Supra, the leading lock-box supplier, would like to sell associations on the idea of upgrading their equipment and shifting to a monthly subscription service instead of a purchase solution. Like other Internet-enabled companies, Supra has figured out that subscriptions and renewals are better for cash flow, not to mention company valuation as a piece of a publicly-held company.

The problem is that some associations are alleging that the 43-year-old company is demanding that they comply with the upgrades before their contracts on older generation products have run out. They say that they have been told that Supra will no longer support older electronic keyboxes. Yet, compliance would mean raising prices to members, who may not correlate the value in additional security for their homeowners for $7 a month increase in fees. "That's like saying your homeowners safety isn't worth a latte and a muffin a month," said one pro-Supra industry insider.

While some associations are already compliant, others are up in arms, and some are going before the NAR.

According to Greg Burge, CEO of Supra, the company has every intention of honoring its contracts, and he believes that what has occurred is simply a misunderstanding. (See Agent News' exclusive interview with Burge in tomorrow's edition.) "What we have provided some customers are service extensions or support extensions when their six or seven-year contracts have run out, and the disagreement revolves around their misinterpretation that we intend to guarantee them that we would continue to build the older product," he explains. "I take full responsibility that we have done a poor job of getting our message across."

But this story is bigger than a dispute between a vendor and its customers -- it goes right to the heart of service pricing to agent members and the behind-the-scenes power struggles between MLS organizations, the associations that run them/employ them, and third-party service providers for ever-shrinking revenues.

Each side has a story to tell and an answer to this question -- How much should members be willing to pay for progressive technologies and how should technology companies negotiate or renegotiate existing contracts when they come out with a better mousetrap?

The question has come to a head with the demands of the Large Board Forum at the NAR convention demanding that the NAR "do something" about Supra. According to witnesses at the Large Board Forum at the NAR's Chicago convention last week, Supra may have gone too far its quest for dominance as it has announced its intention to upgrade boards of Realtors to its new more secure lockbox system.

According to real estate consultant Gregg Larson of Clareity Consulting, observed the Large Board Forum and reported his findings on his Web site, where he wrote, "At the show, I spoke with the CEO of Supra, Greg Burge, and several of the large Association executives at length on this subject and heard both sides of the story.

"There is a considerable chasm… Supra wants to phase out its older products, rollout its new products, provide state-of-the art security for consumers, stay in business, and satisfy its stakeholders. The Associations want to control costs to members, continue to use a system that works (if it ain’t broke don’t fix it…), and in some cases, protect a valuable source of high margin, non-dues revenue as they continue to lease a system that is essentially paid off."

Reading between the lines, it appears that Supra's older products work a little too well, and are preventing the company, which is at near saturation, from leveraging growth via advancing technologies. Standing in the way are many associations who prefer their old revenue models, many built on collecting fees from agents long past the expiration of Supra's hardware contracts.

With contracts of about six to seven years in length, the products are capable of serving much longer, writes Larson. Associations are put in a Catch-22 situation. Raise fees and face angry agents, or fail home sellers with less than state-of-the-art access systems to their homes. For some associations, upgrades means new accounting. Said one insider, "When the hardware contracts run out, some associations still charge fees of about $10 a month to agents for the service contract, but Supra is only seeing about $3 per agent per year under the support contract. No one tells the agents that Supra isn't getting those fees."

Writes Larson, "Association executives from across the country ranted virtually the exact same story – "stop holding a gun to my head by discontinuing support on our old system and making us lease (and not buy…) your new electronic system!'"

"I didn't go to the convention, but when our delegation came back we asked what was new and controversial," says Jim Ronding, Realtor. "I was told the thing most talked about with some anger was the Supra electronic lockboxes, the apparent problems with them, the nose-in-the-air attitude Supra has (I have market share, humph!!) and the fact that several people wanted NAR to step in. Our EO said, 'Thank heavens we voted down getting the electronic lockboxes two years ago.' Now we buy all of those lockboxes formerly used by the electronic agents for about $.35 on the dollar."

