The dotcom field is littered with wounded or dying companies that broke the rules of the real estate industry. These are unwritten rules, but they must be respected if a company wants to make money in the real estate sector.

What are the rules? They aren't published anywhere, but you'll find out soon enough if you break them.

Rule #1: Don't make fun of Realtors

Rule #2: Don't mess with Realtors' money

Rule #3: Don't get between Realtors and consumers

eBay

eBay just broke Rule # 1 with its airing of a commercial that allegedly makes fun of traditional real estate using a near likeness of RE/MAX International, Inc.'s signage, and the timing couldn't be worse. Astutely realizing that eBay's transgression also impacts rules #2 and #3, RE/MAX didn't see the humor and filed a lawsuit claiming trademark infringement.

eBay is attempting to facilitate consumer-to-consumer home sales on its auction site. Realizing this won't work in the kind of volume it takes to keep investors happy, the site is retooling itself to entice Realtors to advertise their listings, too.

Now, just when it needs to connect with Realtors, eBay has riled one of the largest franchise organizations in the nation. From the nuisance and expense of dealing with a lawsuit, to potentially alienating many RE/MAX brokers and agents, eBay may pay a heavier price for its blunder. RE/MAX is an unhesitant litigant, and plays to win. The franchisor has historically used, and will use, its considerable public relations machine to publicize suits in which it is embroiled. Now other Realtors will be alerted that eBay is a rule-breaker, whether it deserves that reputation or not.

Adding insult to injury, eBay has exposed itself to its rival, Realtor.com. While eBay could have selected any franchise's logo to spoof, it picked RE/MAX's. But now that shareholders have approved the Move.com purchase by Homestore, eBay probably wouldn't have been any safer using a Cendant brand's logo, either. But choosing RE/MAX all but assured a suit, and a sizeable blip on Homestore's radar screen.

eBay should have paid attention to the prices paid by others who broke the rules.

HomeSeekers

It is eBay's partner HomeSeekers' daunting task to bring Realtors and their listings to eBay. An Internet pioneer and survivor, Homeseekers is the most successful of the non-NAR strategic partners to maintain a consumer listings site and sell its products to Realtors.

That makes HomeSeekers the perfect partner to design eBay's real estate space, but HomeSeekers wouldn't be in the consulting business at all if it had been allowed to stick with its original business plan. HomeSeekers is a consumer listings portal, just like Realtor.com, but the Realtor.com Gold Alliance deals are making it too difficult to compete, causing HomeSeekers to go broker to broker to get listings. Killing its competitors with skyrocketing customer acquisition costs like that, Realtor.com also intimated to associations and brokers that its competitors, as outsiders, don't have Realtors' best interests at heart. This caused many Realtors' organizations and brokers to assume that if HomeSeekers hadn't already broken Rules #2 and # 3, that it would soon enough.

Recognizing that perception is reality, HomeSeekers has spent the past year reinventing itself as an Internet MLS information services provider, among other things. While new revenues are about to start the billing cycle, the future looks bright, but HomeSeekers stock was nearly done in while it piled up debt building its new infrastructure.

HomeAdvisor

HomeAdvisor suffers from the outsider syndrome. Since it isn't a real estate organization, nor has a strategic alliance with any real estate organization, HomeAdvisor is viewed with suspicion by many associations, brokers and agents. Never mind that it actually has done nothing but promote agents' listings for free. HomeAdvisor has no current business model that requires one dime from Realtors, nor does it transact real estate in any manner, but that doesn't stop the industry of accusing HomeAdvisor of breaking Rule #3 anyway.

According to the latest story on Homestore and its competitors in a recent Industry Standard, the author sees the number of listings that Homestore has compared to its competitors as a clear market advantage. Realtor.com has 1.4 million, or 90 percent of online listings available, HomeSeekers has one million and HomeAdvisor is in third place with 800,000. While HomeAdvisor has some plans to deploy its software, and after all Microsoft, HomeAdvisor's lead investor, is a software company, the company has been effectively blocked from providing services that could have leveraged its traffic more. While some companies went broke creating lead generation tools for Realtors that had to be heavily promoted by mobile sales forces, HomeAdvisor sat tight, but failed to produce a revenue model to launch its service more effectively than as a thorn in Homestore's side.

