Realtor.com's new 'Featured Agent' and 'Featured Company' ads -- personal promotion spots which appear on the 'Find A Home' search results pages -- have some folks wondering whether Realtor.com operator Homestore is violating its operating agreement with the National Association of Realtors (NAR).

Realtor.com belongs to the NAR, but the NAR licenses the mark and its goodwill to Homestore, a company which NAR management feels is more capable of successfully operating a commercial site to benefit Realtor members and their consumers than the not-for-profit organization.

According to the agreement, Homestore cannot engage in certain advertising practices for the protection of the Realtor brand and the interests of NAR members.

Under previous management, Homestore engaged in an agreement with Bank of America that was a blatant violation of the contract. The timing alone was terrible, as the NAR was engaged in a battle with big banks, of which Bank of America was one of the lobbying leaders, to keep banks out of real estate. Within minutes of learning that Homestore had announced a strategic alliance with Bank of America that included providing Realtor.com content, NAR leadership contacted Homestore leadership and had the Realtor.com listings removed from the Bank of America site.

Under Homestore's new management, an advertising arrangement with Lending Tree also drew criticism. Lending Tree's business model calls for 35 percent referral fees to be paid by Realtors for leads. The contract with Lending Tree was not renewed. It is unclear whether the advertising agreement with Lending Tree violated Homestore's operating agreement or whether it simply offended some members.

To prevent such missteps in the future, the NAR has insisted on more active participation in Homestore's decisions, especially where Realtor.com is concerned. In October, 2002, a former broker and active Realtor Allan Dalton was appointed as president of Realtor.com. In January 2002, Joe Hanauer, also a broker, was made chairman of Homestore's board of directors. Both men are well-known Realtors.

Can't stop critics

Despite the conspiracy theories put forth by some Homestore critics, there is no evidence to suggest that current Homestore management wants to or would attempt to circumvent the operating agreement with the NAR, or that the NAR wouldn't fail to take immediate action if it did.

Says Bob Goldberg, the 'Featured Agent' and 'Featured Company' advertising spaces are "not a violation of the operating agreement."

"In fact, Homestore has actually sold these banner slots before to the brokers as early as 1998," says Goldberg. "What is different is that Homestore has branded it with a name (Featured Company) and is reintroducing the capability with the product announcement."

To clarify any misunderstandings, Goldberg points out, "In reality, these ads have been allowed from day one with some restrictions.

"Those include:

Published: November 3, 2003

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