Homestore's eRealtor platform is supposed to change the real estate world, yet the business model for it is more closely guarded than a NORAD missile launch code. Is Homestore hiding a problem, or is it planning the biggest stock-et launch yet?

The first test of eRealtor was debuted at the National Association of Realtors convention in November. A business model was not announced for the platform then and it still hasn't been announced. The only thing that is certain so far is that the Realtor will be the end-user for the platform.

The attraction for Realtors is that the platform will seamlessly populate contact tools, contracts, closing documents and more with one stroke of a key, saving imput time and costs for all associated with the laborious real estate transaction. It will also enable Realtors to set up and collect on affinity agreements with preferred partners. What isn't so clear is whether the Realtor will be the customer, and if so, how will the Realtor be charged? Through a monthly subscription fee ( the way all other online services are going?) Through a licensing agreement via the broker? Through the MLS as an upgrade to MLS services?

When asked, Homestore officials hedge. "It's not a one-size-fits-all platform," explains Peter Tafeen, Homestore's executive vice president. "There will be multiple cost structures."

"The product is in the early stages of testing," illuminates another spokesperson.

Could Homestore be waiting for more information?

Some possible roadblocks

Cost

A cost structure could be the reason behind the delay of the platform deployment. Realtors have shown that they have some tolerance for subscription services, but balk loudly and collectively if they think prices are too high. Any response ranging from indifference to a boycott by Realtors could be disaster for Homestore, so Homestore has to provide the best solution possible in light of all competitors.

Realtors will have to be given compelling reasons why they should adopt the platform and that means that the platform will have to significantly save them time, money, and assist them to attract and retain more business. That's a tall order, but with the partners that Homestore is putting together, it could be feasible - at the right price. The company has to be looking at ways to market its holdings services separately, yet make them attractive to subscribers, too.

For example, a subscription to a web-based application like Top Producer (Web-based TP is not available yet) may be a significantly harder sell than packaged software the agent can own forever for $400, or whatever is the going rate. Let's take a typical online subscription rate of $20 a month. At that price, the software is not only affordable for agents, it is recurring revenue stream for Homestore. That may be feasible if upgrades are included in the subscription. But add that $20 on top of an office management module, an offer management module, a transaction module, a loan compliance module, an affinity partner module, an ISP, DSL service, and that $20 over and over begins to really add up. Will Realtors pay $160 a month or more in online management services, or will the services have to be sold as an ensemble at a lower price?

Homestore may be wondering what is the best way to sell to agents. The company already has a field sales force, but the product offerings are beginning to get cumbersome. Which products do you tout first? Which ones are add-ons? Is the eRealtor platform a means to unify all the Homestore products into one sales pitch? These are questions that have yet to be answered.

What competitors are doing

Some companies like HomeBid, have found that selling door-to-door to brokers and agents is expensive. A promising transaction service provider, iProperty, has laid off workers recently. Others are finding that it's better not to try to sell agents at all. Companies like Bridgespan, Expeditrix, and Realty Plus Online are ruining the business models of companies who want to charge Realtors to use their online platforms.

Bridgespan boasts that it doesn't charge agents to use its transaction platform and that is because it is the closing agent. Expeditrix and Realty Plus Online are charging the service providers like title companies to be on the platform which agents can use for free.

Where Realty Plus Online's business model gets interesting is the fact that it operates another division, Fusion MLS, that provides MLS information management services online. Brokers can get online transaction management services and MLS access with the same service provider. Fusion MLS isn't large enough to scare Homestore, but it shouldn't be discounted either. It does follow Interealty, VISTAinfo, and HomeSeekers as the fourth largest provider of Web-based MLS systems, according to seated agents.

One wonders if Realty Plus Online's business model wasn't the inspiration for the agreement between HomeAdvisor and Interealty, in which Interealty is deploying HomeAdvisor's Realty Desktop, a client/office/loan/transaction management suite that is incorporated into MLS access software, MLXchange, and available by upgrade to MLS members. It is the first Web-based solution for real estate professionals that combines "listing and property data with additional services like lead capture, marketing and customer relationship management," according to a recent press release. MLXchange is being test-marketed, and the companies have yet to announce a pricing structure for it either.

