Homestore's Fresh Start

May 1, 2002

NAR recently posted at REALTOR.org the transcript of a remarkably candid discussion on the future of Homestore.com.

At the annual Association Executives Institute, Homestore executives Mike Long and Steve Ozonian and NAR General Counsel Laurie Janik appeared before a group of more than 100 REALTOR® association executives and won plaudits. Answering tough questions from NAR’s 2001 President Richard A. Mendenhall, Long and Ozonian admitted the Web company’s mistakes of the past and its considerable challenges for the future. They vowed to make business decisions in the best interests of Homestore’s No. 1 source of customers: the real estate brokerage community. Janik made assurances that NAR was committed to its partnership with Homestore.

The same day I read the transcript, Homestore released a financial report outlining its fourth quarter results and restating its results from the first nine months of 2001. The company reported a $490 million loss for 2001 in clear and straightforward terms. If you read our interviews with Ozonian and Long and dismissed them as company hype, as some letter writers did, I believe that you should take a closer look at the new management of Homestore.

The most refreshing message from the panel discussion regarded a shift in Homestore’s branding strategy: The company will focus its marketing energies on driving people to REALTOR.COM and its other core sites, not on quixotic attempts to build the Homestore brand into the housing equivalent of America Online.

It’s easy to see how Homestore got caught in the dot-com hype of the late ’90s. What’s not excusable is the way some within the company pulled tricks to make the books look good as other real estate dot-coms were hitting the skids. Although it’s natural to make comparisons to recent business scandals, the accounting irregularities weren’t even close to the scale of an Enron. There were no hidden debts or shell partnerships. But trust was eroded nonetheless.

Homestore’s greatest strengths are the relationships it has with MLSs and the 200,000 subscribers to its lead-generation services. It would be a lie to say those relationships aren’t damaged. But the company is taking impressive steps to make repairs and create a new vision for the future.

Stacey Moncrieff

Stacey is executive editor of publications for the National Association of REALTORS® and editor in chief of REALTOR® Magazine.

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