We can expect some hot debate over the issue of Broker AVMs at the upcoming NAR Multiple Listing Issues and Policies Committee meeting during the 2014 REALTOR® Party Convention & Trade Expo in May.
According to Inman’s Andrea Brambila, big brokers would like to use multiple listing service data to create automated property valuations to sell to financial institutions, and they want the National Association of Realtors to require MLSs to help them do it. That’s according to a letter from The Realty Alliance (TRA), a network of 60 or so large real estate brokerages. TRA believes the right thing to do is for amended policy wording to make clear that MLSs must provide MLS Participants with a source of MLS data that the Participants may use in conjunction with their third party technology and software providers — namely, to generate AVMs for the purposes of delivering the AVM results to financial institutions in return for compensation independent of a real estate sales commission.
NAR is set to grapple with a policy proposal stemming from that letter at its midyear conference in May in Washington, D.C.. “MLS participants are already entitled to use MLS information to broker and value real property,” NAR spokeswoman Sara Wiskerchen told Inman News. “So the issue isn’t whether participants can develop AVMs for clients or customers, but rather how MLSs deliver the information to participants to do the AVMs.”
In a recent article in the WAV Group Consulting blog, founding partner Victor Lund points out that “there is a healthy and robust marketplace for AVMs in the financial services industry…Largely speaking, brokers have been cut out of this marketplace.”
“Knowing that a broker’s data in the MLS has value to the financial industry, the National Association of REALTORS® founded a company called Realtors Property Resource™ or RPR. RPR is unique in that it combines public record data with MLS data to provide services to the financial services industry. In exchange for the data license from MLSs, RPR provides REALTORS® with a valuable reporting service so that they can provide the best market information to the customers they serve. They also offer REALTORS® an AVM called the Realtor Valuation Model™ or RVM. The RVM is also a tool REALTORS® can provide to their clients as another reference to Zillow’s consumer AVM, called the Zestimate™. Recently, RPR has also delivered a beta product that allows brokers to display the RVM on their consumer facing websites.”
“CoreLogic is among the leaders in providing the financial services sector with AVMs. They reacted to the launch of Realtors Property Resource by offering to pay MLSs a data license fee so that they could create similar products as RPR for the financial market, products that combine MLS data with public record data. In an update sent to MLSs last week, CoreLogic mentioned that 100 MLSs now license data to them and that they have paid out $1.8M in licensing fees. Some MLSs pass this income or a portion of it back to brokers. Others use the income for delivering more services or offsetting dues.”
We are talking big dollars here. NAR’s investment in RPR is nearing $100 million.
Well-regarded attorney and business consultant Brian Larson of the law firm of Larson/Skinner is running a series of articles that delve into the MLS rules and regulations regarding the use of MLS data by brokers to perform AVMs. Follow the discussions at:
Time for all of us to do some serious thinking on the Broker AVM issue and its impact on brokerage practice. Brian is known for his detailed analysis so we recommend you look for future articles in his series at www.larsonskinner.com