A Tokyo-based company that operates real estate portals in Japan and China has purchased Movoto, and intends to catapult the San Mateo, Calif.-based referral site and brokerage into the same league as Zillow, Trulia and realtor.com.

Recruit Holdings Company Ltd. is a global human resources giant that operates the North American human resources firms CSI, Staffmark and Advantage Resourcing. Recruit also owns the U.S. job-search site Indeed and the Japan-focused travel site Jalan.

Recruit’s flagship housing site, SUUMO, has become one of Japan’s leading portals and generates approximately $700 million in annual revenue, according to Recruit’s manager for U.S. operations, Shiro Takeuchi.

Movoto, which was founded in 2005 and has real estate licenses in 37 states, was the 18th-most visited real estate-related U.S. site in January, according to rankings compiled by Experian Marketing Services.

“We think we can be the No. 1 online real estate service in the U.S.,” Takeuchi said.

Most of SUUMO’s revenue comes from the fee brokers and agents pay the site to list their for-sale and for-rent properties, Takeuchi said.

Recruit, which in its marketing materials compares SUUMO to Zillow and Trulia, will leverage the expertise gained from operating SUUMO to grow Movoto, Takeuchi said. It will also put its massive resources — Recruit brought in $10.2 billion in revenue for the fiscal year ending March 31, 2013 — behind Movoto, he said.

The Movoto acquisition, which took place last fall, is Recruit’s first real estate endeavor outside of Asia, and is part of the firm’s plan to expand from its human resources base, Takeuchi said.

In January, Recruit established a U.S.-based subsidiary with headquarters in New York City, RGF USA Inc., to oversee all of its overseas firms, including Movoto.

Henry Shao, Movoto’s founder and CEO, launched Movoto in 2005 for the same reason real estate tech pioneers like Trulia’s Pete Flint and Zillow’s Rich Barton have cited for starting their firms: He was frustrated with the way real estate worked.

Before real estate’s Internet age, there was no easy way for consumers to find accurate, complete listings online or access to information that would help consumers find a good agent, Shao said.

Shao — who served as marketing director of the San Francisco Bay Area semiconductor firm FormFactor Inc. for three years just before founding Movoto — had made something of a hobby out of buying and selling homes.

He now compares Movoto, which is a member of nearly 90 multiple listing services across the U.S., and has approximately 90 employees, to the online brokerage Redfin.

Online referral sites and brokerages ZipRealty, Estately and HomeSnap operate similar models.

Currently, Movoto primarily deals with, and is focused on, buyers, Shao said.

Takeuchi, who was the project manager for the acquisition, says Recruit was drawn to Movoto as a real estate portal with accurate listing data and successful agents.

Recruit saw an opportunity to grow with Movoto by building stronger agents, Takeuchi said.

With Recruit behind Movoto, Shao says he wants to build stronger partnerships with agents and supply training and tools to help them grow.

Shao, who has stayed on through the acquisition to run Movoto, says he sold Movoto to Recruit because he felt the firm, given its immense resources and success with SUUMO, could help Movoto grow rapidly in the U.S.

SUUMO was an unknown brand in Japan as recently as four years ago, Shao said. Now it’s a household name. He and Recruit have similar hopes for Movoto in the U.S., he said.

In addition to MLS-listed homes, Movoto displays new-home listings from Builder Digital Experience LLC — the same firm that began supplying its new-home listings to realtor.com in August. The site also serves up a variety of additional information like local market data, school proximity information and demographic info.

Is Movoto a “paper brokerage”?

In markets where Movoto is an MLS member, the company is able to display the Internet data exchange (IDX) feeds from MLSs, giving it the ability to display a nearly comprehensive set of for-sale listings, like other MLS member brokerages in each market.

Shao said part of the value of the site to consumers is a connection with a real estate agent who has been vetted by the firm.

Movoto checks out each partner agent by interviewing them online to ensure they know the local market, Shao said. In addition, Movoto requires partner agents to have a minimum of three years of real estate experience, doing at least 10 transactions per year while exhibiting professional behavior.

The firm also tracks agent performance, and if an agent’s service dips below a certain level, Movoto doesn’t work with that agent anymore, Shao said.

The firm recruits agents by partnering with brokerages and working with a subset of that firm’s agents or establishing contacts directly with agents interested in establishing a referral relationship, Shao said.

Shao says Movoto has a stable of in-house agents, but it also maintains a network of partner agents it sends leads to for a referral fee that lies between 25 and 35 percent of the agent’s commission on the transaction.

Companies that join an MLS to obtain access to its IDX listing feed, without ever demonstrably providing brokerage services by representing a buyer or a seller in a transaction, are sometimes described as “paper brokerages.”

In Austin, Texas, Movoto surfaces 28 agents on its find-an-agent tool. None of them are labeled as Movoto agents. A search for agents on Movoto in Charlotte, N.C., yielded similar results: None of the 55 agents in that market were labeled as Movoto agents.

Shao says Movoto is not a paper brokerage.

Though it doesn’t have brick-and-mortar offices, “Movoto does have in-house agents that do service clients in each MLS market it operates in,” Shao told Inman News.

“Movoto actively endeavors in making real estate transactions, either representing sellers or buyers,” he said.

Referral-only brokerages contradict National Association of Realtors’ IDX policy, former NAR General Counsel Laurie Janik told Inman News in a series of articles detailing practices employed by referral and “paper brokerages.”

But NAR’s IDX policy includes a loophole that many paper brokerages exploit: There is no minimum number of deals required to be considered a brokerage in good standing. To access IDX feeds legitimately, brokerages need only to demonstrate that they are making a “good faith” effort to list or sell a property.

In addition, since NAR policy does not dictate local MLS decision-making, it’s up to individual MLSs to police members and decide whether they will allow companies to employ “paper brokerage” practices.

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