Gotta love the National Association of Realtors' new and very open-to-the-public Realtor.org site. Operated independently of Realtor.com by the NAR (that's right - not by Homestore,) Realtor.org is a tell-it-like-it-is real site for Realtors.

It also may be a great place for Homestore investors to get information on the intentions of the company, as many industry watchers feel that Homestore's recovery will depend on its customer relationships.

Homestore's new CEO Mike Long has written an open letter to all Realtors explaining the company's reorganization, which focuses all products, services, and support on Realtors and the real estate industry.

Long says "Homestore expects to regain strength this year and be able to meet customer commitments and fund growth."

Key statements include the following: "In early February we implemented a new organization designed to place you, our customer, at the center of all we do. Last week we launched our Customer Advocacy Program, which will make employees throughout our company responsible for directly contacting our customers, understanding their needs, and keeping the entire company focused on meeting those needs. In addition, we are eliminating businesses that do not support our focused objective of making real estate professionals more productive and profitable."

"These changes have strengthened our company. We recently reported that we expect our cash flow from operations to be positive for the full year 2002 and that we had cash available to fund operations of $48 million at December 31, 2001, in addition to restricted cash of approximately $100 million. I am delighted that in a challenging economic climate where so many companies are having financial difficulties, we have the financial resources to meet our customer commitments and fund the growth of our business."

In a two-pronged show of support for Homestore's custody of Realtor.com, NAR has posted Long's letter alongside a question and answer page directed to association executives, brokers and members. It addresses issues related to REALTOR.com, the NAR's public Web site for consumers, which is operated by Homestore by agreement.

Tough questions about Homestore's viability and its commitment to the continued health of REALTOR.com are addressed.

Among concerns for association leaders are the reduction of listing payments by Homestore.

Q.Associations received notice from Realtor.com that their non-dues revenue was to drop to fifty cents per new listing. Does NAR approve? Can it be reversed?

A. "NAR is aware of Homestore's need to reduce the revenue share that they have had historically with data content providers. Homestore made us fully aware of their financial need to take this step upon renewal of their current agreements. "We are, obviously, disappointed at the adverse effect this will have on board and MLS budgets. The need to reduce the revenue on Homestore's part reflects the realities of the marketplace. These reductions comply with the contracts negotiated between RealSelect and the data content providers. "Certainly in the current economic environment we can't see any reason why Homestore would reverse its decision. As you may recall several years ago when there was a Department of Justice (DOJ) review of certain complaints made by competitors in the marketplace about Homestore's activities in this area, the DOJ was satisfied that NAR did not participate in the creation of any of the exclusive relationships between RealSelect and certain data content providers. To indicate now that there might have been an implied guarantee of any part of these revenues could put NAR in an awkward position with the DOJ.

Addressing a question as to whether NAR will take over operation of Realtor.com, and where the operating funds will come from, NAR responds:

"NAR has no plans nor do we have the right to take over REALTOR.com at the moment because Homestore is complying with all of the requirements of our operating agreement. Additionally, REALTOR.com is a highly successful Internet site that has a commanding lead in listings and consumer participation. It is doing the job that it was founded to do extremely well, which is to bring millions of consumers per month to the REALTOR.com site and thus create exposure of our members' listings and leads for agents and brokers.

"We do, of course, have every right to move REALTOR.com to another host operating company should Homestore fail in the future to be able to fulfill the terms of our operating agreement. We certainly don't ever expect this to happen, but of course, when dealing with such a significant asset, we have contingency plans from both a technology perspective and a business model perspective to deal with that challenge should it occur.

"Our goal is to make sure that REALTOR.com continues to be up 24-hours-a-day and continues to deliver value to members and consumers every day without regard to who operates the site."

In conclusion, NAR writes: "NAR believes that the new management team of Homestore, headed by CEO Mike Long is on the right track and has the focus and experience to correct the accounting problems, and more importantly refocus all of the energies and assets of Homestore on its core business, REALTOR.com and the real estate space."

"We believe that the comments in Mike Long's letter below should answer any questions anyone has about their viability. As he states in this letter, Homestore will be able to continue to invest in their business and get it back on a significant growth path this year because it has the cash on hand, valuable assets in its portfolio, and expects a potentially positive cash flow this year.

"NAR senior staff and the elected officers will participate as much as possible in not only monitoring our significant asset REALTOR.com, but helping Homestore and REALTOR.com management make positive product development and business model decisions that will make the site even more beneficial to our brokers, agents, and the consumer.

"We are focused on ensuring that the next phase of our partnership with Homestore for the operation of REALTOR.com is one of solid performance for REALTORS®. We are also focused on ensuring that our partnership with Hoomestore is one of solid financial performance so that they have the wherewithal to continue to serve our members' needs."

To access Long's letter: Click Here

To access the Q&A: Click Here