When Realestate.com, owned by Primedia, ramped up its referral business model, a number of big-name companies lined up for a banquet including The Real Estate Book, Lending Tree, Fidelity National Information Solutions, Fidelity National Financial and MSN. The only thing lacking was inside access to listings. None of these companies are true real estate companies. They serve the real estate industry with advertising and technology solutions, and most would like a piece of the Realtor's commission. Here's how they are getting it.

Somebody figured this out - it's expensive to pay MLSs for listings when brokers are only too glad to hand theirs over in the name of exposing them to consumers. Not only will they gladly give away their listings, but they will gladly give away the listings of all the other brokers in the MLS database via VOW and IDX arrangements. Further, these brokers have convinced themselves that this is business they wouldn't have had otherwise, and so they are happy to pay 35 percent for any leads that the listings (especially those from other brokers) generate.

What loosened the neckties of the brokers was years of paying hefty referral fees to relocation companies, and many times to relocation companies within their own franchises. With the definition of third-party referrals blurred, the threshold was lowered. Brokers are also aware that for the first time, more leads are coming from the Internet than any other single source.

Now how to get the whole thing to work? Get the agents to pay the fees just like they do with relocation referrals. The broker gets more business coming in without lifting a finger, and the third-party companies who once were the have-nots (as far as listings go) are now the haves. Everybody wins, especially if the brokers and agents don't look too closely at who these deals are really benefitting. It's particularly ingenious for third-party companies that can't collect referral fees because of preexisting relationships with brokers.

Let's look at who benefits and how:

MSN

Microsoft's HomeAdvisor is sorely bruised from competing with Realtor.com. MSN wants to stop paying MLSs and start collecting revenues instead. MSN doesn't sell any products to brokers. Why pay to attract traffic when your traffic can be leveraged to bring income?

Primedia

Along comes Primedia and its three subsidiaries Realestate.com, HPCInteractive and 1RoofTechnologies. Primedia tells MSN that they can deliver listings, but doesn't elaborate how they are going to do this. After all, MSN is a competitor, sort of. MSN alerts all its MLS partners, third-party providers such as The Real Estate Book, brokers and agents that it will no longer take datafeeds or listings.

Primedia plans to integrate strengths from three divisions - HPCInteractive - Internet technologies, 1RoofTechnologies - MLS data integration services, and Realestate.com - a middleman with a cool URL which will front the whole strategy and contract for strategic relationships. What they don't have is a revenue model.

Lending Tree

Enter Lending Tree. Lending Tree has a real estate company complete with broker licensure so that it can collect referral fees from brokers. Lending Tree contacts brokers to invite them to join their referral system and asks them for permission to access their MLS. If the broker doesn't have an IDX solution, the broker is invited to learn all about Lending Tree's handy IDX solution (requires Microsoft Word to open) and is encouraged to fill out a document giving 1RoofTechnologies permission to access the entire MLS to publish the broker's virtual office Website (VOW) or IDX solution.

This gives Lending Tree access to all the brokers in the MLS system while the MLS believes that the true vendor is 1RoofTechnologies. The listings are then used by Lending Tree to call more brokers to get them into the Lending Tree network. Editor's note: The above documents were supplied by a Lending Tree affiliate who wishes to remain anonymous.

Guess what a broker can do who is operating a VOW? They can strip off the listing agent's contact information. The listings are then being given to the broker's user-agreement-signed-sealed-and-delivered consumers.

The relationship comes full circle as Realestate.com uses the listings which have been so freely given to Lending Tree to rebuild itself as a portal.

Where the plan is smart is that the brokers can have VOWs, IDX or any solution for their listings to gain exposure, unlike Yahoo! which only has one broker partner per area. On Realtor.com, agents and brokers are exposed through their listings and other means, but Realtor.com is prohibited from capitalizing on the relationship with referral fees.

Lending Tree, in addition to wearing the halo of "consumer-friendliness" also adds to its cachet by promoting only REALTORS - members of the National Association of REALTORS.

"While NAR did not affirmatively give Lending Tree permission to use the term Realtor in its advertising, says NAR general counsel Laurie Janik, "there is no basis on which we can object to its use because it is a proper use.  "In other words, Lending Tree's program is in fact limited to REALTORS (NAR members), and Lending Tree uses the term REALTOR in reference to our members.  They also use the term in the proper style and include a definition of the term indicating its registered status, ownership by NAR and the fact that it identifies members of NAR."

Lending Tree has in effect taken everything that belongs to Realtors from their trademarked name to their listings and incorporated it into their business model. Take that, Realtor.com.

The Real Estate Book

With the traffic feed to MSN suddenly stopped, The Real Estate Book isn't able to expose its advertisers - agents who pay The Real Estate Book for personal exposure and exposure for their listings - on a major portal. Realestate.com and Lending Tree aren't ready with their broker network yet, so it is an ideal partnering for The Real Estate Book to agree to share listings with Realestate.com.

Fidelity

Fidelity owns a majority of shares in FNIS and Lending Tree. FNIS sells automated valuation tools to Lending Tree, helping to keep revenues in the family. Lending Tree is in the referral business which is a business model not allowed to MLS tool supplier and data aggregator FNIS. With both companies under the FNF wing, FNF wins no matter which way the wind blows.

A perfect plan gets spoiled by greed and stupidity

Everybody would have been happy except 1RoofTechnologies and sibling HPCInteractive did a very bad thing. They took The Real Estate Book's listings, stripped off the listing agent and contact information, slapped an HPCInteractive copyright on them, and put them on Lending Tree.

Some broker advertisers of The Real Estate Books brokers contacted the company and complained that they were getting solicitation calls from Lending Tree to join their network. As they visited Lending Tree, they discovered with horror that their listings had been stripped of their contact information.

The listings were subsequently taken down.

Exhibiting incredibly forgiving behavior for a company that had just been ripped off of its copyrighted data and put at risk of losing its advertisers, The Real Estate Book attorneys are in talks with Primedia attorneys about the matter. Both sides hope the "misunderstanding" can be worked out.

The worst timing in the world

Meanwhile, the timing of this gaffe was a godsend to some factions.

Primedia and Lending Tree, by misusing broker listing data, have handed a sterling example to VOW and IDX opponents why MLSs and brokers should have tighter controls over who gets to use listing data.

The National Association of Realtors is putting the finishing touches on a proposed policy that will govern the use of VOWs that is about to be distributed to members for comment and voted upon by leadership at the May mid-year governance meeting in Washington, D.C. Having a recent and blatant example of how data can be misused won't help VOW proponents cause, and that may inhibit how Primedia and Lending Tree can get listings, as well as limit the number of brokers who are willing to associate with them.

And the competitor this whole business plan was meant to hurt? Homestore and Realtor.com are about to release their new version of Realtor.com, which is being promoted as much more Realtor-friendly and will provide many more opportunities for Realtors to advertise themselves and their listings - without paying referral fees.

The Primedia/Lending Tree gaffe of purloining listings and stripping off listing agents' contact information is only going to give more credence to Realtor.com as a listing repository, because the listing agent and the listing will be exposed without being stripped away. By "keeping it in the family," Realtor.com is in an ideal position to reignite loyalty to the brand by brokers who strayed away during the company's unfriendlier days under different management, or those who are disgusted by Primedia's and Lending Tree's antics.

Now the only thing Lending Tree and its big-name partners can do is appeal to the growing divide in the real estate community - those who oppose VOW-generated referral fees and those who don't.

Tomorrow, read the Realty Times' exclusive interview with Homestore CEO Mike Long.

Published: March 10, 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.