History of REALTOR.com (Excerpted from Realtor.org website)
"In November 1996, the Board of Directors of the National Association of REALTORS® approved an agreement between the REALTORS® Information Network (RIN)—NAR’s wholly-owned subsidiary--and RealSelect, Inc. to take over the operations of NAR’s official Internet site, REALTOR.com. At the time, many business models were considered to finance the development of REALTOR.com. NAR’s Leadership Team decided against using dues dollars or asking for a special assessment of the membership to fund REALTOR.com. While Homestore and its investors have spent hundreds of millions of dollars to build and operate REALTOR.com, no NAR funds or NAR member dues dollars have ever been used for the creation or operation of the site."
It is now time for the NAR Leadership Team to issue a special assessment and buy the publicly traded Move corporation. Here is why:
1. Realtor.com is not supporting the National Association of Realtors stated mission "to help its members become more profitable and successful." Most Realtors I talk with hate Realtor.com. Or perhaps more accurately they hate the way Move monetizes the Realtor.com asset by selling extremely high priced marketing packages to Realtors. Prominent placement on Realtor.com should be a Realtor's right.
2. Move and it's leadership have failed to leverage the Realtor.com asset to reach consumers. Realtor.com has less than a 5% market share among real estate category websites, with most of it's top competitors boasting a marketing budget of less than 10% of that of Realtor.com's. Realtor.com had a huge first mover advantage, perhaps the most valuable domain name possible, hundreds of millions of dollars in marketing support, and the, at least initial, grassroots support of 1,000,000+ Realtors.
3. NAR cannot easily get out of its Operating Agreement with Move:
"Key Provisions in the Operating Agreement
The operating agreement negotiated more than eight years ago contained a number of important provisions ensuring NAR’s control over the content and operations of the site. Those provisions remain in full force today and continue to guide the relationship between NAR and Homestore (NASDAQ: HOMS), which owns RealSelect.
1. The National Association of REALTORS® owns and controls REALTOR.com. NAR's subsidiary, RIN, also owns approximately 4% of Homestore's stock, and maintains two seats on the Real Select board, and one seat on the Homestore board. In addition to their fiduciary responsibilities to those entities, the NAR appointees also:
* Represent NAR and RIN’s interests in all matters pertaining to the agreement;
* Assure compliance with all agreements with RIN and NAR, and report any non-compliance or other concerns to the RIN board and through them, to the NAR Board of Directors; and
* Provide quarterly reports to the Leadership Team on all significant Homestore activities.
2. Basic real property ads on REALTOR.com, including the primary photo, are free to REALTORS®.
3. No “For Sale by Owner” properties may ever appear on REALTOR.com.
4. NAR remains the sole owner of the REALTOR.com site and trademark.
5. The use and presentation of property listings remain under the control of NAR. Homestore cannot market any property data or information derived from the data without NAR approval.
6. Advertising on REALTOR.com is strictly controlled. For example, no REALTOR® detailed listing will ever contain a banner from a competitor. Advertisers are limited on the amount of space they can occupy on the site at any given time.
7. NAR must approve changes to the design or text of the REALTOR.com home page.
8. Homestore must conduct all of its real estate related business in Real Select, where NAR has substantial control. Should Homestore ever be acquired by a real estate related entity, RIN has the ability to terminate its agreement for the operation of REALTOR.com.
Homestore operates REALTOR.com as a business. Its separation from NAR allows the company to make decisions that could potentially pose difficult problems for a trade association on business terms. These include the pricing of REALTOR.com products and services to REALTORS® and the development and marketing of new products and services."
4. Relatively speaking, it's cheap. Move's stock price is in the dumps along with the rest of the real estate sector; it's always best to buy in a down market.
Move's stock is trading at just about a three year low. It's market cap is roughly $350 million with Current Assets over $200 million, and a Total Equity position of over $100. This means it's Enterprise Value is under $250 million, or in otherwords under 1x of Move's last years revenue!
5. Move has lots of other assets that NAR could spin off to lessen the out of pocket acquisition price.
- TopProducer: This is one of Move's biggest money makers, bringing in over 10% of 2007 revenues with over 65,000 subscribers.
- Move.com: A top 10 most trafficked real estate site.
- Rent.com: 5th most trafficked real estate website.
Realtor.com should be controlled and operated by the National Association of Realtors. It is our namesake, and the internet is too important to Realtors to just outsource.