Mortgage servicer Nationstar Mortgage Holdings has its sights set on building a real estate marketplace to rival the likes of Zillow, Trulia and and will spend $18 million to acquire the company that could hold the key to achieving that goal: Real Estate Digital and

Real Estate Digital, a 2011 spinoff of Lender Processing Services Inc.’s Real Estate Group, provides technology services to more than 500 multiple listing services, 350 brokerages, nearly 60 settlement services companies and more than 300,000 agents.

RED specializes in data aggregation and has licensed 98 percent of all MLS listings — an achievement perhaps surpassed only by, which licenses data from virtually all of the nation’s 850 or so MLSs through its relationship with the National Association of Realtors. NAR subsidiary Realtors Property Resource (RPR) is one of its MLS data aggregation clients.

Nationstar runs an online auction platform,, that features bank-owned properties and short sales. It plans to use the RED acquisition to build it up into “a transactional marketplace for all things related to real estate” that will give the company “a customer for life,” Nationstar CEO Jay Bray said today in an earnings call with investors.

“We believe our unique ability to bring real estate data services and property leads together allows us to make real estate simple through the creation of [a] real estate exchange that enables consumers to search, evaluate and transact for real estate, all in one location,” he added.

Dubbing the effort “HomeSearch 2.0,” Bray said that once MLS data and other data are added to the site, “I think you’ll have a search engine there that can compete with some of the larger search engines that are out there.”

While Bray said that would attract advertising revenue to the site, Nationstar is thinking beyond that. Currently, a real estate transaction can involve a myriad of third-party vendors and entities, and real estate search portals don’t address that challenge, according to Bray.

“Today, real estate search engines allow you to search for homes, find the estimated property value of your home, and somewhat realistically, those of your neighbors,” he said.

“However, these search engines are not currently designed to allow consumers to transact, and lack a comprehensive fee-based business model. In short, their value is generally limited to real estate catalogs supported by advertising.”

By contrast, Nationstar envisions that consumers and real estate agents who come to its site will be able to list their properties, manage them, sell them, buy them, and look for “downstream” mortgage, title, appraisal and closing services.

“Annually, there are 8 million real estate transactions in the United States, 5 million home transactions and 3 million refinancings. Our macro goal is to capture a fee component of as many U.S. real estate transactions as possible while increasing profitability,” Bray said.

It is unclear how Nationstar will accomplish what seems to be the first step in its plan — adding MLS data to Although RED currently licenses data from most MLSs, that data is likely provided for only a specific purpose, such as running a website for an agent, broker or MLS.

Should Nationstar have to negotiate MLS data for, the company could run into the same obstacles as Zillow and Trulia, which must take data from a variety of sources.

Even so, Nationstar sees other benefits to the acquisition.

Nationstar offers mortgage servicing, origination and real estate services to financial institutions and consumers, and its Solutionstar business unit offers asset management, settlement, valuation and processing services.

Acquiring RED “accelerates our plan to offer a fully integrated digital marketplace that provides end-to-end services for every aspect of a real estate transaction,” the company said in a regulatory filing.

“RED will enable Solutionstar to diversify its revenue streams, gain access to a significant third-party customer base, and drive traffic to our websites,” the company said. The acquisition will allow Solutionstar to “cross-sell services to RED’s existing third-party clients while enhancing Nationstar’s purchase origination and servicing opportunities when properties are listed for sale.”

RED’s offerings include rDesk Websites, reDataVault, TransactionPoint, DocCentral, FormCentral, MLS Portal, Neighborhood & School Reports, rDesk CRM, rDesk CMA and rDesk IDX.

Nationstar also said it expects it will eventually be able to save money by replacing third-party vendors with enhanced technology developed by RED.

Gregg Larson, president and CEO of real estate consulting firm Clareity Consulting, noted that RED does a lot of business — particularly broker and agent websites — with brokers who are part of HomeServices of America Inc. (the nation’s second-largest brokerage firm) as well as The Realty Alliance, a network of 60 or so large brokerages.

Nationstar is “obviously interested in RED’s large broker clients … to cross-sell mortgages and whatever else they do. RED’s MLS public site business would be of little value to Nationstar (in my opinion),” he said.

In a blog post, W&R Studios co-founder Greg Robertson said, “For those who don’t know, RED basically powers online real estate. This [acquisition] brings about many questions.”

RED declined to comment for this story, citing the pending acquisition. Jay Gaskill, RED’s CEO, is a founding board member of nonprofit real estate intellectual property protection group REDPLAN Inc..

RED spun off its Real Estate and Living Media Network (REALM) online advertising service and lead generation site in July to form a separate digital media and marketing company, Cerulean Media, in July. Cerulean, acquired by Nationstar along with RED, also offers search engine optimization and marketing services.

Larson said he didn’t understand why RED was selling for only about 70 percent of its estimated full-year revenue for 2014.

That’s “a low value for a ‘healthy’ software company. I personally think Nationstar got a steal — but I don’t understand the details/terms of the deal. RED’s outside investors must have wanted out — that’s the only thing that makes sense to me for the … price.”

Once the deal closes, Solutionstar will oversee Aliso Viejo, California-based RED’s management team and 120 employees.

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