Houston Association of REALTORS®

Real Estate Information Symposium

Brian Larson

March 30, 2010

© 2010 Larson/Sobotka Business Advisors, LLC

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Speaker introduction• Larson online

– Blog at www.MLSTesseract.com– Twitter: @BLarsonMpls

• “Miranda” warning– Not legal advice– Seek business and legal counsel– Views are of presenter, not sponsors

or clients

© 2010 Larson/Sobotka Business Advisors, LLC

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MLS data licensing: Legal/strategic view

• Agreement must embody the cost and benefit characteristics that prompted MLS to enter relationship

• Why? “Integration,” “merger,” and “parol evidence”

© 2010 Larson/Sobotka Business Advisors, LLC

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Benefit and cost characteristics

• Per the three agreements...• What does MLS get?

– Principal benefits– Ancillary benefits

• What costs to MLS?– Direct costs– “Opportunity costs”– Risks

© 2010 Larson/Sobotka Business Advisors, LLC

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MLS’s principal benefits

First Am Move RPRRevenue share

7% - 40% share of revenues*

No No

Software tools Realist ValueMap* if exclusive

Yes •Access for non-REALTORS•Improved experience for REALTORS

MLS data share

No Yes? Yes

Consumer exposure

No Yes No

© 2010 Larson/Sobotka Business Advisors, LLC

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MLS’s ancillary benefits

First Am Move RPRNon-compete No No / subject to

Op Agmt?Yes*

Use restrictions

Risk mgmt only*No consumer products

VOW confid. limits / No use to compete with MLS

No contact-productsNo web site display

Warranties- Indemnification

For infringement /only if exclusive

None/none None/ for RPR’s breach

Governance role for MLS

No No No

Damages for other’s breach

12 months’ payments “direct”

None Direct only

© 2010 Larson/Sobotka Business Advisors, LLC

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MLS’s direct costsFirst Am Move RPR

Data interface RETS Not specified (might follow Realtor.com feed)

RETS or other

Notice to brokers & opt-out mechanism (NAR MLSs)

Yes Not specified (might follow current Realtor.com opt in/out)

Yes

© 2010 Larson/Sobotka Business Advisors, LLC

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MLS’s “Opportunity costs”

First Am Move RPRExclusivity Yes for higher

revenuesNo No

MLS receives revenue report

Partial No No

© 2010 Larson/Sobotka Business Advisors, LLC

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MLS’s risks First Am Move RPR

Data licensed All listings All listings All listings, less confid.

Broker consent

Acknowledged NOT acknowledged

Acknowledged

Residual use 12 mos beyond term & already productized

Perpetual? (Ambiguous)

Perpetual if already productized

Licensed uses known up-front

No No No

MLS receives notice of uses?

No No No

Damages for MLS’s breach

12 mos’ payments “direct”

None Direct

© 2010 Larson/Sobotka Business Advisors, LLC

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Questions

More discussion at www.MLSTesseract.com