Editor’s note: Marketing experts expect a continuing migration of real estate advertising dollars online, so it’s no surprise that a growing list of companies are seeking to capitalize on the online marketing trend. Some companies are focused around a single Web site, while others are approaching the industry from many fronts and with many sites to draw both real estate professionals and consumers. In this three-part special report, Inman News analyzes three large companies that each have multiple real estate holdings and Web sites. (Read Part 1, “Dominion Enterprises on the rise,” and Part 2, “Internet Brands builds family of real estate sites.”)

Realtor.com, among the first property listings Web sites, consistently ranks among the most popular real estate destinations on the Internet, and residing at the top has its rewards and its challenges.

The site’s dominance owes much to its huge collection of for-sale property information from multiple listing services and a unique operating agreement between parent company Move Inc. and the National Association of Realtors trade group.

Being at the top can make a company a target for competitors, and Realtor.com has announced a series of technology initiatives — while keeping others under wraps — in an effort to stay ahead of fast-moving rivals.

With online real estate advertising expected to rise to a $3.1 billion market by 2010, according to a report from Borrell Associates, a growing list of companies are seeking to capitalize on the online real estate marketing and ad trend.

Several companies chasing after Realtor.com seek to grab a share of the massive online audience for real estate information by gaining access to large amounts of for-sale content through agents, brokers and MLSs. The increasingly low barriers to entry and rapid evolution of Internet technology is driving industry innovators to quicken the pace in launching new features and functionality.

Move Inc. has announced plans to offer free blog sites to Realtors and to engage consumers with user-generated content, neighborhood information and more multimedia features including embedded video in property descriptions.

The company is also working on a secretive new business venture that will be led by former Realtor.com president Allan Dalton and former National Association of Realtors chief economist David Lereah. Last month, the company announced the hire of Lorna Borenstein, a former Yahoo executive, as president of Move Inc.

Move Inc. reported in its 2006 annual report that the site has a database of about 3.5 million existing homes for sale, which is compiled from about 900 MLSs across the country. Most of those MLSs are owned or affiliated with local, regional or state Realtor groups.

Realtor.com is a major segment of Move Inc., formerly known as Homestore, and the company also operates real estate services portal Move.com and moving services site Moving.com. Move Inc. sells a customer relationship management software program called Top Producer; owns Welcome Wagon, a direct-mail and online service; and operates The Enterprise, a division that offers Web, video and other services to brokers.

Realtor.com has consistently ranked first in total monthly visitors to real estate Web sites among Web research firms such as Hitwise and comScore. Hitwise noted that Realtor.com had an 8.12 percent share of the total visitors to real estate Web sites in May, and Move.com ranked 10th on the Hitwise list in May, with a 1.41 percent market share of real estate site visitors.

Move.com, the company’s all-in-one portal, offers links to search tools for new homes, resale homes, rentals, finance, moving, valuation, and home and garden information.

Real estate search and information sites that also are drawing a large online audience include RealtyTrac.com, HomeGain.com, Rent.com, REMAX.com, Zillow.com, Yahoo Real Estate, Apartments.com and ZipRealty.com.

In addition to its own family of Web sites, Move Inc. supplies all real estate content to America Online and the Microsoft Network, and the company also provides new-home and apartment listings to Yahoo.

“The rapid pace of technological change constantly creates new opportunities for existing and new competitors and it can quickly render our existing technologies less valuable should one of these businesses decide to create online real estate businesses that are competitive with us,” Move Inc. notes in its annual report. “While we believe we would have an advantage on listing content for some time over other online businesses,” the company notes that there is no guarantee it can maintain this listings advantage indefinitely.

The company has already weathered a dire financial crisis from within — a corporate accounting scandal caused its stock to drop to pennies per share when the problems were publicized in 2002.

The U.S. Securities and Exchange Commission and U.S. Justice Department in April 2005 filed criminal and civil cases against former Homestore CEO Stuart Wolff and Peter Tafeen, the company’s former executive vice president of business development. The company entered into settlements to pay millions for the legal defense of the officials entangled in the scandal.

In all, a dozen Homestore officials were convicted for their participation in illegal schemes that led the company to restate its earnings and harmed investors. Wolff is appealing his conviction.

