Slower housing markets have ratcheted up competition throughout the real estate industry, and realty search-engine Web sites haven’t escaped the trend. Among them are Realtor.com, Homescape, Zillow and Trulia, all of which depend on realty advertising for at least some of their revenue.

But shifting markets aren’t the only significant change these companies face. Equally important is the new and unprecedented ease with which prospective home buyers and sellers can now access detailed information about for-sale homes online without giving up identifiable personal data.

Slower housing markets have ratcheted up competition throughout the real estate industry, and realty search-engine Web sites haven’t escaped the trend. Among them are Realtor.com, Homescape, Zillow and Trulia, all of which depend on realty advertising for at least some of their revenue.

But shifting markets aren’t the only significant change these companies face. Equally important is the new and unprecedented ease with which prospective home buyers and sellers can now access detailed information about for-sale homes online without giving up identifiable personal data.

Listings “are what folks want,” said Frank Breithaupt, vice president and general manager of Homescape in Chicago. That singularity of focus suggests that the value of other functions Web sites spend money to develop and promote may be in doubt, he added.

Open access to listings has diminished opportunities for companies to turn personal data (i.e., leads) into revenue and forced them to ponder what sorts of business models might come next, according to Sam Sebastian, director of classifieds at Google, which also has a real estate advertising component.

“You could con someone into filling out a form, and then you had a saleable item. That got revenue flowing, but the consumer proposition was lousy,” Sebastian argued. “Now what everyone is waiting for is: Where is the business model and what are the products — cost-per-click or banner ads or whatever — that marry themselves with the consumer proposition and work for the companies.”

So far, no one company has found a break-out model that clearly maximizes the consumer experience and generates a reliable revenue stream. Most of the models depend on advertising by realty brokerages and salespeople, a revenue stream that may be eroded, even if only temporarily, by weaker housing markets.

Google relies on a cost-per-click advertising model, but other competitors depend more heavily on banner, display and enhanced listings ads or online tools and functions. Realtor.com, for example, recently announced a new neighborhood search tool, a zoom-in pictures function and a mobile distribution service that runs on iPhones and certain Windows Mobile 5.0 phones.

For now, though, listings are still king as a way to attract both consumers and advertisers, and several companies have announced deals to display more listings on their Web sites.

Homescape, which claims to display more than 2.7 million listings, previously relied solely on a network of 100 newspapers for such content, but has added partnerships with half a dozen regional realty brokerage companies. The list includes Keller Williams Realty, which will submit 75,000 listings, and Real Living, which will add 13,000 listings. Homescape also includes new construction, open housing and other newspaper classified ads. Sellers can add information to this Web site too.

Zillow, which claims to offer access to almost 300,000 listings, has announced that ERA will send some 80,000 listings to the Web site, updated daily, and RE/MAX Allegiance, a 40-office brokerage in Virginia, Maryland and Washington, D.C., also will send bulk for-sale property listings feeds to be displayed on Zillow. Early next year, 11 newspaper chains will give Zillow access to listings and open-house classified ads from 282 newspapers. This Web site also accepts information from realty brokers and salespeople, multiple-listing services, property sellers and even neighbors.

In another instance, Trulia last week announced a deal with RealtyTrac that will add limited information about more than 400,000 foreclosure properties to Trulia’s online index of some 2 million for-sale homes.

But the value of these listings in terms of additional direct or indirect revenue for the companies is impossible to measure. And meanwhile, these companies also face increased competition from Web sites operated by brokerage companies and individual realty salespeople, who may prefer to invest in an online presence that they can control themselves rather than a separate entity.

That said, there is good news for realty advertising-driven Web sites: While competition may heat up next year, the overall size of the market is expected to grow significant in each of the next few years with much of that market share being taken from print. A Borrell Associates’ study released last week predicted that growth in online real estate advertising would moderate to a still-strong 12 percent in 2008 compared with almost 26 percent to $2.6 billion this year. In 2011, expenditures are expected to soar to $3.3 billion. Any way it’s sliced, that’s still a very large pie.

Marcie Geffner is a real estate reporter in Los Angeles.

Copyright 2007 Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.

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