The National Association of Realtors is the largest trade group in the country.
It also owns a tech company. A thus-far unprofitable one.
NAR dedicates $50 of its $120 in annual dues to lobbying and political activities, most of it ($40) dedicated to its “Realtor Party” political advocacy arm.
The trade group also dedicates a $35 assessment on top of dues to a consumer advertising campaign.
A third of the remaining $70 will go to a single NAR program this year, Realtors Property Resource.
Real estate data and technology company RPR is a wholly-owned, for-profit subsidiary of NAR. After the two programs noted above, RPR is by far the biggest program expense in the trade group’s budget.
And unlike the other two programs, it keeps getting costlier.
What does RPR do?
RPR provides a comprehensive parcel-based database of 166 million properties and data tools to all of the nation’s nearly 1.2 million Realtors, free of charge.
The vast majority of MLSs — 658 — have licensed their data to RPR, allowing 1 million NAR members to access their local and regional data via RPR’s tools. More than half of those members have single sign-on or “deep link” access to RPR through their MLS.
“For some time now we have tried to focus our programs, products and services on direct tangible member benefits,” NAR CEO Dale Stinton told Inman via email.
“With over a million members, each with unique interests and needs, this can be a challenge.
“After several years of study, about seven years ago, the NAR board of directors instructed staff to develop and build a parcel-centric database of every property in the country that could be shared directly with every member, and from which other products and services might ultimately be generated.
“In the early stages, we had hoped to create a revenue stream but disappointingly, it did not materialize.
“Nevertheless, recognizing this was a multi-year ‘build’ and that it would need continuous updating to keep it current, and that a customer service center for a million plus members is a major annual expenditure, the board continues to regard and support RPR’s massive, resource-rich … capabilities as a core benefit of membership.”
How many real estate pros use it?
RPR is only available to Realtors, and usage varies among members. “While examining 90-day RPR usage among MLSs and associations across the nation, we notice a broad variance in percentage of users — spanning from the mid 40s to as low as single digits,” RPR said in recent blog post.
Usage continues to grow every year, Stinton said.
“We find when RPR is imbedded (deep linking) in the MLS, usage increases significantly,” he said.
“In areas of the country where MLSs promote RPR, usage runs between 35-45 percent of the membership. In other less cooperative areas, usage is not very high. There is a base of over 100,000 power users who use it frequently.”
“Power users” are those who use RPR more than once a month, which is usually driven by a transaction or marketing activity at the time, NAR spokeswoman Sara Wiskerchen told Inman via email.
“There are 585,000 Realtors that use RPR over the course of the year. With over 220,000 users on RPR Mobile, and annual report creation approaching 3 million reports,” she said.
$215.2 million spent by the end of 2019
RPR’s business model originally assumed that the venture would become self-sustaining by 2012 by selling analytics products, such as property valuations, to lenders and government agencies.
RPR CEO Dale Ross estimated in 2009 that the business would break even by 2012 and eventually generate $60 million to $80 million in annual revenue. After covering RPR’s operating expenses, all profits would go back to NAR to repay its capital investment.
But in the six years since its launch, RPR has struggled to make money, generating a total of $586,270 in revenue from analytics as of December 2013.
The trade group’s Finance Committee reports for 2015 and 2016 omit how much analytics revenue RPR took in in 2014 and 2015. RPR is not included among the programs that bring in revenue for NAR in its operating budget.
RPR received $21.9 million in funding in 2014, $22.9 million in 2015, and will receive $22.9 million in 2016.
The board approved funding of $23 million in 2017 with $23.5 million proposed for 2018 and $24 million for 2019, according to NAR’s May 2016 Finance Committee report.
Source: NAR
Of the funding for 2014 and 2015, about $4.7 million and $5.1 million, respectively, were for data sets sublicensed from Black Knight Financial. These data sets are public records that contain information on tax assessments, mortgages, deeds and foreclosures, according to RPR’s website.
By the end of 2016, NAR will have spent $144.7 million on RPR since 2009, an amount that is projected to rise to $167.7 million by the end of 2017, $191.2 million by the end of 2018, and $215.2 million by the end of 2019.
When asked how NAR would fund the annual increases and whether other NAR resources would be affected, Wiskerchen said, “Funding for RPR is budgeted for in the next three-year planning cycle just like all other programming activities (that’s to say other resources won’t be affected by it because it’s all budgeted for).”
See a summary of NAR’s budget for 2017
‘A bargain’
The above per-year figures do not include the $12 million in funding the NAR board approved last year for the development of two RPR projects in 2016 and 2017, a back-end MLS system called Advanced Multilist Platform (AMP) that may be a new revenue source for the company and a broker data management platform called Upstream.
So far in 2016, the funds have been split between the two projects about 50-50, RPR’s Jeff Young said in mid-May.
Starting in 2018, Upstream, which is not a NAR-owned company, will pay RPR a licensing fee to cover RPR’s operational expenses related to Upstream plus a 10 percent mark-up, the Finance Committee report said.
“[P]erhaps most important, RPR’s strategic systems infrastructure is state of the art and extremely flexible, allowing for such critical projects such as ‘Upstream’ and ‘AMP’ to be seamlessly built on top of it,” Stinton said.
“So while it is true RPR’s overall costs are budgeted to increase 2-3 percent over the next few years, the NAR leadership team and board of directors considers the annual cost of around $24/member to be a bargain for the direct tangible benefit being provided.”
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Not an ‘investment’
NAR does not consider RPR an “investment” from a financial standpoint, and it isn’t carried in NAR’s books as such, Stinton said.
“[I]t is considered an all-member service which is available 24/7,” he said.
“To report the cumulative dollars spent as an equity-type investment is very misleading — if that’s the case, then we’ve ‘invested’ some $200 million in the Realtor Party over the last five years, and some $500 million on the Public Awareness Campaign over the last 15 years.
“Most importantly, RPR is an ‘on the ground’ tangible tool used by our members in a variety of ways to provide reliable information and value to their clients.”
One of the members-only repository’s many capabilities is the ability to convey one of the most accurate valuation models in the industry, Stinton said.
“It is not directly available to consumers because Realtors are in the best position to use the information in concert with their personal expertise to develop property valuations which don’t break the strong fabric of trust inherent in Realtor/consumer relationships,” he said.
“We will leave it to others to artificially raise the hopes of buyers and sellers, only to find what they thought to be reliable may just be marketing gimmickry.”
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