National Association of Realtors Executive Vice President Terence McDermott says the NAR will not immediately sell its interest in RealSelect Inc. when the Internet company goes public, but will evaluate its position again in the next 6 to 12 months.

McDermott's comments come as RealSelect is rumored to be readying documents to submit to the Securities and Exchange Commission in advance of issuing its stock to the public.

The documents are expected to be filed in the next two weeks, but there was no indication when the IPO would actually take place.

Some sources speculate the IPO will be a typical Internet offering -- streaking to some multiple of its initial asking price on the first day of trading.

Said one insider, "It's the kind of thing investors typically are looking for. It's already captured a large share of its market. It closest competitor (for listings) has half as many. And it has contracts in place that go for several years. It should do well."

The NAR currently owns 10 percent of RealSelect -- which rose from the ashes of the failed, $12 million disaster that was the Realtor Information Network.

McDermott said over the past few years RealSelect had helped the Realtors recoup at least half of that money -- "cash in the bank" -- without denting its equity holding. He said he felt the best position for the organization on the day of the IPO would be to hold its shares.

"First of all, we (the Realtors) have to maintain a certain position to keep control of the (REALTOR.com) site," he said. "Our current philosophy is not to do anything for six months or a year. But we have a certain flexibility. There may be a time when the board wants to realize some return."

McDermott did not categorically dismiss the notion of selling off shares and rebating the money to members or offering a dues reduction, "but I'd hope we could make a lot better investment than that for our members." he said.

McDermott said the NAR leadership team of elected and appointed officers -- including himself, President Sharon Millett, President-elect Dennis Cronk and others -- had personally decided not to be involved in the IPO.

"The leadership team is not buying before it goes public. That's a decision we've all made. They don't want to do anything that even has the appearance of conflict of interest. After its gone public, like any Realtor -- or anyone else, they may want to make an investment. But they won't be participating in the IPO."

He also said he hoped an opportunity would be given to members to buy the stock at the opening price.

RealSelect watchers say they are anxious to see the SEC filing documents. Those documents should contain information about RealSelect's current investors -- which largely have come from the venture capital community.

Since opening almost three years ago, RealSelect is believed to have raised another $75 million to $100 million, and it is believed some of that money has come from other Internet interests.

The documents also may list the names of real estate companies and MLSs that secured warrants and options from RealSelect in exchange for signing exclusive listing agreements.

Published: May 11, 1999

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