Robert Freedman is the former director of multimedia communications at NAR.
E-Racers: And... They're off!
Tech companies are jockeying for position as they dash toward an Internet-based transaction management platform.
June 1, 2000
The race is on to enable the first paperless transaction in real estate. What’s at stake is nothing less than the way you do business.
At the finish line: an Internet-based platform that will either (a) make it possible for you, your clients, and others involved in a transaction to “talk” in real time and track deals online, or (b) allow technology companies, mortgage lenders, and others to cut into your role in the transaction. It depends on whom you talk to and what you believe.
There’s no disputing that Internet-based platforms will form the foundation on which real estate e-commerce is built. So these platforms are widely considered to be pivotal to the viability of real estate brokerages and salespeople in the Internet age.
The technology for such a platform is already here; at least a half dozen companies are touting competing versions. Still in question: which platform will gain adherents, whether the promised advantages of the electronic transaction— lower costs and faster closings--will follow, and what role real estate brokers and salespeople will ultimately play.
Promises from the companies developing the platforms are flying fast and furiously. And the din will only get louder now that some companies are moving from the development stage to deployment.
Formally joining the race this spring was Homestore.com, which operates realtor.com. Homestore announced its intention in mid-March to develop a REALTOR® friendly transaction platform. By early May, the company was announcing its acquisition of Wyldfyre, a real estate technology solutions provider that’s already beta testing a platform called RealtyLink.
Anchored by its relationship with the NATIONAL ASSOCIATION OF REALTORS®, Homestore brings to the race built-in market strength that other companies will be hard-pressed to match. That only puts pressure on the company to make its transaction management platform the best--and the best for practitioners--says Stuart Wolff, the company’s chairman and CEO.
Looking at Homestore’s competitors, it’s not entirely clear how practitioner friendly some of the services are.
Homestore is bound by its contractual relationship with NAR to offer a platform that mirrors existing practitioner-led transaction models. It also has the technological horsepower to accommodate thousands of transactions at any one time, says Wolff.
In practical terms, its connection to NAR means that practitioners, not others such as lenders, direct the process. “The platform’s centerpiece is that it will keep--and will always keep--practitioners at the center of the transaction,” says Dennis R. Cronk, NAR’s president.
What’s Microsoft up to?
Bumping up against Homestore’s March announcement was news from Microsoft’s HomeAdvisor that it plans to test its Realty Desktop and a related online mortgage service this spring.
HomeAdvisor’s mortgage partners include secondary mortgage market giant Freddie Mac and some major lenders such as Bank of America and Norwest Mortgage. To test its Realty Desktop, Microsoft has lined up two big brokers, Prudential California Realty in Brea, Calif., and Howard Perry and Walston, REALTORS®, in Raleigh, N.C.
Richard Cosner, president of Prudential California Realty, says he agreed to test HomeAdvisor’s Realty Desktop because of Microsoft’s size and technological superiority, but he’s not committed to any system yet. “If anyone will be successful, it’s likely to be Microsoft,” he says. “It has the ability to pull all the pieces together, and it doesn’t serve a lot of different masters. It’s not bound by any one franchise or any one lender.”
Wolff is not so sure. “Companies can say they’re not going to get in the middle of the practitioners’ relationship with their clients, but how do you know their platform isn’t going to turn on you at some point?”
Microsoft says it won’t interfere with practitioners’ compensation.
Sara Narbaitz, a product manager for HomeAdvisor, says real estate pros will remain key. “The transaction will always be assisted by a practitioner,” she says. “We’re trying to increase efficiencies and maximize profits for brokers.”
Homestore and HomeAdvisor, because of their size and existing top spots in the Internet real estate environment, will likely be close rivals to lead the e-commerce race.
If history is any indicator, the odds favor Homestore. HomeAdvisor continues to play catch-up in the online listings business. Traffic on Homeadvisor.msn.com lags behind that on Homestore.com, which has five times the number of unique users and 23 times more page views, according to Nielsen’s NetRatings.
The other racers
Both Homestore’s and HomeAdvisor’s fee structures are still under development. Meanwhile, other technology companies developing platforms are wrestling with issues that affect how strong a challenge they can pose. The good news is, each of the companies we talked with insists that, with its system, the real estate practitioner remains central.
A platform called Chorus, by iProperty.com, an MLS company, allows practitioners to access a Web site that’s customized with their photo and their broker’s brand imagery. Chorus lets salespeople walk their clients through the transaction from home search to postclosing--at no cost. The company’s revenue model depends on lenders and other service vendors paying to compete for the business of online buyers and sellers.
Some competitors say iProperty’s infrastructure-heavy approach, with its separate setups for each user, will make it hard for the company to gain broad-scale market share.
Another Internet-based company, Synteleos, is testing a system that manages transactions only during the closing process, not during the home search. Pricing will range between $25 and $50 per transaction, depending on transaction volume in the office. The platform has been available since last fall.
ezClose.com, the online service of ezClose Title Co., touts itself as the first electronic closing platform and, as its name implies, manages the transaction only through closing. Practitioners pay nothing to use the service, but the platform requires participants to use ezClose title services. As of this spring, the service was operational only in the San Francisco Bay area, but it was to be launched in eight other areas by midsummer.
At the end of the day, practitioners say, they’ll go with the system that enables them to do what they do best--guide their clients through the transaction process. Given the strong competitive field, it’s unlikely that practitioners will be taking a wait-and-see attitude for long.
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