History may remember eRealty as the father of the virtual office Web site, although others may claim to have actually invented the VOW. Either way, the online brokerage’s MLS-on-the-Web technology now belongs to Prudential Real Estate Affiliates. Pru’s bold acquisition puts some sophisticated dot-com stuff in the hands of a major traditional brokerage company.
Prudential plans to use eRealty’s technology to turn the Prudential.com Web site into a national VOW that will generate leads for Prudential brokers at the cost of a referral fee paid to the franchisor. The success of this strategy will depend in part on the extent to which local MLSs implement the local-level VOW technology. The VOW approach will enable Prudential.com to include the entire MLS, not just Prudential’s own listings.
Yet Lee said he doesn’t intend to use Prudential’s power to force MLSs to comply with the National Association of Realtors’ VOW mandates and policies. That means the Prudential.com VOW will contain only Prudential MLS data for any local area where the local Prudential-affiliated broker elects to participate in the franchisor’s system, but the local MLS doesn’t facilitate VOW listings aggregation.
“Prudential is not going to go to NAR and say you have to make (the MLSs) do this,” Lee said.
The Prudential chief takes a similar hand-off approach to the NAR VOW opt-out rules that eRealty so loudly protested. Lee insisted that the whole opt-out issue along is a strictly local matter for individual brokers to decide.
“We will abide by whatever the rule is,” he said.
Indeed, the acquisition takes eRealty out of whole VOW the debate. That may be a gratifying turn of events for NAR and local Realtor associations. After all, eRealty was one the loudest of the voices that challenged the blanket and selective opt out rules in the National Association of Realtors’ VOW policymaking. And it was eRealty that the Austin Association of Realtor sued for copyright violation when eRealty put local MLS data on the Internet in what later became known as the VOW.
A key component of eRealty’s VOW technology is the electronic system that keeps prospective home buyers and sellers engaged in the real estate process for many months before they enter into a transaction. This “customer incubation” system, to use Capper’s description, is the competitive edge Prudential wants to leverage across its own national network of 46,000 salespeople.
“If we can deploy this technology into our network, we are providing our brokers the ability to access business that is floating around on the Internet, business our affiliates don’t have,” Lee said.
Capper plans to stay on board at Prudential to ensure that goal is accomplished. Prudential may have acquired eRealty, but Capper now has access to a huge brokerage operation.
“I’m excited about looking at 44,000 agents. I am going to do what I did in the past, except without the responsibility of the brokerage offices,” he said.
Prudential appears to be disinterested in eRealty’s controversy deal with the Yahoo! Web portal. An agreement between the two dot-coms gave Yahoo! users access to eRealty’s listings content and gave eRealty an exclusive position on Yahoo! that neatly propelled Yahoo! users directly into eRealty’s customer incubation system.
The Yahoo! contract has expired, and Capper said Yahoo! has been signing up other brokers within the last six months. Lee said Yahoo! isn’t necessary to Prudential’s plans, even though the Prudential.com VOW won’t be able to compete head-to-head with the likes of MSN and AOL, both of which obtain listings data from Realtor.com.
“(Yahoo!) is on the agenda, but we based our projections on traffic flow through Prudential.com. (Yahoo!) is not a priority. We have a lot of other (more immediate) issues,” he said.
One issue is whether eRealty’s managers and salespeople will welcome the opportunity to join Prudential’s brokerage offices. After all, the dot-com folks deliberately chose to affiliate themselves with an innovative business model, and mergers of disparate cultures rarely are accomplished without challenges and at least some fallout.
Capper said it’s not accurate to “label eRealty agents as part of the dot-com world” because many of them previously worked in traditional brokerage companies. Lee characterized the eRealty agents has having acquired “a different skill set” and a history of knowing how to work with online leads and customers.
“Transition is difficult in any environment, but we understand that the assets of a real estate company are its people,” he said. “We have very strong affiliates in all the markets that eRealty is in.”
Prudential will keep “parts of” the eRealty name and brand, Lee said, but the details of how or where the name will be used yet to be decided.
Some Prudential brokers might be dismayed at their new association with a brokerage known for its buyer and seller commission rebates as well as its technology. eRealty abandoned its commission rebates late last year because buyers and sellers confused the rebates with low-quality brokerage services, Capper said. The end of the rebates didn’t perceptibly decrease eRealty’s numbers of registered users, home showings or closed transactions, he added.
The image of eRealty as “discounter” might not be that easy for Prudential to erase. However, Lee said the traditional brokerage has no intention of adopting any part of eRealty’s rebate model.
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