Tree.com shutting down real estate brokerage business
RealEstate.com will continue as lead-generation network
By Inman News, Friday, March 18, 2011.Tree.com Inc. says it will close all of the field offices of its brokerage company -- RealEstate.com, Realtors -- by the end of the month, but will continue to operate RealEstate.com as a lead-generation network.
Tree.com announced last month that its real estate brokerage posted an $11.9 million fourth-quarter operating loss as revenue fell 67 percent from a year ago.
The company brought industry veteran Steve Ozonian on board as CEO of the RealEstate.com division in October. Ozonian is a former RE/MAX International Inc. executive who has held CEO positions at Prudential Real Estate Services, Realtor.com, and Help-U-Sell Real Estate.
But in a regulatory filing this week, Tree.com said results from the first two months of this year convinced management team that "the difficult mortgage and real estate market conditions are too weak to support our brick-and-mortar real estate brokerage business at this time."
RealEstate.com, Realtors, operated in 20 markets from 2008 through 2010. In its most recent annual report to investors, Tree.com said it closed brokerage offices in five markets in January and February, leaving it with offices in 15 markets.
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In reporting fourth-quarter results, Tree.com said the brokerage employed 641 agents at the end of 2010, down from a peak of 1,365 agents in the second quarter of 2009. The number of transactions handled by the brokerage during the quarter fell 59 percent from a year ago, to about 600.
Tree.com will rack up $1.6 million in charges related to the cost of closing its brokerage offices, including $500,000 in termination benefits. The company will also recognize non-cash impairment charges totaling $13 million in the first quarter of 2011 related to goodwill, trademarks and property and equipment within the real estate segment.
Shares in Tree.com hit a 52-week low of $5.64 per share Friday before rebounding to close at $5.96.
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Submitted by Derek Eisenberg on March 20, 2011 - 5:33am.
RealEstate.com had the right idea working leads themselves rather than the burnout of selling them. Hanging on to the buyers generates mortgage and title business that is often lost when leads are sold.
RealEstate.com's only mistake was opening bricks and mortar offices. It was not their transformation into a real estate brokerage. Rent and unnecessary office staff caused the downfall of their brokerage.
We operate in 21 states with one office. With the right technology and agents working out of their homes, their model had the potential of being great. It still does.
Derek Eisenberg, GRI, ePRO, MBA
Broker
Continental Real Estate Group, Inc.
http://www.mls2u.com
Submitted by J Philip Faranda on March 22, 2011 - 3:08pm.
To piggyback on Mr Eisenberg's thoughts, overhead kills. I am reminded of Foxton's here in Metro New York, which had literally hundreds of listings. They had a bunch of agents driving around in company cars and folded despite command of the market which should have had them, ironically, in the driver's seat.
Broker-owner, J. Philip Real Estate
Vice President, Empire Access MLS (NY)
www.jphilip.com
www.WestchesterRealEstateBlog.NET