Magazine article Mortgage Banking

Competition Heats Up in Online Home Listings

Magazine article Mortgage Banking

Competition Heats Up in Online Home Listings

Article excerpt

ONLINE HOME SALES AND LISTING SERVICES are engaging in megadeals to boost their market presence. Move Inc. and its realtor.com[R] website were purchased last year by New York-based News Corporation, the international media company formed by Rupert Murdoch.

News Corp wrote a check for $950 million in the last quarter of 2014 to acquire the No. 3 real estate portal in terms of online traffic. Yet it's not certain where the fit is for News Corp--which owns properties ranging from The Wall Street Journal to romance novel publisher Harlequin Enterprises.

However, the purchase may have seemed necessary after Seattle-based Zillow Inc. announced in July 2014 it was acquiring San Francisco-based Trulia Inc. Combining the top two real estate websites created a firm valued at $2.5 billion. That all-stock transaction closed in February after a six-month review by the Federal Trade Commission (FTC).

Zillow and Trulia expect to cut operating costs as a combined entity while also expanding into rental listings, reports The Los Angeles Times. Revenue for these growing yet unprofitable online enterprises comes mainly from selling advertising and leads to real estate agents.

Real estate selling is "one of the last marketplaces the Internet hasn't revolutionized," contends Rick Sharga, executive vice president at Auction.com, Irvine, California. But he forecasts that online businesses can change real estate as much as they have altered how we purchase hotel rooms, autos and investments.

"At some point in the future, most real estate transactions will be online," Sharga predicts. "We're at the beginning of this process now."

Step one is providing consumers with market information, he explains. Afterward they'll be open to using online tools to complete transactions.

Auction.com is transaction-based, according to Sharga, while other online marketplaces focus on compiling information about sale properties. In fact, he says, Auction.com advertises on Zillow and Trulia to attract purchasers.

Merging Trulia and Zillow shows the two companies "figured out that combining forces is easier than competing," notes Sharga. He expects both to continue as separate brands after centralizing their operations to gain efficiency.

Sharga adds that Move Inc. combines "incredible content" from the realtor.com site with News Corp's expertise in managing media assets. However, Sharga wonders whether having ties with the National Association of Realtors (NAR), Chicago, could hold News Corp back in some areas. For instance, he questions whether realtor.com will allow For Sale By Owner listings on the site.

New business models

Real estate agents are concerned their primary role in home sales will diminish as property information becomes more widely available. Traditionally real estate salespeople have operated as gatekeepers to the market, due to their control of data through local multiple listing services (MLS).

Online markets eventually could marginalize real estate sellers just as travel sites put many travel agents out of business. Growing concentration of Web-based listing services also has real estate agents worried that ads they purchase next to online property listings could become costlier.

However, Sharga doesn't "believe technology and real estate professionals are mutually exclusive." He touts the benefits of websites providing greater property exposure and search capabilities with the "local market expertise" offered by real estate sellers. …

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