Homestore CEO Mike Long's biggest challenge in getting the company to profitability is dealing with the disinformation, alienation and belief systems of Realtors that have turned many of them from supporting their own brand - Realtor.com.

Here are some of the objections Long hears from Realtors about Realtor.com, along with his responses:

1. Realtor.com competes with my brand.

   "Consumers believe Realtor.com is a not-for-profit," responds Long. "They believe it is there to help them - an industry service. It is the Realtor - online."

2. Realtors don't need a national site for relocation because real estate is local.

   "About 75 percent of buyers are moving within 50 miles of where they are presently living," says Long. "And they come to Realtor.com to check out various neighborhoods, zip codes and streets, even if they are moving within the same city."

3. Realtor.com is expensive

   "It's about $30 for the life of the listing," says Long. "Pricing is based on last year's data, if your listings go down, you'll pay less next year.The averages are to the Realtor's benefit."

4. Homestore and Realtor.com are only interested in Wall Street and investors

   "The good news is if we improve our performance," says Long, "then we have access to the capital market. If we are not profitable, then there is no opportunity to raise capital."

Long says there are two trends emerging that Realtors need to be aware of, whether they are sold on the idea of supporting Realtor.com or not:

1. Realtors must protect the consumer experience, or allow third parties to force change upon the industry by giving consumers what they want.

2. Consolidation of traffic is both an opportunity for the Realtor and a risk. The new companies understand this trend, but many Realtors don't understand the high costs associated with assuring that real estate channels that welcome consumers are also Realtor-friendly.

Consumers using the Internet is on the increase, and Realtors for the most part are not responding to inquiries which creates a bad experience for the consumer on Realtor.com. In addition, consumers are demanding more information from online sources, and to date, only one-third of listings have enhancements that make them more robust than the bare essentials found in a typical MLS listing.

"Two-thirds of listings are there for free," says Long, "and two-thirds of 2.2 million listings is a lot. If you have the top ten percent of agents representing one-third of the listings, and those are enhanced but the remainder aren't, then that is a poor reflection on the industry. Traffic will naturally be funneled to agents who have enhanced their listings."

With over 75 percent of buyers starting their search for homes online (as anticipated by new NAR figures yet to be released,) Realtors must consider who will be the first point of contact when they go online. Will consumers find a pro-Realtor place, where the site works to protect the image and commissions of Realtors? Or will they find a site that feeds consumers' fears about quality, service, and cost.

"We compete by increasing traffic to Realtors," says Long. "Not every consumer goes to Realtor.com but we have about half who type the word Realtor and the other half is brought in."

Buying traffic to Realtors is a cost that is increasing, warns Long.

Currently there are four ways to get traffic on the Internet, almost none of which favor the buying power of the individual Realtor except listing enhancements, says Long:

1. Organic - a site originates traffic through word-of-mouth, recognition. Realtor.com originates organic traffic from AOL, MSN, etc.by operating their real estate channels or providing listings.

2. Search words - a site buys clickthrough rates on search engines such as Google in a real-time auction which again favors large companies

3. Advertising - Ads on the Internet can be interpreted as block, banner ads and can run thousands of dollars. Even a listing is an ad and on Realtor.com a bargain at $30 for the life of the listing, he says.

4. "Tariff model" - Online marketing is abdicated to a third-party where the site brings consumers who want the inventories of Realtors and then charges a tariff to participating Realtors to capture closed leads.

"In real estate, you have eight and a half billion being spent in advertising annually," says Long, "yet less than three percent of that money is spent online even though 75 percent of consumers are online."

For online marketing, advises Long, fees should be reasonable and equivalent. Marketing fees should be the same up front as they are paid in arrears, but if the marketing partner takes a risk with the Realtor, there should be a fee associated with that. But then, they can be turned into discount brokers and agents.

Which brings Long to the point.

"We can't lead the charge because that only creates more suspicion," says Long, "but we can offer a solution that is more in line with what Realtors believe is fair value. If brokers and agents say 'Give us a choice to pay on the front end or the back end,' then we have the validation we need to price reasonable advertising, marketing and lead management services that will not only be affordable, but will keep consumers connected to Realtors."

Published: May 26, 2004

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