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Diller's IAC Planning to Enter Real Estate Brokerage Business

September 01, 2005|From Bloomberg News

IAC/InterActiveCorp, the television and Internet services company owned by Barry Diller, plans to enter the real estate brokerage business next year to expand beyond offering property and mortgage listings on websites.

The New York-based company's RealEstate.com business will open brokerage offices in the Pacific Northwest in the first half of 2006, RealEstate.com spokeswoman Mindy Duquette said. The company has yet to decide how much to invest, whether to buy related businesses and if it will expand the service nationally, she said.

IAC, whose LendingTree.com and RealEstate.com websites help users find mortgages and homes, is entering an industry dominated by Cendant Corp.'s NRT Inc., the largest brokerage, and its biggest competitor, Berkshire Hathaway Inc.'s HomeServices of America Inc. Mortgage giant Fannie Mae this month forecast that U.S. home sales will slow next year, which would mean less revenue for brokerage companies.

NRT's revenue last year was $204.6 billion, while HomeServices had $60.1 billion, according to estimates by Real Trends Inc., a real estate records company based in Littleton, Colo.

"IAC may be entering the game late," said Omar Bassal, an analyst for Silver Spring, Md.-based Profit Investment Management, which manages $620 million including IAC shares. "Growth rates are moderating in the real estate market."

The Wall Street Journal reported the story Wednesday.

Shares of IAC rose 79 cents, or 3.3%, to $24.55. The stock has fallen 20% this year.

IAC Chairman and Chief Executive Diller, 63, who spun off the Expedia Inc. online travel unit this month, is reshaping IAC after accumulating more than 40 Web and other businesses ranging from home-shopping channel HSN to Ticketmaster.

With the spinoff of Expedia, IAC derives about half of its revenue from its struggling HSN division, whose second-quarter sales were unchanged from a year earlier, Bassal said. Diller is looking to boost growth by expanding IAC's financial services and real estate division, he said.

IAC's Internet real estate services make sense because they offer a cost advantage in an industry where consumers are price conscious, although that is unlikely to be the case for real estate brokerage operations, Bassal said.

RealEstate.com's move to open brokerage offices in the Pacific Northwest would put it up against local rivals such as John L. Scott Real Estate, the region's largest brokerage. John L. Scott had 2004 sales of $7.57 billion, according to Real Trends.

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