The company has rebounded financially since the dark days that nearly brought its collapse — in November 2005 Move Inc. announced that private equity firm Elevation Partners agreed to invest $100 million in the company. The equity firm includes Bono of rock group U2, and a former Apple Computer executive vice president, among others.

Move Inc. reported net income of $163,000 in the first quarter, which compares to a net loss of $2.3 million in first-quarter 2006. For the full year in 2006 the company reported net income of $18.6 million, compared to $234,000 in 2005.

The company traces its roots to InfoTouch Corp., which formed in 1993 with the plan to establish a network of electronic real estate search kiosks. The corporation developed Web site technology and entered into a series of agreements with the National Association of Realtors and investors. The company formed a subsidiary which became RealSelect Inc., and that company offered NAR a 15 percent ownership interest in exchange for operating rights to Realtor.com and opportunities to use Realtors’ real estate listing content online, according to the company’s 2006 annual report.

Homestore.com Inc. was formed as a parent company to RealSelect in 1999, and that company was renamed as Homestore Inc. in May 2002 and renamed again as Move Inc. in June 2006.

Move Inc.’s Realtor.com operating agreement with the National Association of Realtors “contains a number of provisions that restrict how we operate our business,” according to Move’s 2006 annual report.

“We would need to obtain the consent of NAR if we want to acquire or develop another service that provides real estate listings on an Internet site or through other electronic means,” for example, and “we are restricted in the type and subject matter of, and the manner in which we display, advertisements on the Realtor.com Web site.”

Also, “we can only enter into agreements with entities that provide us with real estate listings, such as MLSs, on terms approved by NAR. In addition, NAR can require us to include on Realtor.com real estate-related content that it has developed.”

The Realtor.com operating agreement is perpetual and does not allow Move Inc. to terminate the agreement, though “NAR may terminate it for a variety of reasons,” according to the report, based on dwindling site traffic below 500,000 unique users per month, the acquisition of RealSelect by another company’s without NAR’s consent, a “substantial decrease” in property listings at Realtor.com or a breach of Move Inc.’s obligations.

The agreement provides that NAR is entitled to one representative on Move Inc.’s 11-member board of directors and two representatives on RealSelect’s eight-member board of directors.

While the agreement with the National Association of Realtors does limit Realtor.com in some ways — the company cannot mix for-sale-by-owner properties with Realtor-represented properties, as an example — Move Inc.’s relationship with NAR is beneficial, said Errol Samuelson, Realtor.com president.

“Outsiders may characterize (the agreement) as restraints,” he said, though “it has helped us to do the smart, right things, and (avoid) things that may not be a good idea.” The company’s relationship with NAR is “fantastic,” he added. “We work very closely with NAR at the early stages of our technology planning. I would characterize it as quite healthy and symbiotic.”

Over the years, “Realtor.com has stayed pretty true to its purpose, which was to create a site to help connect consumers to Realtors,” he said. “Initially the site was very focused on listings, but it’s more than that — it’s an opportunity for Realtors in a single national environment to display their expertise, showcase their specialties. We’re certainly taking that basic premise and expanding it in several directions.”

The core audience for Realtor.com has historically been early-stage home buyers and sellers, and the new features at the site are intended to reach a broader audience of consumers who may not be considering a real estate transaction in the short term, Samuelson said. Move Inc., as an example, now offers a “Home & Garden” section with educational articles and a contractor-search tool.

There appears to be an emerging category of real estate enthusiasts who are passionate about real estate information but are not necessarily actively in the market, Samuelson said.

“I get the sense a lot more people are interested in real estate almost as a general interest. I think formerly it was fairly task-oriented. As real estate information became available online, the more they became interested. Companies like ours are responding with deeper, richer information, better analysis tools,” he said. But you can’t count out these real estate hobbyists, he said, as they may be future buyers or sellers.

There is no shortage of real estate sites on the Internet these days, and Samuelson said the “rate of innovation has accelerated tremendously … because tools are easier and cheaper. The barriers to entry are lower.”

The advantage of Realtor.com, he said, is the ability to roll out new technologies quickly on a national scale. “It’s one thing to throw up a Web site and hope that people will find it and show up vs. the ability to drive millions and millions of users to the site and provide a sustainable (platform),” he said.

It’s a good environment to be in the online space, he said, as the national real estate market “isn’t as hypercharged as it was a year or two ago,” and real estate professionals may be thinking more about where they are spending their ad dollars.

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