Is Homestore an evil empire, or is new management, including Marty Frame, Realtor.com's vice president of strategy and development, taking undeserved heat over improperly addressed complaints and misconceptions?

On real estate agent list-servs, stock message boards and even in letters to the editor at Realty Times, some agents with very negative attitudes ask the same questions over and over:

• Why do we need Realtor.com?
• Why does Homestore operate Realtor.com?
• Why can't the NAR operate Realtor.com for us?
• They're using our listings to sell our leads back to us.
• Realtor.com is for listing agents only.

And so on.

Some of the negative attitudes about Homestore and Realtor.com are related to Homestore's previous pocket-lining managment, which has since been replaced. But some Realtors aren't willing to give new management much slack. Their discontent stems from a lack of understanding about why the National Association of Realtors employs a third-party to operate its Realtor.com Website in the first place. Since Realtor.com is to benefit Realtors, some members don't understand why all services on Realtor.com aren't free. Since they aren't free, these agents believe that Homestore is just trying to get "into our pockets." Does Homestore have any right to make money?

Realty Times' Blanche Evans went to Frame for the answers.

B.E.: Some agents are very confused. They feel that because the NAR has an agreement with Homestore to operate Realtor.com, that all lead generation services to Realtors should be free. Since you charge for personal promotion, some feel that either the NAR has sold them out, or that Homestore is some kind of evil empire. Why do some Realtors feel that way?

M.F.: Because they worked very hard to go out and get the listings. We all agree that they worked hard. We didn't get the listings for free - we pay the MLSs, and we didn't pay the broker, and that is a sensitivity we are very aware of. In our agreement with NAR, the broker's phone number is on every listing whether or not they are a Realtor.com subscriber or not.

B.E.: So basically the broker's listings are exposed on Realtor.com for free.

M.F.: That is one thing NAR has protected for them. They are the owners of the listing. We recognize they are the owner of the listing, and we give those listings exposure. We give a free listing the same exposure as a subscriber.

B.E.: But those listings aren't free to you, are they?

M.F.: We pay a lot for exposure and for listings. What's free on the Web to the agent costs us millions of dollars. We pay MLSs directly to aggregate the listings, and they all charge different rates according to what we have under agreement. We pay royalties to state associations and to the NAR association, so we pay both the MLS and the NAR.

B.E.: And, judging by the quarterly payments to AOL, you also pay for traffic.

M.F.: We have hundreds of agreements that deliver traffic.

One goal of AOL is not to buy traffic, but to expose Realtor.com so that when they (consumers) type in real estate, and get to Realtor.com, they know who is providing the listings. Next time they want to look at listings, they will go directly to www.realtor.com. Eighty-five percent of our traffic is organic. Remember, we aren't advertised by the NAR. (Editor's note: The NAR does include the URL in its public awareness ads. Frame says," What I was referring to was the realtor.com-specific campaign, which stopped running, I believe, a little more than a year ago.") Consumers are on the Web, and come to us through AOL, Lycos or Earthlink, local TV or ISPs.

AOL and other gateways deliver about 15 percent of traffic for Realtor.com, but AOL is much more important to Homestore's other sites.

The indirect benefit is that they (consumers) find out about Realtor.com through AOL, that we are the place to go for all the listings.

B.E.: Other costs?

M.F.: There are the costs of operating 17 million page views a day. We took a 30 percent spike in the last two weeks. It costs a lot to operate a data center without going up in flames. You need people, equipment, bandwidth. We have 60 people running our data center, no matter if it is a normal or slow traffic day. On Christmas day, we had five million page views, but we still had our data center running.

B.E.: Some of your answers are also well-suited to the next negative question we often see - Why do we need a third party like Homestore to operate Realtor.com? Why can't the NAR do it?"

M.F.: Technology is hard, and technology costs a lot of money. Operating a resource like Realtor.com doesn't fit with the fiscal characteristics of a nonprofit organization like NAR. The NAR controls the entity, but it is more complicated to manage it. NAR is not a technology company, and there is no successful business that is not in its core business. If you have a dependence on a service that is outsourced, you get the benefit of that company's efficiencies. That's why Amazon doesn't own its own shipping and delivery trucks - it uses UPS and Federal Express. IBM doesn't need to own CPUs, it does that with Intel. The benefit to Realtors is that there is an operating agreement which spells out what can and can not be done with data content providers, a set of protections related to the use of the data. Generically, it is easier to beat up a vendor than your own employees.