And here is Homestore's biggest threat. While Homestore's competitors drop out of the listings race or refocus their efforts in other directions, very few portals are left to compete with the market gorilla. Almost the last real estate portal standing, Homestore is rivaled only by HomeAdvisor in terms of financial strength, marquee name backers, volume of content, and visibility in the online marketplace, as well as its commitment to the consumer side of the homebuying process.

The sites also have something else in common. HomeAdvisor is also the only other technology company to launch a multi-moduled client/office/transaction management, Realty Desktop, now also in beta market testing mode.

Like some other transaction management companies, HomeAdvisor elected not to sell real estate professionals directly. In fact, the homebuying portal does not rely on subscriptions of any kind from real estate agents to be profitable. It does not offer one single lead generation tool for agents to buy. Real estate agents are welcome to post their listings free of charge, and the leads that come from the listings are theirs to capture. Then how does HomeAdvisor make money? Like Homestore, HomeAdvisor has a healthy share of advertisers, but the real hit is the company's Loan Advisor. Consumers can get loans directly on the site. They can also get loans via Realty Desktop.

With Realty Desktop, HomeAdvisor quickly abandoned any ideas of selling door-to-door to sell agents. Instead, it created a partnership with one of the nation's largest MLS information management system providers, Interealty, to deliver the platform as an upgrade to MLS listings access, a brilliant stroke of marketing genius. The advantage for real estate professionals is that they can get a one-stop-shop productivity experience with the one technology tool they need everyday - the MLS information service. And the heart of the service is listings.

Will Homestore do something similar? The one piece missing in Homestore's holdings is that it has no market share in MLS information aggregation systems. MLS access is the one subscription that is a must-have for any real estate agent. For a company that has been actively buying subscriber bases such as Top Producer (100,000 agents) and IPIX (250,000 real estate tours) among others, to leave the one service which agents have to have is an interesting oversight.

While Homestore's Wyldfyre ramps up MLS aggregation services and an Web-based MLS information management system of its own, it has to be aware of the market share already garnered by competitors such as Interealty, which has announced the seating of 270,000 agents, or one out of three agents.

Homestore's business model could include the addition of MLS information management systems to sweeten the pot for MLS companies (and to instantly buy market share,) with which Homestore may have exclusive operating agreements for the public display of listings. What worked to build the model could sustain it as Homestore retools those agreements to become the exclusive provider of MLS and information management systems to MLS members.

Affinity partners

The promise of an affinity arrangement isn't necessarily a slam-dunk either for the platform or the broker, nor has it proven to drive more Realtors into using the Internet, something Homestore may also be considering. Brokers who may wish to offset transaction management costs may find that some service providers at the local level are reluctant to pay agents for the privilege of being their partners on a platform, even if it means driving them business. And that's because many service providers such as lenders and inspectors are used to being fed business from Realtors without any favors in return, or the regulators will come down on the hapless agent.

Some practitioners are trying to turn that around. A new company called Home-Link offers Realtors a transaction platform that encourages affinity partners, and helps brokers create a revenue stream by charging marketing fees to service providers that got business for free in the past. But a recent article in the South Florida Sun Sentinal reveals that some service providers aren't going to pay up quietly.

According to the report, a home inspection trade organization is upset by the fact that members are asked to pay an advertising fee to be on the Home-Link system employed by Arvida Realty, one of Florida's largest real estate brokerages. While Arvida calls its plan a partnership opportunity, the Florida Association of Building Inspectors, a 235-member group of private home inspectors, is asking its members not to get involved. Will all service providers feel that way? Clearly the lender backers of the eRealtor and Realty Desktop programs don't think so, but brokers may have to be hand-delivered national and local affinity partners from which to collect "marketing" fees.

The eRealtor initiative is clearly important to Homestore and given the scope of the platform, it should be more than an investor tease. With training, support, agents can be encouraged to use online platforms, and if Homestore can bring a platform at the MLS level, it can reach hundreds to thousands of agents at a time.

Once the business model is announced, perhaps it will be more understandable why the company was so cautious about cloistering the details.