Online Real Estate Rivals Vie in Battle of Home Pages

For most consumers, a home is the most complex, important and costly purchase they will ever make.

For Internet companies, that just makes the multitrillion-dollar residential real estate market--and all the things that go with buying, selling and owning a home--all the more attractive.

Online real estate firms are now battling to build the most comprehensive site with the biggest brand and the most extensive distribution network.

The idea is fairly simple: Attract potential home buyers to a Web site. Make money there either by selling advertising or collecting a fee for referrals to related services such as appraisals or mortgage loans. So far the model typically does not include taking a cut of fees for actual home sales, which are usually completed in the traditional way, through an agent.

If selling real estate online is a 100-yard dash, then Thousand Oaks-based RealSelect Inc., which operates Realtor.com, started on the 50-yard line. And some spectators are ready to declare it the winner.

“They control all the listings, so they’re going to be the big guys,” said Lawrence Schoeffler, vice president of Best Image Marketing, an Internet services firm that caters to real estate brokers. “Everyone else is competing for No. 2.”

That assessment is startling in part because of the fledgling nature of online real estate, and because Realtor.com’s rivals include HomeAdvisor, from technology giant Microsoft Corp., and HomeHunter.com, from Classified Ventures, a joint venture among eight of the country’s largest newspaper companies (including Times Mirror Co., parent company of the Los Angeles Times). Other rivals include Nevada-based HomeSeekers.com Inc. and Moore Corp.’s CyberHomes, both of which are publicly held.

RealSelect, however, follows the stereotype of an Internet company: It has a limited operating history, has burned through millions of dollars in venture capital, and is preparing to file for an initial public offering. For now, the privately held company declines to disclose its revenue.

In residential real estate, of course, listings are everything. RealSelect became the early front-runner by affiliating with the keepers of the lockbox keys: real estate agents. The National Assn. of Realtors gave RealSelect instant access to all of its members and the listings they hold, a resource that competitors have been trying to replicate ever since. NAR had attempted to put the listings online itself, but turned to RealSelect in 1996 after deciding that the cost had become prohibitive.

In exchange for its affiliation and listings, NAR received a “small” ownership stake in RealSelect and the assurance that its listings would be posted for free forever.

Listings draw people to a home-selling site, and while its competitors have pockets of regional strength, Realtor.com provides the most comprehensive nationwide coverage.

Posting home listings online for free was the beginning of a small revolution, and it illustrates the topsy-turvy nature of the Internet.

Originally, Realtors Information Network, an NAR subsidiary, charged online home sites $3 for each Internet listing. In 1995, CyberHomes upped the ante: It not only put listings on its site for free, but offered brokers 10% of any ad revenue generated by a specific listing.

Last year, Microsoft’s HomeAdvisor site started paying multiple listing services--a proprietary listing of homes for sale in a given area compiled by local Realtor boards--$1 for each listing. That practice has since been matched by Realtor.com and others, although in different ways.

While other media, including newspapers, charge real estate agents to advertise the homes they’re selling, some Web sites pay to attract listings. That underscores the difference in how media perceive the nature of listings: Newspapers see them as advertising, Web sites see them as content.

With 1.3 million homes listed on its Web site, RealSelect has hundreds of thousands more listings than its nearest competitor.

RealSelect also is trying to sign multiple listing services to exclusive contracts, which would prevent other real estate sites from sharing them.

“When you look at the national race, and as it expands internationally, Realtor.com clearly won that race,” said Gregg Larson, senior partner in Clareity Consulting, a real estate information firm. “Since then, all they’ve done is strengthen their lead through their marketing alliances.”

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But, as elsewhere on the Internet, assessments of who’s winning what are merely snapshots of a speeding bullet. Many of Realtor.com’s best-financed competitors have only recently entered the race.

Some rivals to Realtor.com argue that the listings race soon will be moot.

“By the end of the year, all the competitors will be at the same amount,” said John Giamo, president of HomeSeekers.com, which has listings in 33 states and is signing up more.

