Web site conflict has giants clashing Outcome may affect ** buyers and brokers

Nation's Housing

June 28, 1998|By Kenneth R. Harney

A real estate war has broken out in cyberspace that could determine where and how millions of American homebuyers shop for property and mortgage money for years to come.

It may also have a long-term impact on the role that real estate brokers play in the home selling and buying process.

The main adversaries in the Web site conflict are all big players. On one side are computer software behemoth Microsoft Corp. and its allies in the real estate franchise industry, including Re/Max International, Prudential Real Estate Affiliates and Better Homes and Gardens Real Estate Service.

On the other side are the brokerage industry's principal trade group, the 700,000-member National Association of Realtors (NAR), along with some of the country's largest broker-run Multiple Listing Service (MLS) organizations -- including the Metropolitan Regional Information System that is used by the Greater Baltimore Board of Realtors.

For the past two years, the dominant site on the World Wide Web for home shoppers has been Realtor.com (www.Realtor.com). The site is operated by Los Angeles-based RealSelect, Inc., under an agreement with the NAR, which has an ownership stake in RealSelect.

Realtor.com, loaded with approximately 1.2 million active home-for-sale listings supplied by brokers in 50 states, receives more than 230 million "hits" a m onth, according to Stuart H. Wolfe, RealSelect's chairman and chief executive.

The Web site allows shoppers to match the desired location, style, size and price range of homes they want against listings available in virtually every community across the country. The site also carries current rate quotes from area lenders. The property listings are supplied by Realtor-sponsored MLS organizations, tapping into their databases of members' listings.

Although various other home-listing sites exist on the Web -- including HomeSeekers.com, Cyberhomes.com, Homes.com, and HomeScout.com -- none comes close to offering as many listings or as wide a geographic reach as Realtor.com. But in middle of next month, new competition for the Realtor Web site is scheduled to make its debut.

Dubbed HomeAdvisor.com, the Microsoft site represents, in the view of its creators, the state of the art in Internet home real estate and finance shopping. And to assure a steady flow of listings from brokers, Microsoft is cutting deals with local MLS organizations, promising them cash payments based on the average number of listings they maintain on the site per month.

The reaction of the big boy on the real estate "cyberblock" to the looming threat has been decidedly hostile. RealSelect and the NAR have begun asking MLS groups for exclusive listing rights in exchange for cash payments under a program called "Gold Alliance." The new program requires MLS groups now providing listings to competing Web sites to terminate their relationships with those sites within 18 months.

MLS organizations that decline to sign up for Gold Alliance still will be able to provide listings to Realtor.com, but they won't be paid for them. The Realtors' move for exclusive rights has already attracted several of the largest MLS groups in the country.

Four online operators -- Microsoft, Cyberhomes (allied with Intuit Corp.'s Quicken.com site), HomeSeekers and HomeShark/HomeScout -- are complaining to brokers around the country about their trade group's "anti-competitive" move.

They warned in a joint protest letter with three major brokerage franchisers -- Re/Max, Prudential and Better Homes and Gardens -- that exclusivity will "hurt consumers" by limiting the number of Internet locations on which a home can be advertised. They also argued that agents will find it harder to sell homes, and that MLS groups will lose dollars they could earn from multiple Web sites.

RealSelect's Wolfe scoffs at the criticism, especially from Microsoft.

"I think it's funny," he said in an interview, "that Microsoft, which is up before the Justice Department" on allegations of anti-competitive practices in software marketing, "complains about us being anti-competitive. Now they're on the other side of the table, and they don't like it."

Wolfe and other Realtor.com proponents argue that property listings constitute brokers' unique "intellectual capital" in the Internet context. As more consumers use the Web for shopping, a key value that brokers can control is their stock in trade -- local property listings.

Wolfe and some MLS operators worry that Microsoft may want to capture big chunks of revenue by taking over some of the functions performed by brokers and loan officers.

Some powerful members of the NAR strongly disagree. In a letter this month to agents, Re/Max International President Daryl Jesperson -- a board adviser to Microsoft on its new Web site -- says, "We oppose exclusive relationships within a free enterprise system. Competition is healthy. It makes business better for everyone, including customers."

Pub Date: 6/28/98

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