Another thing is coming up with the money to do the kinds of deals like AOL to give the broadest exposure to listings and to the agents. There is no way a nonprofit entity can pay for this kind of distribution. Anyone can buy a banner ad or search engine keyword, but when you have someone doing it at economy of scale at the regional and local level, you have a cost effective way of getting the traffic which Realtor.com has purchased. We get the lion's share of real estate traffic - 50 to 75 percent of online real estate portal traffic, according to Media Metrix.

All this requires support. Operating a massive site requires customer care. Should the NAR be in the call center business? Paying a data aggregation team to collect data and upload it, in the business of providing direct support to MLS, CRM software and customer satisfaction? This is a business with all the service and support requirements of a business.

B.E.: Let's talk about free vs not free on Realtor.com. What does a subscriber get as opposed to a nonsubscriber?

M.F.: Differentiation. We don't sort the listings differently; we don't put paid listings at the top and free ones at the bottom. Differentiation rolls into personal promotion.

B.E.: Some agents say, 'We have the MLS, why do we need a Realtor.com?'

M.F.: Real estate is consumer driven. On the Internet, they begin anonymously. They want information - the what can I afford, where is it, and then who represents it. They may have a brand preference or a referral to an agent they may want to work with, but they want an accurate view of the market, what they can afford and they want to know who is their partner. That's where we begin and end in that anonymous process to help them come to a conclusion.

B.E.: So Realtor.com helps them at the early stages when they wouldn't have contacted a Realtor yet. Does this save Realtors time and money? Do consumers choose agents from Realtor.com?

M.F.: This is more valuable than that - it is well-documented that consumers who use the Internet spend less time driving around, they have better information and spend more money. They do choose agents from the site. They are looking for property - no one is going to live with the agent. They are looking for the person who represents the property, and they say, 'I have a lot of other stuff to show you that is like what you are interested in,' so in the process of finding a property, you are finding a Realtor that you are dialoguing with. Realtor.com is about that part of the search when you don't know what you want, what you can afford, or where you want to live, Realtor.com helps in those decisions. There is a certain agent or firm that shows up over and again, and they start to think, 'they must be the firm I want to work with' or 'I want to call that person.'

Consumers clearly want to do that on their own, and once they know the who, they connect to that agent and begin to transact. Realtor.com sits at the beginning of that process.

B.E.: Here's one I read recently. 'Homestore uses our listings to sell leads back to us.' True or not true?

M.F.: We have never sold a lead to a Realtor, and we can't by our agreement with the NAR.

B.E.: There was a flap recently about a company called Service Magic that was advertising on Homestore.

M.F.: Here's the exact path to get to what's upsetting them - Realtor.com click to Homestore, and then click to home and garden channel, and then home improvement, then builders, then 'show me all builders,' then other professionals, then Realtors. I don't know what they do but I think they sell leads to Realtors, but they are seven or eight steps away from Realtor.com. The argument is that people wouldn't be on Realtor.com if it weren't for the listings.

Our operating agreement prohibits us from having a 'find a Realtor' button within two clicks of Realtor.com, but some audiences don't care about that. When we found out this was an issue, we took it down immediately and said to Service Magic that some people were objecting. It will stay down, and the NAR and we are going through every area of Service Magic. What people don't know is that we were in compliance with our agreement and still took it down. We could have said, tough, but we are not here to upset people. We decided to take care of this.

B.E.: Last misconception. Realtor.com is only for listing agents. True or not true?

M.F.: Our new products require you to have a home page to attach to a listing. Ours is still the best mass market Web site around, it's configurable and has great content. If you don't have listings, it is a great way to get a cheap web site.

If you don't have listings, the next thing we have is Accelerator which allows you to go behind the scenes in real time and identify yourself to online consumers. "I see you are looking for this and I can help you, here's my marketing plan." This is free of charge to subscribers to the Realtor.com marketing system.

We have great directories that consumers use to find a Realtor. We have two. One is supplied by NAR, and we have one with subscriber-supplied information search by specialties, location, designation. When we redesigned the homepage, the 'find a Realtor' button is above the fold on the front page.

Then we have Market Conditions Reports, which allows the agent to differentiate themselves on service and present themselves as consultants, so there is an end-to-end service life cycle. They are in the service and skills business and can show that they understand the economics of their local markets.

B.E.: So why isn't it okay with some Realtors that you make money? Are there people you just can't please or convince no matter what you say or do?

M.F.: As I said, we aren't here to upset anyone. I think we provide a great service to Realtors and to the NAR. You can get your listings exposed whether or not you are a subscriber, and if you want to subscribe, you get the best products on the Web at a cheap cost to help you with your Internet marketing, on and off Realtor.com. And you have the NAR agreement that protects the Realtor.

Published: January 13, 2003

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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.