Since there is a finite number of listings, Giamo said, it’s only a matter of time before others get in on the multiple listings and catch up with Realtor.com.

Others doubt that they will be able to close the gap so quickly.

Like Realtor.com, HomeSeekers.com receives payment from advertisers for space on the Web site, including mortgage companies, title insurance firms and real estate dealers who want to highlight their properties.

HomeAdvisor makes its money by encouraging people to finance their homes using the lending firms that advertise on its site. Microsoft gets a cut of every transaction.

Microsoft and other players downplay the importance of the listings race.

“Our site is designed around the whole home event, from the beginning of the transaction--should I rent or buy, helping them find a neighborhood, and then helping them find the home, and then the loan and financing,” said Bryan Mistele, product unit manager of MSN HomeAdvisor.

Microsoft has used its experience with its travel, automobile and investment Web sites in developing HomeAdvisor, including software tools used to present and manage information.

Microsoft hopes to leverage traffic from its MSN Internet network to generate visitors and awareness for HomeAdvisor.

Residential real estate is viewed as a prime category because homes lead to many other types of purchases. A company that captures customers early in the process may be able to bring them back again when they are ready to buy everything from landscaping to lighting fixtures.

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While homes are rarely sold on the strength of an online viewing alone, the rest of the transaction--mortgage financing, title insurance, escrow services--can all be done via the Internet.

Atlanta-based RealEstate.com, for example, operates real-time online auctions for mortgages with more than 100 lenders. Palo Alto-based E-Loan Inc. has been a mortgage broker and lender on the Web since 1997.

All of the online real estate sites are moving to expand their offerings, planning to include everything from title insurance and appraisals to landscaping, renovations and furnishings.

By creating such broad sites, companies hope to gain what is commonly called “stickiness”--a reason for a Web surfer to visit regularly and linger on a site and not just for a single transaction.

“We’re always looking for ways to expand the experience for the consumer. That’s critical,” said Stuart Wolff, president and chief executive of RealSelect. His firm already has diversified into commercial real estate with CommercialSource.com and home building with HomeBuilder.com.

If the other domain names that the company has registered are any indication, RealSelect has big plans. Among them: LuxuryHomes.com, Remodel.com, ForeclosureHome.com and RanchHome.com.

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Trying to Become Household Names

Realtor.com is leading in the battle for the online residential real estate information market, which many view as a gateway to sell everything from home mortgages and title insurance to landscaping and lighting. But the competition is heating up, and rivals are strong and plentiful. For example, listings for the same house could be found on at least four Internet sites.

Name: Realtor.com

Owner: RealSelect Inc.

Web address: https://www.realtor.com

Headquarters: Thousand Oaks

Date launched: November 1996

Number of listings: 1.3 million

Revenue source: advertising

Strengths: Partnership with National Association of Realtors gives it the most listings.

Weaknesses: Deal with Realtors may make it less flexible in pursuing opportunities that do not favor real estate agents.

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Name: MSN HomeAdvisor

Owner: Microsoft Corp.

Web address: https://www.homeadvisor.com

Headquarters: Redmond, Wash.

Date launched: July 1998

Number of listings: 500,000

Revenue source: advertising and per-transaction fees from mortgage lenders

Strengths: Part of Microsoft’s network of Internet sites that is among the biggest draws on the Web.

Weaknesses: Fewer listings than leader Realtor.com means that it is not comprehensive nationally.

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Other Contenders

HomeSeekers.com of Minden, Nevada is the only independent, publicly-held residential real estate site, with $2.5 million in sales during the trailing 12 months.

CyberHomes.com has the backing of real estate technology firm Moore Corp.

Classified Ventures LLC, a joint venture of eight newspaper companies, including the Los Angeles Times’ parent company Times Mirror Corp., will launch its HomeHunter.com this spring and already runs a site focusing on new homes called NewHomeNetwork.com.

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Times staff writer Jonathan Gaw can be reached at [email protected].