Realtor.com

Using the considerable leverage of its listings, many acquired in exclusive arrangements with Realtor organizations and brokers, Realtor.com is lumbering toward profitability by selling back lead generation services to its agents via the agents' listings. While a brilliant idea, Realtor.com is almost too big for its own good. In the drive to produce profits, the company has to have as many ways as possible for Realtors to capture leads so that the company can sell agents an ever-escalating and increasingly expensive suite of tools to nail down the customer. That has some agents crying that Realtor.com is breaking Rule # 2. The problem is that the listings, the point of origin for the leads, are so visually busy that there are many places the customer can get "lost." Some agents feel that squarely violates Rule # 3 and have started watching over the site to make sure that leads are directed back to the agents who paid for them.

But Realtor.com is paying the price. Confusion over what the Internet is and how it should work has prevented many agents from buying lead generation tools, and Realtor.com now finds itself, due to its exclusive arrangements, in the very expensive position of having to sell agents on the Web first, and their products second. They are educating Realtors one office at a time in some areas. The result? About 131,000 lead generation packages have been sold to Realtors, but it could be much higher if the lead generation was easier to grasp.

HomeBid

Homebid took a lot of heat last year for changing their business model horse in mid-stream. What they did was recognize that something they thought was going to work didn't. What didn't work is that they tried to introduce an alternative to the MLS, which should have pleased most brokers, except that the MLSs get their direction from the broker members of the associations that run them or hire them.

Homebid's revolutionary idea was to provide an online auction platform as an event that would enable buyers to see each others' bids on selected homes. Buyers and homesellers were supposed to benefit, but brokers couldn't get past the old way of doing things, namely that buyers shouldn't have the same negotiating advantages as sellers.

By trying to fix what brokers felt wasn't broken, Homebid broke Rule #2. While it reinvented itself into a more politically correct offer/transaction management platform, the company took a substantial blow and was in recovery for months.

HomeGain

HomeGain acts as a referral service for agents to capture leads from anonymous Internet sellers. According to an early August 2000 release, HomeGain was ranked No.17 out of 50 companies profiled in the Wit Soundview study, “Consumer-Focused E-commerce Companies.”

A licensed real estate broker, according to the Web site, HomeGain allows sellers to privately review listing proposals from agents. HomeGain signed up a lot of agents who were tempted by a new way to capture leads using the Internet. But other agents decided that HomeGain had simply found a new way to violate Rules # 2 and # 3.

HomeGain has its supporters and detractors, but the detractors grew louder around mid-December, when an agent alerted the rest of the community that HomeGain had sent the following message on its newsletter to sellers:

THE RIGHT REAL ESTATE AGENT IS WORTH A BUNDLE- BUT 6%?

Screen qualifications of top producing agents in your neighborhood to find out who sells the most homes. Then compare and contrast their fees, anonymously and FREE.

While some agents feel it is okay to pay front or back-end referrals fees to the site for legitimate referrals, other agents resent paying referral fees on top of discounts due to seller expectations.

While the company has had some success signing up 1.8 million consumers and more than 44,000 real estate agents, according to its own press, HomeGain closely guards how many homes have actually closed with the service involved. One reason this may be difficult is that some agents were signed up on other programs that do not require the sharing of closing information with HomeGain or the payment of referral fees.

The e-brokers

By daring to utilize the Internet to pass technology-based savings along to consumers, e-broker eHome has been forced to reorganize into an application service provider, licensing its transaction software to other brokers, title companies and other customers. It was not alone in breaking Rule #2. Other brokers who are not faring so well are Homebytes.com, which announced some recent layoffs in staff. Even e-broker bellwether zipRealty has been quiet lately, with no new expansions announced.

But rule-breaking isn't just limited to those who want to do business with Realtors. There's also the brokers themselves who want to blast open new opportunities at competitors' expense. A new television ad in the New Jersey market depicts an overweight Realtoress in front of a luxury car, a cartoon of a greedy 6 % commission salesperson. Your Home Direct is the company airing the commercial, hoping that consumers will see a difference between their services and those of other brokers. And they don't care that they are breaking Rule # 1.

YHD demonstrates that rule-breaking can be done by brokers as well as dotcoms. Maybe that is where the real threat lies, not on the Internet, but within the ranks.