Some Realtors and residential brokers have a particular interest in the trial of Stuart Wolff, the former Homestore chief executive now facing illegal insider trading charges and securities fraud in U.S. District Court in Los Angeles.
Wolff served as Homestore’s CEO and chairman of the board from 1997 to January 2002, when he resigned during an internal investigation. He co-founded the company (then known as RealSelect Inc.), which became the parent of Realtor.com, the official Web site of the 1 million-member National Association of Realtors (NAR)–the largest trade association in the United States.
In 1998, he had the entire residential real estate industry talking about him and his Realtor.com. He was the brains behind the operation–and he knew it. But a few key Multiple Listing Services (MLS)–including the Kirkland, Wash.-based Northwest Multiple Listing Service (NWMLS)–were not buying in to his deal of placing property listings on his system.
The NWMLS, owned by its member brokers, covers 18 counties, mostly in western Washington state. It currently encompasses more than 2,000 companies with approximately 26,000 brokers and agents. Unlike many MLS associations around the country, it is not owned by the local board of Realtors and operates with a more independent mindset.
Wolff was bubbling when he told reporters gathered for NAR’s 1998 annual convention in Anaheim, Calif., how consumers had viewed 1 billion homes on his site in fewer than two years.
“We have more than 450 multiple listing services nationwide placing listings on the Realtor.com system,” Wolff then said. “We have 95 percent of all existing homes listed for sale in the country that is approximately 1.3 million now.
“I call it a national resource, one that everyone can benefit from.”
Then, a couple of questions seemed to burst Wolff’s bubble.
“What’s going to take to get all the major multiples to join Realtor.com?” a reporter asked.
“What do you mean?” Wolff asked. “We have more than 450…. Oh, I see you’re from the Seattle area,” Wolff nervously laughed. “Things are a little skewed in your corner of the world.”
Wolff, who holds a bachelor’s degree in electrical engineering from Brown University and a master’s degree and doctorate in electrical engineering from Princeton, did not like things skewed out of his control. Despite his relentless efforts, he had a difficult time convincing the NWMLS to accept the official Web flag of NAR. For a time, the NWMLS was the only major broker-agent group in the country not to subscribe to Realtor.com.
The nervous laugh was the indicator that somebody just didn’t get it. The NWMLS was a great example–Wolff not only resented the fact that the Northwest Multiple was not a player, but it also had confounded him. Why would anybody not accept his self-made national resource?
“I don’t know what to do about getting those Seattle-area listings,” Wolff laughed. “I’ve been up there, I’ve sent two other guys up there…. It’s just one of those things.”
In five years at the helm, Wolff worked 12 to 14 hour days (“I think I’m making about five cents an hour.”) and his company had property listings in all 50 states. He often said results could not have gone better and that great things were ahead for the company. The goal was to help Realtors market themselves and their products while giving consumers content and information in a variety of home-and-loan categories. Some of his more controversial decisions had to do with online advertising trades with huge Web sites.
A year ago–nearly to the day–the U.S. Securities and Exchange Commission and the U.S. Justice Department said they would bring civil and criminal charges against Wolff and his former executive vice president, Peter Tafeen. More than 10 former Homestore employees, including Tafeen, have pleaded guilty to a variety of charges. Another important player, John Giesecke, the company’s former COO and CFO, pleaded guilty in 2002 to securities fraud that ultimately inflated Homestore’s stock price.
Wolff definitely had his own way of doing things–beginning with his ubiquitous black-and-orange outfits to his never-had-a-bad-idea persona. He was bright enough not to depend solely on advertising revenue, which shot down many online-only companies. He often said no investment was risk-free and that if something appeared to be, it was probably worthless.
What is curious is that Wolff’s attorneys now are contending in court that Wolff “was just a smart guy from Oklahoma,” initially did not see himself as a chief executive and definitely a person who left the numbers crunching to the accountants.
He didn’t sound nor act that way when his stock was on the rise and his personal stake in Homestore shares was an estimated $100 million. Just ask the NWMLS–it heard his pitch.
Tom Kelly’s new book, “Real Estate for Boomers and Beyond: Exploring the Costs, Choices and Changes for Your Next Move,” (Kaplan Publishing) is available in retail stores, on Amazon.com, and in local libraries. Tom can be reached at email@example.com.