What is the center of the storm? The eKEY, an "organizational powerhouse that keeps records, makes schedules, retrieves updated listing data, calculates amortizations and reads e-mail. It provides agents high-speed Internet access to the latest MLS listing data based on profile parameters of specific interest."

In other words, it can do what most any other wireless device can do, hence its link to the Palm OS platform. The difference is that it can also be the agent's key to open the lockboxes. Associations and homeowners benefit with tighter security around points of access, as the new keys can be disabled or reactivated daily or weekly.

The Supra eKEY "offers the personal productivity tools of conventional Palm OS platforms, giving agents instant access to important business information — contact manager, date book, address book, calculator, to-do list, memo pad, expense report templates and e-mail applications." According to the site, Supra has partnered with Palm to develop the new handheld organizer that doubles as a lockbox key. "Based upon the Palm Vx™ operating system, the 8MB device combines Supra’s leadership in lockbox technology with sophisticated computer technology to give agents instant access to data that provides them valuable sales information and their clients with answers to property selling and buying questions."

But according to Jim Harrison, CEO of NTREIS in North Texas, his MLS, serving 18 local associations, already has most of those capabilities available for wireless products - for free. "It is not just something more expensive, it is new technology, but in this marketplace we have options," he explains. "We have the eKEY, the Palm-based key, and the dKEY that has two lines of display. The new system is Web-based and generates showing information, and we already have that available."

Jonathon Hill of MRIS says, "Three out of 24 associations that we serve have converted to eKEY. If we could negotiate better terms for our associations we would like to because that is where we take our orders, but it is not anything we are pursuing at the moment."

Both men say that they are working with Supra to provide them access to listing data information, but if the information is already available, they could be paying for one-device software that they already get free on other devices.

How could that happen? Because of revenue politics. Supra is considered a "member service," explained one executive to Agent News. The associations set the pricing and collect the revenues, charging widely varying amounts for the same service depending on their needs. Boston may charge members $25 a month for Supra lockbox services while Dallas may charge $18. Running Supra products and services through the association rather than through MLS organizations opens the opportunity for greater revenues.

Some association officers have told Agent News that regionalizing MLS services to organizations such as MRIS has benefitted members at the association's expense, leaving them few means to collect revenues. By designating Supra as a member service rather than an MLS service, the organizations can comfortably collect revenues without conflict of interest.

But Supra's advancing technologies clearly indicate a blurring line between member services and MLS technology solutions. The company is now in the lead management business, many steps beyond its lockbox origins.

And that is where some confusion and hesitation comes in for some association leaders. Technology advances are coming fast and furiously. WAP-enabled phones and other devices are quickly becoming must-have appliances for mobile professionals. But up to now, they have been an option for real estate consumers. That's why one board leader is reluctant to jump on board with Supra's new plan.

"We use the electronic keypad and have a couple of years left on our contract," explains Judith Lindenau with Traverse Area Association of Realtors.

"Our members' costs have decreased over the life of the contract, so I've been a little suspicious of the handheld solution - it's pretty expensive for such a rapidly changing technology."

Lindenau knows that technology advances usually result in reduced costs, making long-term lease contracts downright foolish for an association to push on its members, she says. Just look at what's happened to computers, PDAs and cell phones already. Now you can get a hand-held organizer that has more programming on it than it took to send John Glenn into outer space - for a fraction of what it cost when it was introduced.

"Some boards have already rushed out and bought Palm Pilots for their members," says Lindenau. "How stupid is that?"

Will Supra be able to smooth ruffled feathers and get its message across? Writes Larson, "Supra has graciously offered to fly its customers out to Oregon at its expense to explain the company’s long-term vision and 10-year product plan. Eventually, key safes will all be wireless and Supra has some very cool new product ideas. However, some of the associations are still seeing stars and are just too darn mad to get on a plane and refuse to raise fees. Hmmm…sounds like a standoff to me. There has to be a compromise and happy ending out there – we’ll keep you posted!"

Tomorrow Supra's Greg Burge explains what went wrong, what's going well, and how he and the company plan to clear up misunderstandings with some associations.

• Click here for Part II

Published: November 12, 2001

Use of this article without permission is a violation of federal copyright laws.

Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.