Realestate.com is resurfacing with a business model so secret, that no one at the company or associates of the company will say for certain what its strategy is or where its listings are obtained.

Why all the secrecy?

Says Robert Turnbull, spokesperson for Realestate.com, "This is not a matter of secrecy. It's a standard business practice to maintain a level of nondisclosure to all nonparticipating entities while partnerships, agreements and business deals are being structured. When all parties involved are ready to disclose, we will do so at a date and time mutually agreed upon."

According to Turnbull, Realestate.com was purchased by the Primedia corporation for part of a "much larger business strategy for Primedia's Real Estate Division. The company, he says, purchased no assets of Realestate.com except the domain name.

"We have an overall real estate strategy that includes the integration of the converging residential real estate markets of apartment rentals, the new home building business and the resale real estate brokerage business," expands Turnbull. "All of these industry categories will play an integrated role in the creation of a combined industry and consumer strategy for the use of the RealEstate.com domain. The consumers referred to Primedia from MSN will serve as one component of many that are the fuel for our comprehensive integrated industry and consumer strategy. Primedia's ultimate residential resale real estate strategy will be announced at a later date."

According to Turnbull, Realestate.com gets its listings from a number of sources. When asked if the listings came specifically from The Real Estate Book or Lending Tree, Turnbull replied, "Primedia gathers listings data from a variety of industry partnerships. Currently, apartment listings originate from ApartmentGuide.com, new home listings from the domain, NewHomeOnline.com and resale listings from various current relationships with MLS’, real estate brokers and related third-party companies.

It is the third parties that are of interest, not only how they get the listings, but what they do with them once they get them. Many online companies have turned brokers listings into lead generation tools, resulting in referral fees for brokers.

"We are presently in discussions with numerous sources of direct industry relationships and are not in a position now to make any definitive announcements," says Turnbull. "We also have no comment about the practices of aggregating content employed by any other real estate initiative. Primedia's ultimate residential resale real estate strategy will be announced at a later date."

What has some industry watchers concerned are recent developments which indicate that MLSs will no longer be the primary source of listings for most portals. Competition was once fierce, with Realtor.com and MSN, back when it was called HomeAdvisor, paid MLSs handsomely for their listings, as much as one to three dollars apiece. Other portals wishing to use the MLSs listings also paid the MLSs the going rate. Now that portals such as Homes.com, HomeSeekers, and others have dropped out of the pay-for-listings rat race, other means have been found to ratchet up the number of listings so that the portals can continue to attract homebuying consumer traffic.

When MSN sent a letter to MLS executives last week, informing them that they would no longer contract for the listings while simultaneously announcing an agreement with Primedia's Realestate.com, some executives went to Realestate.com to find out where the listings were coming from.

According to one MLS executive who asked not to be named, where the listings are coming from is a concern.

"When I got the notice from MSN, I went to Realestate.com to see what was out there, and there were a bunch of old listings," said the executive. "The remarks section didn't match what were in the MLS listings, so they may have taken. I sent Realestate.com a note asking where they are getting these listings, and Jamie Gallow (president of Realestate.com) called me and told me they are from The Real Estate Book. If that is their source of data, then Realtor.com doesn't have a thing to worry about."

The executive said that earlier in the year, he and other MLS executives were invited to dine by Primedia and Realestate.com executives who wanted to feel MLS executives out about sharing MLS listings.

"We wanted to know what kind of presence Lending Tree has, and when we didn't give them a positive response, I guess they decided not to go the MLS route," said the executive.

He continues, "Lending Tree is prominently displayed, and that's a red flag for all of us. Anytime we start hooking up with lenders, we have to ask, 'Are we going to compete with our brokers who have their own mortgage companies?' We want to steer people to our brokers - not away from them. This may be the last straw, and MLSs may start pulling listings back."

According to an MLS/broker data services executive who also asked not to be named, Lending Tree is getting listings directly from the brokers themselves.

The data services provider says that he performs numerous data integration services for a number of large brokers nationwide, which Realty Times verified by his Web site and client list. "The brokerage industry has delicate egos," he says, "and they don't want to make a bad call. I don't think this is the smart thing to do, but it is gaining national momentum. Telling them that Lending Tree is making a play doesn't win me any friends."

He says his client brokers have been told by Lending Tree that their listings will be used to get them referrals for which they pay about 35 percent. "If you can find a Realtor on Lending Tree, it is directing you to the relocation department of the brokerage company."

Editor's note: Each broker has a private policy of how Internet leads are handled, either through the relocation department or they are handed as leads to the field agents who pay a referral fee to the company. If the agents pay the broker for the referrals, then the cost of the referral to the broker is diminished.

How did this deal get done?

"The whole energy here is about driving referral fees," says the data services provider. "Public records show that Fidelity owns 14 percent of Lending Tree. Fidelity owns FNIS. FNIS provides tools to Lending Tree. I can tell you that the data that sits on Lending Tree is the same data that sits on Realestate.com - same presentation, same features. I can't tell you where the data is sitting on Lending Tree, but it is on the same server on both sites."

"One broker was very candid with me and told me that he signed an agreement with Lending Tree that included the right to put the listings on other sites," he continues, "but he agreed not knowing where the listing was going to end up - he didn't know about Realestate.com or MSN. If somebody makes an inquiry, the broker is going to owe 35 percent on that listing."

"The broker agrees to give the listings to Lending Tree," explains the data services provider. "The broker agrees to pay a 35 percent referral fee. The program is you put your listings on the site, we will market them for you, and we will have your listings. We will hand you leads, some will come from your listings and some from our relocation department through a referral fee. The broker understands that she might pay a referral fee for her own listing.

He says, "The broker knows they have signed up for a referral fee, but that inquiry can come from a couple of sources, it will look like it is coming through Lending Tree, and they will owe a referral fee for it."

So what about the FNIS/FNF connection? There are other rabbit trails to follow.

Dick Ward, head of the real estate division for FNIS is a former MSN HomeAdvisor director of real estate. HomeAdvisor was recently renamed MSN House & Home.

Did Ward engineer the MSN/Primedia/Lending Tree deal? "He had nothing had to do with it," responds FNIS CEO Patrick Stone.

FNIS, which offers a number of technology solutions to MLSs, brokers, and agents, more heavily targets title companies, insurance companies, and lenders. The company recently launched QuadMerge(tm), a software for lenders which supplies consumer credit and property public records data with an automated property value in a single report, among other technology products.

According to Stone, FNIS has no interest in Lending Tree.

"It is carried in the Fidelity portfolio," says Stone, "and FNF has looked at getting into lead generation with Lending Tree as a passive investment, but they have no board seat and are not active or proactive in nature.

Says Stone, "We are in favor of lead generation, but we are not in the referral business. Who do you give them to? You run into a huge issue when you start parceling out referrals. Its a Pandora's box."

Yet, according to a February announcement by FNIS, the company is trumpeting a very public relationship with Lending Tree. FNIS is providing Lending Tree with automated home valuation tools, but the relationship goes much deeper than that.

In November of 2002, FNIS made a statement of ownership of 1,582,567 shares in Lending Tree, for about 10 percent ownership. Does Fidelity or FNIS own the shares? Or does it matter since the majority shareholder of FNIS is FNF?

Editor's note 3-7-2203: Realty Times has found that the shares in question are indeed owned by FNF.

Says the MLS executive, "While we are going to continue to watch the situation, it appears as if Lending Tree is getting the listings legitimately."

And, it appears, Lending Tree will be collecting hefty 35 percent referral fees legitimately, too.

Published: February 27, 2003

Use of this article without permission is a violation of federal copyright laws.

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.