Builds Equity

Written by Posted On Thursday, 17 February 2005 16:00

For those trying to figure out what LendingTree and it's rapidly growing sibling are up to these days, USA Interactive Corporation's Financial Services and Real Estate's President and COO Tom Reddin has graciously agreed to explain how the company works and where it's headed to Realty Times readers.

Quite simply, is intended to be the premier destination site online for real estate, says Reddin, who is in charge of making the acquisitions he made as LendingTree COO work cohesively, yet oversee more brand separation between LendingTree and

"It's consumer brand marketing strategy," says Reddin. "LendingTree is a great brand, but it stands for lending, and it's top of mind when consumers hear lending, but with, we wanted a brand that stands for real estate. It's more intuitive."

LendingTree is well-known among consumers for allowing "banks to compete" for their business. The first step toward growing the company was to take the same business model into other verticals - real estate agents, home builders, and contractors. LendingTree collects referral fees on closed transactions from leads provided.

LendingTree developed its broker network with the awkward acquisition of in Dec. 2003, when's former parent Primedia put both brands in harm's way by taking brokers' listings and giving them to LendingTree without permission. LendingTree was surprised and embarrassed along with The Real Estate Book, the source of the listings. In a firesale settlement, LendingTree acquired and a new gameplan, a chance to grow the broker participants without paying a referral fee any longer. Today, the broker network has grown from the low hundreds to over 775.

Since then, the company has done quite of bit of acquiring and expanding. In March 2004, LendingTree acquired Domania which provides automated home price and evaluation tools for consumers. In April 2004, LendingTree relaunched with new tools to provide leads to agents.

Next to come on board in the lead generation category was Service Magic, acquired in September, 2004. Service Magic is a comprehensive site that delegates leads to a variety of professionals including real estate agents and contractors. According to Reddin, over 14,000 real estate agents participate on Service Magic. The Service Magic model isn't referral-fee based like the LendingTree broker network -- agents pay for the leads they get.

On Nov.10, 2004, the acquisition of INest was announced, which gave a builder referral network of approximately 500 builders.

"We've built a lot of products," says Reddin, "great prequalifications for mortgage, home value price checks and evaluators, finding a mover, find an inspector, change your address. We've come a long way."

The sites cross support each other, and provide lead generation to professionals through various means that are comfortable for consumers. If you want a lender on, that service is provided by the LendingTree brand. If you want a Realtor on LendingTree, that service is provided by

The big picture, however, is that LendingTree is covering all its bases with a referral fee model and a lead fee model, which allows professionals to participate where they are most comfortable. Real estate agents can do a CMA and pay for a lead upfront on Service Magic, or do a transaction and pay a referral fee on the back end from LendingTree and do it all through

Listings are up to about 1.5 million to 1.7 million, says Reddin. They're provided by The Real Estate Book and participating brokers through their Internet Data Exchange sites.

"Business is good," says Reddin. "January closings were up 70 percent, new volume customers is up three-times, and we have almost 40 brokerage companies that have made over $1 million in commissions, and a handful have made $5 million."

The next step is to start building the brand name for Reddin promises that broad advertising will be test-marketed in the spring.

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