It's a lot more fun to be right than to be wrong.

On August 5th, 2003, Realty Times predicted that the key to Barry Diller's and InterActiveCorp's (IAC) strategy in buying Lending Tree is another holding called Citysearch.

What does this mean for the world of real estate?

Real estate is local. Citysearch is the site that IAC owns that can consolidate all the company's holdings into one portal which would include real estate-related searches such as local Realtors, lenders and properties.

Let's see if we can connect the dots.

According to the IAC site, "the goal of the Company is to be the world's largest and most profitable interactive commerce company by pursuing a multi-brand strategy." IACs current businesses include Expedia, Inc.; Hotels.com; HSN; Ticketmaster; Match.com; Entertainment Publications; Citysearch; Precision Response Corporation; and LendingTree (transaction closed August 8, 2003).

So far, every acquisition that IAC has made provides "matching" services electronically to meet local needs. If you want to find a hotel room, you look in the city where you want to stay and get matched to a hotel. Ditto for buying tickets to shows, meeting your next love interest, and now - finding a Realtor. You get matched to what you want online, but you actually use the tickets and services locally. IAC holdings don't fly airplanes, build hotels, or book rock concerts. They just get you reservations, tickets, and dates.

So why the sudden interest in real estate? IAC has closed on the all-stock acquisition of Lending Tree. Lending Tree is a matchmaker, too, not unlike Match.com. It matches consumers to lenders and real estate agents.

IAC doesn't intend to sell real estate. Unlike selling tickets to a concert, selling real estate is a complex transaction filled with a lot of thankless work. Leave that to the professionals - Realtors who are willing to work long hours, put up with cantankerous consumers, and provide all the service that can't be monetized like mowing and watering client's lawns for them while they're out of town so the listing will show well. No, Lending Tree is smarter than that. The company just wants to cross-pollinate its loans with leads to and from real estate agents. It does so by selling what can be monetized very easily online - leads.

But to get consumers to come to the brand takes a lot of advertising. Those Today Show ads aren't cheap, and the Internet hasn't been the slam-dunk Lending Tree thought it would either. The last time the company would talk to Realty Times, (the company has declined repeated requests for interviews) the company had added only 50 brokers to its network over the 600 it had in 2002, according to the post-acquisition conference call IAC chief Barry Diller gave to analysts and investors. Further the company has been removed from advertising on the most trafficked portal - Homestore - because of outcry from agents who did not want Lending Tree 35 percent fees to come back to them from the one portal they had given their listings to for free. Lending Tree has also fared poorly with its traffic partner Realestate.com which embroiled the lending site in a scandal when it was learned that Realestate.com published listings it didn't have rights to from The Real Estate Book.

In addition, Lending Tree is getting kind of a bad rep with the franchise brands. Cendant brands Coldwell Banker, Century 21, and ERA have filed suit against Lending Tree for copyright infringement (using the brands' logos on the Lending Tree Website, among other alleged infringements.) Now RE/MAX has announced that the franchise is suing Lending Tree for the same thing.

That leaves Lending Tree limited to advertising on non-real-estate-specific sites like CBS Marketwatch and other "financial" sites where it competes heavily with its referral fee-based rival HomeGain.

But with its own portal - Citysearch - all the IAC brands including Lending Tree can cross-pollinate. Why make another portal rich when you can build up one of your own? Why pay for advertising when you can charge for it? Go to your city and let that be the start of your search for a home, a loan, and heck- while we're at it - a date.

All that's missing is listings.

Where Realtor.com has the advantage over Lending Tree and its Citysearch is that consumers can go right in and search for homes. The site is huge with millions of listings because Realtor.com has already done the groundwork to get MLSs to give them the listings for free presentation to the public on the Internet.

Lending Tree listings, on the other hand, will mostly only be available through whatever partnerships (Realestate.com) the company can generate and through Internet Data Display and virtual office Websites supplied by the 650 brokers in the network. These are not only guaranteed to provide spotty national coverage, but possibly fewer listings as the new virtual office Website policy outlined by the National Association of Realtors allows brokers to opt out of any advertising arrangement of their listings if they choose. In addition, many consumers will be discouraged from home searches they have to register to get into when other alternatives like Realtor.com exist.

But Lending Tree has a major factor in its favor - the desperation of brokers to capture a lead at any cost. These brokers who are used to paying referral fees for sure-thing referrals from other brokers they know, are now willing to go further. For thirty-five percent of their commissions, they must now compete with other brokers for the lead, and may the best man, er lowest commission, win.

This kind of self-defeating behavior is sure to gain traction in the independent-minded real estate industry. While decrying the pressure on commissions, these brokers are bounding headlong into the one type of relationship that will insure that they go lower. When banks compete - don't they compete on lower fees? When Realtors compete, won't consumers ask them to do the same thing? This isn't advertising in the traditional sense because the broker's brand isn't being advertised by Lending Tree. When the consumer completes the transaction at a deep discount, will he thank the broker or Lending Tree?

And there's nothing like sheer determination to make it work. All Lending Tree needs is enough brokers who feel they can't compete any other way, and they'll get the disenfranchised desperate brokers first, and then they will get the larger brokers who will one day begin to feel they can't beat 'em so they might as well join 'em.

Already IAC has shown solid growth with its other properties. Expedia and Hotels.com for example saw second quarterly sales grow by 73 percent and 47 percent, respectively. Ticketing grew 7 percent to $187.5 million, while personals rose 62 percent to $48.2 million.

Local services, said a report, shot up 495 percent to $45.2 million when CitySearch rolled out its pay-for-performance search business.

While the company didn't make much with real estate last year, next year might be a different story.