Over 1.7 million people a day click on eBay, making it the largest marketplace in the world. The recently added real estate button takes consumers directly to a homeseller auction section, powered by online discount broker zipRealty, which clearly outlines its discounts and goes one step further - it offers money back to both buyers and sellers at closing.

zipRealty is a relatively small brokerage, but it is nonetheless marching across the continent. Starting in key "wired" cities, where the likelihood of encountering Internet-happy home buyers/sellers is greatest, the company has expanded to 12 jurisdictions from coast to coast. That's not deep coverage, but it is broad - just broad enough to put them in direct competition with not only local brokers in their regions, but with the large national franchise organizations as well.

Online discount brokerage is a direct threat to the business models of local traditional brokers, but it is potentially a bigger threat to franchise organizations whose marquee names may lose wattage next to the neon hype of reduced fees to consumers. Are the franchisers going to fight back or will they leave the battle to the brokers?

Most franchise organizations have treated the Internet like a great lead generation package for their brokers, but have done little to cater specifically to the Internet buyer or seller. The sites have showcased their brand's listings, and invited the consumer to contact their agents. But, that doesn't mean they are necessarily asleep at the wheel.

On the private side, organizations like PrudentialReal Estate are busily training and certifying their participating agents in online expertise in order to better serve the Internet consumer. They are also quietly moving all their corporate communications online, until one day in the near future, agents will only be able to get news and access to company benefits online only.

On the public side, RE/MAX, the largest of the 100 percent commission franchise organizations, was the first to go outside its own brand and get help from a potential competitor, engineering a deal with Realtor.com to power its listings. RE/MAX doesn't get into the commission debate, but it does empower agent affiliates with the ability to fully retain their commissions in exchange for paying for their share of office costs. What the brokers negotiate with sellers beyond that is up to them.

The Cendant franchise brands are as different as siblings can be in looks, and they operate independently on the Internet. Century21 and its little sister ERA follow tradition, but are overshadowed in the Internet innovation department by Coldwell Banker. Coldwell Banker has introduced such firsts as email notification of new listings to consumers, customized personal property searches via its Personal Retriever, and the Virtual Open House, the first program to publicly display seller disclosures on the home.

"All the brands are always innovating, researching trends, and trying to stay at the forefront of industry change," says Ted Deutsch, director of corporate communications for Move.com, "but we certainly haven't made any announcements of any specific initiatives (to address discounting.)" Deutsch points out that as independent business owners, franchisees may launch initiatives of their own at any time.

But that could change shortly. Word on the street has it that a nationally known franchise brand is about to introduce a new sub-division which is designed to appeal strictly to the Internet consumer. Code-named "*click.com," the new venture will automate most full service brokerage services and take discount competitors head-on with a fee-for-service schedule that is based in large part on the consumer's ability to navigate the Net. The brand will pull off a neat trick, as corporate integrity will depend on the sub-division's ability to not only meet the needs of the online consumer, but maintain and strengthen the brand's offline service delivery system.

You read it in Realty Times first. Look for an announcement by year-end.

Published: August 7, 2000

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