Realtor.com is relaunching its Website with promises to provide even better exposure to its Realtor advertisers. That's good news for Realtors. But considering the current climate in online lead generation, Realtor.com could benefit even more. Here are a few reasons why:
Realtor.com is still on top with listings
With around two million homes for sale, Realtor.com has the highest number of consumer-explorable listings anywhere on the planet, giving consumers little reason to look elsewhere. To keep it that way, Realtor.com is in agreements with about 800 out of 850 or so MLSs, according to Marty Frame, Realtor.com's vice president of strategy and development.
Yet paying for listings is expensive. Is it worth it to keep good relations with MLSs?
Frame says that as agreements end, Realtor.com plans to renegotiate so that both the MLS and Realtor.com mutually benefit. So while the days of paying MLSs $3 a listing are clearly over, there are other things that can be done - like revenue-sharing with MLSs to help get its products sold, which Realtor.com has already done for several years with MLSs whose Gold Alliance $3-per-listing contracts have already run out. This turns listings into gold in a way that makes sense for Realtor.com and participating MLSs.
For political reasons as well as efficiency, Realtor.com is still interested in getting listings from MLSs, and there is no reason to believe that it won't. It is, after all, the official Website of the National Association of Realtors. The site has to be democratic, which means it showcases all members' listings, without giving advantage to anyone except paying customers who want additional exposure.
Members get their listings showcased for free, whether they contribute one dime to the company or not. As competitors aren't able to offer free listings without strings any longer, that fact alone will go a long way with Realtors.
Competitors can't compete
Realtor.com competitors face two hurdles in getting listings - affordability and acceptance of their businesss models.
MSN House and Home channel (formerly known as HomeAdvisor) doesn't believe in paying for MLS listings any longer. They would rather be paid to display listings, which, for a media company, is smart. Just this past month, MSN alerted all its MLS partners that it would no longer be aggregating listings from them. Instead, MSN engaged in a distribution relationship with Realestate.com, owned by Primedia.
MSN was Realtor.com's biggest competitor, and by white-toweling itself out of the listings arena, MSN conceded the listings race to Realtor.com. In short, MSN would rather cash checks than have the most listings.
Listings are tough for other competitors to get, too. HomeSeekers and Homes.com simply can't or won't afford the $1-per-listing going rate, which could run between $5 and $12 million annually.
Companies such as HomeGain, a referral fee-based brokerage/media company, and Realestate.com are not able to get MLS listings easily because many MLS executives have expressed distaste for enabling any third-party to charge referral fees to broker members. HomeGain solved the problem by purchasing its own listings source, HomeScout, and it relies on agreements with print media companies such as The Real Estate Book to boost its supply of listings.
Realestate.com wooed many MLSs without success, according to reports from some MLS executives. Then it tried to woo Cendant so it could get three brands at once - Coldwell Banker, Century 21 and ERA. Cendant Real Estate Division CEO was so incensed by Realestate.com's business model, which includes sharing the listings with Lending Tree on the back end, that he has vowed to inform all Cendant brand brokers to avoid giving their listings to any third-party company that charges back a referral fee.
The net result is that not one Realtor.com competitor can come even close to having the number of listings that Realtor.com has. While that doesn't translate into cash, it does mean that consumers will continue to flock to it, at the rate of 13 million page views a day, more than any other single competitor.
The Realestate.com/Lending Tree scandal
With MLSs not playing ball, that makes other sources for listings, such as print real estate media companies, more attractive to Realtor.com competitors, but even that option isn't boding well.
A scandal is ongoing in which The Real Estate Book, one of the largest print publications for real estate listings, has filed a lawsuit against a Primedia/Realestate.com affiliate called One Roof Technologies for giving its online listings to Realestate.com and Lending Tree without permission. According to executives, either One Roof or another Primedia subsidiary called HPC Interactive, stripped off The Real Estate Book's copyright data and the listing agents' contact information. Because Realestate.com is obfuscating what happened to the data when and by whom, say The Real Estate Book executives, they are demanding to know about One Roof/HPC Interactive/Realestate.com/Primedia and its relationships, its business plan, the path the data took and who profited, according to the filing.
The answers could be explosive enough to cripple Realestate.com and its partners, including Lending Tree.
While One Roof/HPC Interactive/Realestate.com/Primedia deny any wrongdoing, The Real Estate Book says it is serving the lawsuit nonetheless. Spokespersons for One Roof/HPC Interactive/Realestate.com/Primedia could not be reached for comment.
Needless to say, listing brokers don't want to have their contact information scraped off their listings, as the listings are property ads for the broker.
Under the NAR's scrutiny, members' listings don't end up on sites which charge referral fees or scrape off listing broker data. In fact, by agreement, Realtor.com is forbidden to charge referral fees to brokers, and as stated earlier, listing brokers' listings are posted free of charge.
At this point, all Realtor.com has to do is emphasize to brokers how its data is protected and the difference between companies which charge advertising fees and referral fees. At its most expensive, points out Frame, Realtor.com costs for premium annual advertising for any broker don't approach the cost of a typical referral fee on even one closed transaction.
VOWs
Because listings have been so difficult to obtain by other means, Realtor.com competitors are reduced to asking brokers directly for listings via their IDX (MLS-enabled broker permission based listing sharing for advertising purposes) or VOW portals (MLS-enabled views to the entire MLS database), and that has Cendant and RE/MAX leadership steaming mad.
A growing number of brokers do not wish to see their brokers' listings given to third-parties without their permission, especially by competitors who use their VOWs as gateways to capture consumers. On Yahoo!, for example, a broker may post a VOW and then use the VOW to collect user agreements as leads. That's not the intent of many listing brokers who share their listings in MLS-governed repositories. In other words, they share their listings to get them sold, not to give online advantages to competitors.
Cendant Real Estate Division CEO Richard Smith is mad enough to have written a white paper to the NAR about how he would like to see VOWs regulated, and he spoke tirelessly to brokers at the company's three brand conventions last month. RE/MAX's CEO Daryl Jesperson said he did the same.
Once thought to be the death-knell for Realtor.com and other national real estate portals, VOWs are a threat today, but they may turn toothless, thanks to the new proposed rules by the NAR to be voted upon in May. According to rules which may be enacted by all MLSs as early as January 2004, brokers with VOWs will not be able to publish their VOWs in third-party referral-fee advertising arrangements, which will handicap many business models that compete with Realtor.com.
Other measures could limit the use of VOWs even more. States could enact specific laws labeling them advertising, which means that brokers won't be able to use them in advertising because brokers can't advertise other brokers' listings without permission. And if Smith and Jesperson have their way, brokers will be able to opt-out of VOWs, too.
Any way it is sliced, Realtor.com competitors dependent on getting Realtors to pay referral fees instead of advertising fees will be disadvantaged if they have to battle opponents like Smith and Jesperson.
The bottom line is that Realtor.com will still have the most listings, and its Realtor-friendly business model may make it more appealing to brokers who don't like alternatives like providing media with their listings, and then watching the media get licensed so it can charge back referral fees.
The NAR will vote on the proposed VOW policy in May, at the mid-year governance meeting - the same meeting during which Realtor.com plans its launch.
Published: April 7, 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.
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
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.
