Put two high profile real estate-related businesses in an alliance, and you've got more synergy that can lead to a closed transaction. But the business model has to work for all concerned - the partnering service providers and their consumer bases, which may or may not include Realtor and consumer components.

While the concept isn't new, distribution agreements are an efficient way to get the most services in front of the biggest buying audience. Is this advertising? Not really. They're more than that. It's more creative and meets more needs between the partners than simple ad placement arrangements.

In the old days a company might want to take advantage of the distribution by a newspaper - its readers. To do so, the company would purchase advertising space. And that's where distribution agreements have a lot in common with advertising. Except that with a distribution agreement, the two companies are sharing more than eyeballs, they are also co-promoting each other's products and services. Some distribution agreements allow providers to fill a content or service need which is very different from filling space with an ad.

The arrangement between HomeAdvisor and LendingTree Realty Services Network is a perfect example. To get in front of HomeAdvisor's millions of consumers, LendingTree wants to do more than buy an ad, it wants to do point-of-sale business which is entirely possible in the online environment.

Both HomeAdvisor and LendingTree want customers to use their services and they also want to do business with real estate agents. HomeAdvisor wants agents' listings to attract consumer visitors to the site, and LendingTree wants to do loans. HomeAdvisor is very careful not to charge Realtors for their listings or to have any service which the Realtor could misconstrue as having a conflict of interest. LendingTree wants to build its business by having Realtors suggest their product lines. Both HomeAdvisor and LendingTree feel they will do better business by bringing business to the Realtor - business the Realtor might not have had otherwise.

This way, both HomeAdvisor and LendingTree become lead generation sources looked upon favorably by Realtors.

Because HomeAdvisor is not a licensed real estate broker, it can't collect a piece of the referral or the loan as a loan originator, but it can charge a fee to LendingTree as a distribution partner for access to its traffic. What's not to like? Consumers can get loans, agents get new customers, and both LendingTree and HomeAdvisor profit by making it easier for the consumer to make choices.

While some naysayers might point out that it was the agents' listings that brought the consumer in the first place, it is the collective listings, loan features, advice, and news that attracts the consumer. If a particular listing should invite an inquiry, HomeAdvisor doesn’t stand between the consumer and agent, and it certainly does not ask for a referral fee.

But the lending area is a different channel where leads can pass through - apart from listings.

Says Matt Heinz, lead product manager for HomeAdvisor, "It's been done for years on the Web. One company has access to customers and the other company wants access, too, so they buy access. It's a win/win for both companies."

He explains, "It is an advertising distribution agreement between MSN and LendingTree to give access to HomeAdvisor. These are consumers that are in the market to find a Realtor and that is part of LendingTree's business model. It is just advertising - if you have Kraft foods and want to reach people who cook, we can give you a direct link to an action. With a magazine and an ad, the consumer has to go outside of the magazine to take action. The advantage of the Internet is that the call to action is immediate. The consumer can click through immediately and search for an apartment, or find a Realtor. Eighty five percent of homebuyer's online find a Realtor from a listings, but this gives Realtors a way to be found besides listings.

"There is a portion of people who come to the Internet to find a Realtor, then go through the home search process. This is who this tool is geared for," says Heinz. "They use LendingTree's professionals, and LendingTree is responsible for figuring out who they are. We are providing an additional service to the minority of homeshoppers who are looking for a Realtor first. LendingTree charges a referral fee to the agent. In the distribution agreement, MSN gets a portion of it as an advertising fee.

"We don't screen the agents, we are not a licensed broker," continues Heinz. "We have the eyeballs, they have the system in place to parlay their network of real estate professionals onto an online resource. That is the core essence of a referral business. They are linked to the Realtor in terms of getting compensation for us because we provide a bolt-on. service. We have something they want, and we want an advertising arrangement."

To sweeten the deal for consumers, LendingTree RealtyServices enables consumers to complete one simple form describing their realty needs and then choose a real estate professional in their local area that best suits their situation. In most states consumers who close a real estate transaction via the RealtyServices Network are eligible for a gift certificate that, depending on the sale or purchase price of the home, can equal up to $1000 in merchandise at Home Depot.

The LendingTree RealtyServices network is made up of approximately 7,000 trained and certified real estate professionals who represent 650 real estate companies nationwide.

The beauty of distribution agreements is that they don't have to be exclusive unless it serves the interests of both parties. For example, HomeAdvisor has a completely different distribution agreement with Realty Times which also promotes real estate agents. This is a unique advertising opportunity that is part of a content/revenue generation agreement between the two companies. Realty Times' news and "Market Conditions Reports" provides valuable content for HomeAdvisor's visitors, but the news also serves as a lead generation tool for agents who "report" the market conditions in their areas. Visitors get information they can get nowhere else, and then they can contact agents directly. Agents don't pay referral fees or suffer any interference. Realty Times uses HomeAdvisor's traffic to bring leads to the agents to whom it has sold lead generation packages, and HomeAdvisor uses Realty Times content to bring more value to site visitors.

That means that agents can choose the lead generation tool of their preference if they want to be found on HomeAdvisor. They can be found through their listings, through LendingTree's network of agents, or through Realty Times' news and advice for consumers.

With Realtors uncertain how well the Internet is really performing for them in terms of lead generation, having multiple channels for lead generation on key portals such as HomeAdvisor is a sure way to increase leads as well as to know which portal and vendors are bringing the most leads.

Published: May 28, 2002

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