Technology

With News Corp’s realtor.com play, it’s ‘game on’ as real estate portals battle for dominance

Zillow sees opportunity to prove that it can be real estate industry's best partner

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News Corp’s pending acquisition of realtor.com operator Move Inc. will intensify the competition between top national real estate portals — a battle that, until now, looked like it was Zillow’s to lose.

Any way the numbers were sliced — revenue, Web traffic, growth, acquisitions, valuation — Zillow was pulling away from Move.

This summer Zillow made a move that looked like checkmate, entering into an agreement in July to acquire its chief rival, Trulia. The deal, which is expected to close next year once it clears regulatory hurdles, should have cemented Zillow’s advantages over its biggest remaining rival.

But with Move now on track to join the News Corp realm sometime in the fourth quarter this year, Move CEO Steve Berkowitz thinks the playing field will not only be leveled, but that realtor.com and Move will have a leg up in the U.S. online real estate space.

As Zillow CEO Spencer Rascoff tweeted early this morning when he found out about the deal, it’s now “Game on.”

Move will operate as a business unit of News Corp. Its headquarters will remain in San Jose, California, and the offices it maintains around the U.S. and Canada will continue to operate after the acquisition, Berkowitz said.

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Unlike Zillow and Trulia’s merger, which will involve a focus on integrating two behemoth companies, Move will hit the ground running when it joins News Corp, Berkowitz said.

Details of just how Move and realtor.com will benefit from joining News Corp’s vast media family have yet to be worked out, Berkowitz said. But he envisions a vast audience synergy between the two firms and an entré to the millions of high net worth readers who visit the WSJ Digital Network, which includes MarketWatch and Barron’s.

Move also said it will benefit from cross-platform promotion with News Corp and tap its audience monetization expertise. The company will also leverage the lessons its majority-owned subsidiary, REA Group, has learned in operating realestate.com.au, the dominant real estate portal in Australia.

“We view Move as an important part of our ongoing transition to digital media across all of our businesses and our expansion in digital classifieds internationally,” News Corp Chief Executive Robert Thomson told investors on a call this morning about the deal.

Rascoff says that Zillow and Trulia’s projected full-year combined revenues represent just 4 percent of what agents and brokers are expected to spend on advertising this year — an indication that Zillow’s business has tremendous growth potential.

Thomson sees the Move acquisition in the same light — as a chance to break into online real estate in the U.S. while it’s still in its early days.

Realestate.com.au, has a market cap of approximately $5 billion on an expected full-year 2014 revenue of more than $400 million, Thomson said. About 10 times as many homes are sold in the U.S., and the roughly 2 million brokers and agents in America have only begun to shift the $14 billion they spend on marketing a year online.

Move is only capturing about 2 percent of that spending, but is in “a unique position to be a major player” with growth that can be “turbocharged by News Corp” given its “powerful content platforms in the U.S., marketing resources and real estate expertise,” Thomson said.

In addition to expanding its reach and gaining access to new resources from News Corp, Berkowitz said Move will continue with its current business model built around delivering high-quality leads to real estate agents, helping pros convert leads into closed deals and being the industry’s go-to online partner.

That last point might be where Zillow and News Corp go head to head.

“We are going to take this opportunity (of Move’s acquisition by News Corp) to prove that we can be the industry’s very best online real estate partner,” said Greg Schwartz, chief revenue officer at Zillow.

Zillow will concentrate on growing the industry-focused side of its business, Schwartz said. Zillow is out to convince the brokerages, MLSs, franchisors and agents that its success is based on having profitable relationships with brokerages and agents, he said.

Minneapolis-St. Paul, Minnesota-based brokerage Edina Realty, after a noteworthy absence on the portals, today began sending listings to Zillow, Trulia and realtor.com.

Schwartz predicts the real estate industry will reverse the way it currently views each firm in the coming years. The industry was initially wary of relative newcomers Zillow and Trulia, which have quickly built strong name brands and large revenues on business models with a consumer-centric focus.

Move operates realtor.com under the terms of an exclusive agreement with the National Association of Realtors dating to 1996. That relationship helped realtor.com secure direct listing feeds from more than 800 multiple listing services around the U.S., which gives it a more complete and fresher listing database in markets where its competitors don’t have direct MLS feeds.

With NAR bestowing its blessing on the deal, Move will continue to have “the exclusive and perpetual right to operate realtor.com,” Thomson said.

“We certainly expect competition from both Zillow and Trulia, even though they face the manifold complexities of consolidation in coming years,” he said.