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The Cutting Edge

Online Real Estate Rivals Vie in Battle of Home Pages

Internet: RealSelect of Thousand Oaks leads pack of firms that centralize listings but are expanding into services.

May 03, 1999|JONATHAN GAW | TIMES STAFF WRITER

For most consumers, a home is the most complex, important and costly purchase they will ever make.

For Internet companies, that just makes the multitrillion-dollar residential real estate market--and all the things that go with buying, selling and owning a home--all the more attractive.

Online real estate firms are now battling to build the most comprehensive site with the biggest brand and the most extensive distribution network.

The idea is fairly simple: Attract potential home buyers to a Web site. Make money there either by selling advertising or collecting a fee for referrals to related services such as appraisals or mortgage loans. So far the model typically does not include taking a cut of fees for actual home sales, which are usually completed in the traditional way, through an agent.

If selling real estate online is a 100-yard dash, then Thousand Oaks-based RealSelect Inc., which operates Realtor.com, started on the 50-yard line. And some spectators are ready to declare it the winner.

"They control all the listings, so they're going to be the big guys," said Lawrence Schoeffler, vice president of Best Image Marketing, an Internet services firm that caters to real estate brokers. "Everyone else is competing for No. 2."

That assessment is startling in part because of the fledgling nature of online real estate, and because Realtor.com's rivals include HomeAdvisor, from technology giant Microsoft Corp., and HomeHunter.com, from Classified Ventures, a joint venture among eight of the country's largest newspaper companies (including Times Mirror Co., parent company of the Los Angeles Times). Other rivals include Nevada-based HomeSeekers.com Inc. and Moore Corp.'s CyberHomes, both of which are publicly held.

RealSelect, however, follows the stereotype of an Internet company: It has a limited operating history, has burned through millions of dollars in venture capital, and is preparing to file for an initial public offering. For now, the privately held company declines to disclose its revenue.

In residential real estate, of course, listings are everything. RealSelect became the early front-runner by affiliating with the keepers of the lockbox keys: real estate agents. The National Assn. of Realtors gave RealSelect instant access to all of its members and the listings they hold, a resource that competitors have been trying to replicate ever since. NAR had attempted to put the listings online itself, but turned to RealSelect in 1996 after deciding that the cost had become prohibitive.

In exchange for its affiliation and listings, NAR received a "small" ownership stake in RealSelect and the assurance that its listings would be posted for free forever.

Listings draw people to a home-selling site, and while its competitors have pockets of regional strength, Realtor.com provides the most comprehensive nationwide coverage.

Posting home listings online for free was the beginning of a small revolution, and it illustrates the topsy-turvy nature of the Internet.

Originally, Realtors Information Network, an NAR subsidiary, charged online home sites $3 for each Internet listing. In 1995, CyberHomes upped the ante: It not only put listings on its site for free, but offered brokers 10% of any ad revenue generated by a specific listing.

Last year, Microsoft's HomeAdvisor site started paying multiple listing services--a proprietary listing of homes for sale in a given area compiled by local Realtor boards--$1 for each listing. That practice has since been matched by Realtor.com and others, although in different ways.

While other media, including newspapers, charge real estate agents to advertise the homes they're selling, some Web sites pay to attract listings. That underscores the difference in how media perceive the nature of listings: Newspapers see them as advertising, Web sites see them as content.

With 1.3 million homes listed on its Web site, RealSelect has hundreds of thousands more listings than its nearest competitor.

RealSelect also is trying to sign multiple listing services to exclusive contracts, which would prevent other real estate sites from sharing them.

"When you look at the national race, and as it expands internationally, Realtor.com clearly won that race," said Gregg Larson, senior partner in Clareity Consulting, a real estate information firm. "Since then, all they've done is strengthen their lead through their marketing alliances."

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But, as elsewhere on the Internet, assessments of who's winning what are merely snapshots of a speeding bullet. Many of Realtor.com's best-financed competitors have only recently entered the race.

Some rivals to Realtor.com argue that the listings race soon will be moot.

"By the end of the year, all the competitors will be at the same amount," said John Giamo, president of HomeSeekers.com, which has listings in 33 states and is signing up more.

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