Not many companies have survived crooked CEOs, shareholder lawsuits, fraud and anti-trust investigations, and wicked challenges from well-funded competitors -- at least not without retreating into bankruptcy. That Homestore, now known as Move.com, never suffered that indignity is a triumph, but six years after cleaning house and starting over, the stock price of the company is about where it was when CEO Mike Long took over.

Homestore went public in August 1999, with shares debuting over $22. The company was a juggernaut, armed with real estate listings from MLSs all over the country. To get over one million listings, Homestore paid as much as $3 each, and not only greased the palms of local association and MLS leaders, but many leading brokers as well. MLSs counted the payoffs as non-dues revenues. By January 24, 2000, Homestore's shares were as high as $138, and many of these "friends" of the company had cashed out with extremely nice profits.

It was a different story on December 17th, 2001.

Shareholders were burned by corporate malfeasance. Shares plummeted to $1.62, and $190.3 million in shareholder value went up in smoke. Trading was halted, and didn't resume until Mike Long took over in mid-January, 2002. That day, shares opened at $1.40, and closed at $2.65.

As this story is being written, Move.com shares are at about $2.65.

But it's six years later, and that's after the biggest real estate expansion in history. Realtor.com remains the market leader, but has rarely made a profit. It's attracted over $100 million in investments, but doesn't have the Wall Street buzz of competitors such as Zillow.

One reason is the company is stuck on page views, stickiness, number of listings, and traffic dominance instead of what really matters -- that agents make sales from advertising on Realtor.com. That means Realtor.com has to beat other options for agents out there, including offline advertising choices like newspapers.

And so far, it doesn't.

Our first clue that something was wrong was "the shake-up." Allan Dalton vacated the presidency of Realtor.com and is working on a hush-hush project. He was soon joined by David Lereah, former Chief Economist and Steve Cook, former Vice President of Public Affairs of the National Association of Realtors.

It's no surprise after an ouster that a company announces dismal earnings, and Move.com was no exception. For the third quarter, Move.com announced a $4.8 million loss for the quarter, after making a nearly $900,000 profit the same quarter in 2006.

A troubling story was revealed in the Classified Intelligence-Realty Times survey of Realtors and how they feel about their advertising choices. The results were compiled in August 2007, and the report was released in October. What we found is that Realtors overall are unsatisfied with their advertising choices, but they're especially unhappy with the results of their online spending.

Methods of free and paid advertising were ranked most to least effective in generating leads with number one being assigned a value of plus five and least effective given a value of minus 5.

1. Word of mouth - 420

2. Billboards/yard signs - 267

3. Pesonal Websites - 170

4. Office or corporate Website - 96

5. Blogging - 51

6. Free online sites (Google, Craigslist, Zillow) - 27

7. Newspapers - 22

8. Paid online sites (Move.com) - 9

9. Search-engine advertising (Google) - 6

10. Print publications other than newspapers - 5

11. Social networking sites - minus 28

That means that out of 11 types of free and paid advertising, word of mouth (personal referrals), billboards and newspapers were considered the best at providing leads.

Paid online sites came in eighth for producing leads.

Although they spent more of their budgets on national websites such as Move.com, agents are so confused by the results they are getting, that most don't spend more than 10 percent of their annual budget in any single category. A meager 13 percent of those polled said they were spending more money on national sites, and devoted between 10 and 20 percent of their budgets to that category.

According to Classified Intelligence, Move.com was "weighed down by a transfer of its data center to a new Phoenix location and a subsequent "freeze on website innovation," allowing competitors such as Zillow to gain on the company. However, Realtor.com still is number one in traffic and in the vast number (3 million) of its listings. That should make the company even more attractive to agents who buy enhanced ads, but agents are already spending more money than they want to on poor results with newspapers. Will they be able to afford spending money on Realtor.com without getting the results they want?

But Realtor.com, the only camel carrying any weight in Move.com's caravan of websites, is facing stiff competition. Free ad providers such as Zillow are becoming more attractive to partners such as franchisor ERA because of their dramatic increase in traffic. With Zillow targeting brokers and franchises for listings, the company is on its way to producing scalable numbers of listings quickly.

Zillow has another tremendous advantage over Move.com. Zillow is on its way to a public offering. It can get participation (listings) the same way Homestore originally did - by promising brokers, franchisors and others stock options in the company when it goes public. That's how Cendant, now known as Realogy, and the parent company to ERA, got over 18 percent ownership in Homestore.

So why shouldn't Realogy let lightning strike twice? Realogy has no motivation to help the National Association of Realtors maintain dominance in online real estate through licensing Realtor.com to Move.com. And after the fraud fiasco, Cendant "wrote down" its investment in Homestore, the company had already cashed out enough options to make its partnership with Homestore very profitable. But that's in the past - profits are all about the future.

The problem with Realtor.com is that most advertising methods that work for agents are free, including having their listings on Realtor.com unless they want the listings enhanced. Further, Realtor.com is mired in providing the "best consumer experience" even though the consumer isn't paying a dime to use the service. This is the same kind of thinking that will come back to bite Zillow as it struggles to provide a sexier image to Wall Street than yet another advertising medium.

Changing market conditions should be working in Realtor.com's favor. Realtors are closing fewer sales, and inventories have ballooned from under four months on hand to over 10, about 3 million listings. According to NAR, memberships haven't dropped, so the remaining agents should be working even harder to get those listings sold. Or are they?

The bottom line is that Move.com has had every advantage, including a lot of wind in its sails from its partnership with the National Association of Realtors. MLSs it formerly paid were now giving the online advertising company listings for free.

If Realtor.com can't make money in good and bad times, that leaves little hope for its competitors to survive either.

Realtor.com isn't out of tricks yet. The company will make some announcements at next week's NAR convention on some exciting enhancements to its website. It's also bringing on new executives, such as eBay alumnus Justin Miller as senior vice president of product management, and Apple Computer alumnus Randy Wigginton as site-wide architect.

Explains Steve Cook, "Zillow is private, so you don't how well they are doing. Their plan was to disintermediate the Realtor. Now their plan seems to be to build listings and traffic and become an advertising portal, and now they're getting into the mortgage business. Our model is different from theirs. We sell enhancement and marketing tools to Realtors, not advertising."

Says Move.com's new president, Lorna Borenstein, "I am extremely optimistic about the opportunities available to us and am pleased with what we have accomplished in the past 90 days. Some of our businesses are performing extremely well in a tough market, but we are not satisfied with the performance of all of our businesses and are focused on better monetizing our entire portfolio.”

That's been said many times before.

Published: November 7, 2007

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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.