HomeSeekers.com (NASDAQ:HMSK) stock soared 30 percent over the critical $1 a share benchmark with over 3.1 million shares traded Tuesday on the news that it has entered into a five-year strategic and technology alliance with the nation's largest association of independent brokers, the Realty Alliance.

Under the agreement, Homeseekers will jointly market and distribute technology solutions to the Realty Alliance and its members and will develop, host and maintain the Realty Alliance national real estate web portal. According to Homeseekers, the deal could potentially serve as many as 64,000 real estate agents, who are responsible for approximately 20 percent of the nation's residential sales volume, $160 billion. "Based on the nationwide average expenditures by a single real estate agent of approximately $800 per year, the technology target market for the Realty Alliance agent base is approximately $50 million annually," said the Homeseekers release.

In case readers aren't familiar with the clout of this august group, Realty Alliance is a trade group of about 47 of the nation's largest independent residential real estate brokers in the U.S. and Canada. The group's purpose is to provide programs, products, services to its members at better prices and terms than they can get individually. Realty Alliance members include nationally known independent leaders and franchisees such as Long and Foster, DeWolfe, Baird and Warner, Arvida, Royal LePage, Edina, Realty One, Smythe Cramer, and Ebby Halliday, among many others.

Three years ago, the support of the Realty Alliance enabled Homestore to launch its Broker Gold program in which brokers were given stock options and payment for listings in exchange for exclusive rights to publish Internet listings. Between the Broker Gold and Gold Alliances with MLS organizations, Homestore was able to achieve dominance in online national listings, helping to propel its stock valuations to over $130 per share at one point, and to drive some competitors out of business.

Gold agreements also had Homeseekers on the ropes, downsizing staff, and watching its stock plummet to $.15 from an all-time high of $26 per share. The company took evasive action to develop other areas of its business not in direct competition with Homestore, and before long, it was able to announce a key strategic alliance with eBay, and was executing on its fledgling MLS information management business.

Now it's payback time for Homeseekers.

Homestore's recent alliance with Cendant, parent to large franchise brands such as Century21, Coldwell Banker and ERA, has some brokers wondering if they want to feed the giant listings portal any longer. While Homestore and the NAR claim that Cendant brands gain no marketing or pricing advantage over other brokers, some brokers remain unconvinced.

"We are concerned about some of the things they are doing, mainly their relationship with Cendant," says Charles McKee, president of Realty Alliance. Yet, he maintains that the Homeseekers deal is not a snub toward Homestore, and is quick to point out that there is a difference between its former arrangement with Homestore and the new deal with Homeseekers.

"Our agreement in 1998 with RealSelect (Homestore) was about the aggregation of listings on a national listing service. The original agreement has expired, and 28 of our members have renewed the Broker Gold agreement," says McKee. "The agreement with Homeseekers is not about listings. It's about technology. Our members are free to put listings on any national Web site they choose."

"We wanted a partner to provide technology products to our members, and Homeseekers will be able to help us develop products," says McKee. "And we got two seats on the board so we will have input into the kinds of products that our members need and want. It will be a benefit to our members to own stock in the company that they are buying technology from."

One technology that the Alliance liked was Homeseekers ready-made Broker Reciprocity solution, which could save members thousands of dollars in development costs. "If you are interested in Broker Reciprocity, you can get Citynet from them and it is ready to work in a reciprocity environment in a major MLS," says McKee.

So flush with stock options, and low-cost technology solutions, Homeseekers' new customers hope to make and save a lot of money. "Most of our members have huge technology budgets," says McKee. "Homeseekers can save them a lot of time and expense, and they don't have to reinvent the wheel."

Adds McKee, "The products and services will be made available to everybody in the industry. This isn't just a technology play for our members, this is for all brokers."

How much will this deal impact Homestore, Homeseekers and the rest of the marketplace? "We were the catalyst in the Broker Gold agreements, and we made that successful, and we can make this program successful. It's about the industry and making technology available for everybody," says McKee. "But like every other deal, we still have to make it work."

Published: May 2, 2001

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