NAR board may hold closed meeting to discuss realtor.com

Trade group CEO says comments about site prompted calls from hedge fund managers, drop in stock price

Move Inc. stock chart, May 13-17, 2013 (Source: Yahoo Finance)Move Inc. stock chart, May 13-17, 2013 (Source: Yahoo Finance)

WASHINGTON — The committee that sets the agenda for the National Association of Realtors’ board of directors approved a motion to recommend the board have a special meeting to discuss the trade group’s official website, realtor.com, and third-party aggregators, NAR CEO Dale Stinton told attendees at a forum for executive officers of state associations today at NAR’s Midyear Legislative Meetings and Trade Expo.

Subject to approval at Saturday’s board meeting, Stinton said the special meeting would take place sometime in the next 70 days and would be open only to NAR directors who would be asked to sign nondisclosure agreements to participate and would not be allowed to bring in electronic devices. “Certainly no press” would be allowed, he said.

Because realtor.com is operated by a public company, Move Inc., directors need a “safe place” to discuss realtor.com, third-party aggregation, “and what the board of directors would like us (NAR leadership) to do about it,” Stinton said.

To give forum attendees an idea of how sensitive discussing a public company can be, Stinton said his own comments about realtor.com at NAR’s Association Executive Committee meeting on Wednesday had gotten out and prompted calls from hedge fund managers.

“Two hedge fund managers wanted me on the phone to talk about what was going on with realtor.com,” he said. “(Move’s) stock price moved 50 cents in 10 minutes. Fifty cents on a $10 stock is no joke.”

Move’s stock price did take a tumble on Thursday morning, though what caused it is unclear. The price closed at $10.56 Wednesday and dropped to a low of $9.91 in trading Thursday morning before recovering to close at $10.48. The stock’s highest price this month was $11.32 on May 2; the price has ranged from a low of $6.92 to a high of $12.12 in the past 52 weeks.

“Lest you think we’re all friends in the room, you have to assume everything is public record,” Stinton told forum attendees. He referred to comments he made Wednesday at a well-attended meeting of NAR’s Association Executives Committee.

The day before, he had declared NAR leaders were “ready to get into trouble“ by considering controversial issues surrounding the trade group’s structure — including changing its relationship to realtor.com. Members taking part in NAR’s REThink Initiative about the industry’s future suggested NAR “take back realtor.com” and revamp it to compete with other national aggregators. Stinton responded that “maybe realtor.com needs to get sorted out and maybe that will happen here at the board of directors meeting” on Saturday.

At the Wednesday meeting, Stinton spoke on a panel, “Competitive Forces on the Internet.” He said realtor.com is approaching its 17th or 18th birthday and for the first 14 years, it kept everyone else out of the space.

“Then about four or five years ago, an interesting thing happened: Our members started giving away the listings. (They said) ‘I want (them) everywhere.’ It was the beginning of the new era,” he said.

Third-party aggregators — whom Stinton would not name, saying he was tired of giving them free publicity — began to dominate. And there will be others, he said.

“There’s a lot of money sloshing around out there looking for a place to go,” he said.

Stinton said he is “still amazed” at how wrong the industry was about interpreting consumer wants.

“We thought quality would win over quantity. We thought being the best would keep you the best,” Stinton told attendees. But “the consumer has spoken rather loudly and said, ‘I’m not that deep. I want to be entertained, play around. When I get serious about it, I might go to realtor.com because I know it has accurate data, but I’m a long way from being serious about it.’”

He compared realtor.com to public television where consumers go when they want to learn something.

“But 99 percent of my time I’m spending watching the Real Housewives of Beverly Hills,” he said.

Fellow panelist Jim Harrison, president and CEO of Silicon Valley-based MLSListings Inc., said third-party aggregators have evolved to offer content and innovation — much of which the industry resists.

“What started with home valuations are now moving to matching consumers with brokers and agents,” Harrison said.

“We were innovative in the 90s, but we’re not innovative anymore.”

In contrast to realtor.com. third-party aggregators are agile, Harrison said.

“We’ve taken our baby, realtor.com, and we’ve shackled her. Realtor.com is not going to be able to compete the way it needs to as long as it’s weighted down with our bureaucracy,” he said.

Fellow panelist Diane Ruggiero, CEO of the Kansas City Regional Association of Realtors, agreed.

“We have a lack of estimates on there. Some of us still don’t allow sold data on there. Some even don’t allow addresses. We are our own worst enemy in this battle,” she said.

“We are what keeps realtor.com from being effective. It’s us. It’s the MLSs. It’s the organizations,” she added.

Some Realtors have come to believe that realtor.com is a member benefit and should be free, she said.

“But realtor.com is part of a publicly traded company. It takes money” to operate, she said.

Stinton noted that the content of realtor.com and third-party sites is “wildly different” because an operating agreement between NAR and Move prohibits Move from incorporating content similar to those of third-party sites. It would be up to NAR’s board of directors to change that agreement.

“We (NAR leadership) ultimately do what they (the board) tell us to do or not to do. Realtor.com would look like other sites if we would let (Move) do it,” Stinton said.

The realtor.com operating agreement, which dates to 1996, was last amended in 2010, after Move initiated negotiations that dragged on for several months and ultimately involved a mediator. At the time, NAR and Move characterized changes to the agreement as paving the way for innovation, by streamlining the process for developing improvements to realtor.com.

But some details of the Sept. 10, 2010, amendment to the realtor.com operating agreement were kept confidential. The nature of the amendment’s confidential provisions became clear only when Move announced the following year that it would run lead forms for buyer’s agents on realtor.com listing detail pages similar to those employed by rivals Zillow and Trulia.

Although brokers could opt out of the “Connection for co-brokers” program, it proved controversial. Last year, HomeServices of America Inc. subsidiary Edina Realty Inc., the leading brokerage in the Minneapolis-St. Paul market, announced it was pulling listings from realtor.com.

Stinton today characterized the relationship between NAR and Move as a “forced marriage,” and described to state association executives what he called “the rules of the game.”

“One, there ain’t no getting anybody else,” Stinton said. “It’s an evergreen agreement that goes on forever. If you didn’t know that before, you know it now. Two, in 17 years, we never put a penny into realtor.com. In fact, they pay us … royalty to use the term ‘realtor.com.’”

(According to the company’s most recent annual report to investors, Move’s payments to NAR under the terms of the realtor.com operating agreement and “certain other advertising agreements” total $2 million a year.)

That money goes into enforcing NAR’s rules on the site because there have been some Move leaders that would like to have ignored the rules, Stinton said.

Ultimately, he said, the consumer will always win. He invited attendees to imagine a scenario where realtor.com had both innovative content and the most accurate listings.

“Then I think we get the consumer back. They want to have fun. They want to be delighted. And they would like to know it’s really accurate, too.”

When asked if that’s what he would recommend, Stinton said, “I don’t want to say what I think should happen, but I want to tell you all that if there was ever a point in time to find your voice on these issues, now is the time. You (association executives) influence your members greatly in all these debates.

“We serve at the pleasure of the board of directors of this association. It has to tell us what to do and if it doesn’t we won’t do anything. But I will promise you, if the board of directors says, ‘Change it. Fix it,’ we will fix it and we’ll come to you and say, ‘This is how we’re going to fix it,’ and you can tell us if we got it right.”

Errol Samuelson, Move’s chief strategy officer and head of realtor.com, will present at tomorrow’s board of directors meeting.

Editor’s note: This story has been updated with details on the 2010 amendment to the realtor.com operating agreement.

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