of REALTOR.com products and services to REALTORS® and the development and marketing of new products and services.

Ok. Why has this changed? I mean, I love technology as much as the next guy, but if there aren’t private investors out there willing to provide funding then maybe the NAR shouldn’t step in an fund this start up with member dollars. Are any of the NAR board members technology incubator guys? What about venture capital guys with experience in taking a technology startup from soup to nuts??? I’m sure the guys from Cyberhomes are stoked. “Hey check this Bobby, we got an angel investor and get to play start-up now with other people’s money.” Also, since the exact product offerings are not set in stone, nor are any pricing models for members, what’s the deal here? Before owning the whole enchilada posed difficult problems, now, now sweat.

Outlook for the Future
Homestore has survived the shake-out among dot com start-up companies and complete turnover in its management team. It has undergone major cost-cutting and restructuring to adjust to changing business realities. Certainly, its relationship with NAR has helped see it through challenging times and REALTOR.com has never lost its lead in the real estate space.

The two organizations have continued their relationship essentially unchanged because they both benefit. Homestore has access to the best brand in real estate and NAR has a vehicle to provide its members a strong presence on the Internet without incurring the cost or risk of operating REALTOR.com itself. Time and trials have tested the formula, and now it’s poised for new growth, profitability and service to REALTORS®, shareholders and consumers alike.

…

Um. yeah. If I hadn’t sworn off the blink tag long ago, the middle sentence above would be blinking like John McCain at a presidential debate. Why has the time tested formula been changed? Remember what happened when Coke tried that??

So now you see why I think NAR fell in love with RPR and wrote a fat $20MM check. The past taught us as an association what works, why it works, and leave it to NAR to forget the history only 10-15 years in the rear view. As a NAR member, it saddens me. As a technology guy, it frightens me.

I’d love to hear from other agents, brokers, MLS folks, even some of those tight-lipped RPR people are welcome here. Maybe if we knew more about what was going on some of the skepticism would melt away. That remains to be seen.