Things aren’t so sweet on the home front for realtor.com as Zillow has in a sense evicted the official website of the National Association of Realtors out of the online real estate penthouse. Also, nasty litigation has ensued between Move, Inc. (the operator of realtor.com) and Zillow.

  • Despite having more than a million members and holding the highly recognizable collective marks "Realtor" and "Realtors," the National Association of Realtors has lost considerable ground with its website realtor.com.
  • There were at least five critical missteps by the National Association of Realtors and realtor.com that cost them market share in the highly competitive residential real estate industry.
  • There are 10 strategies that could assist the National Association of Realtors and realtor.com in regaining their industry foothold.

Things aren’t so sweet on the home front for realtor.com as Zillow has in a sense evicted the official website of the National Association of Realtors out of the online real estate penthouse. Also, nasty litigation has ensued between Move, Inc. (the operator of realtor.com) and Zillow.

How did this happen to a behemoth organization like the National Association of Realtors? What strategies could it employ to regain some footing, if not trounce its competition? Is it too late?

Old guard + weak strategy = epic failure

In many ways, realtor.com and Move.com became victims of a new era in which a new brand can easily be built with a good idea, a $9.99 domain name from Go Daddy and an army of coders ready to wreak havoc on world order.

Millennial companies with highly optimized websites and apps, fueled by a team of Starbucks-caffeinated college-aged kids, provide infinite A/B testing to ensure users have a wonderful experience and willingly provide copious amount of data about themselves to feed a never ending lead generation machine. Zillow is now to the average Realtor what Uber is to a taxi driver and what Booking.com is to a hotel owner!

[Tweet “Zillow is now to the average Realtor what Uber is to a taxi driver.”]

What’s amazing is the lack of adaption and willingness of an old guard to see the writing on the wall. Instead of trying to use its competitive advantage over newcomers in its space, realtor.com and Move are fighting on Zillow’s and Trulia’s playing fields instead of focusing on what made them strong in the first place.

They forgot that with strong strategies, the right technology platforms will align to achieve business goals and objectives. Dare I say that should realtor.com focus on its strengths in a strategic manner, Zillow, Trulia and any other online real estate lead generation company would be relegated to the suburbs?

A brief history of the National Association of Realtors

The National Association of Real Estate Exchanges was founded in 1908 with a great objective: “to unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests.”

In 1916, its name changed to the National Association of Real Estate Boards (NAREB). That same year, the term “Realtor” began to identify real estate professionals who are members of the association and subscribers to its strict code of ethics.

The collective marks Realtor and Realtors were registered with the United States Patent and Trademark Office on Sept. 13, 1949, and Jan. 10, 1950, respectively, under Registration Numbers 515,200 and 519,789. Since then, the association has maintained a vigilant defense of these trademarks.

The association eventually became the largest trade association in the United States in the early 1970s with more than 400,000 members.

Today, the National Association of Realtors (NAR) has nearly 1 million members, 54 state associations (including Guam, Puerto Rico and the Virgin Islands) and more than 1,224 local associations as of November 2015.

[Tweet “Today, NAR has a million members with 54 state associations and 1,224+ local associations.”]

Bottom line: the Realtor title carries significant weight, and the NAR is a massive organization.

An even briefer history of Zillow: realtor.com’s bully on the block

There is no 100-plus year Zillow history (only about 10). But its story features online startup legends Richard Barton and Lloyd Fink, former Microsoft executives and founders of online travel company (and Microsoft spinoff) Expedia, Inc.

Zillow is currently led by CEO Spencer Rascoff, a Harvard grad who oversees the company’s portfolio of real estate and home-related brands, including consumer brands Zillow, Trulia, StreetEasy, HotPads and Naked Apartments.

NAR’s online presence

On the technology front, computerized multiple listing services (MLS) became a reality in 1975, followed by REINET and RCS-MLS in the 1980s. Realtor.com launched as the official site of the NAR in 1997.

Realtor.org, a valuable tool for Realtors, launched in 2001. The National Realtors Database System (NRDS), an Internet database allowing local associations to post member records, launched in 1998.

How Move.com came to be and NAR’s online missteps that ensued

Now this is where things get interesting. In 1996, RealSelect, Inc. and a certain Stuart Wolff curiously obtained an operating agreement to manage realtor.com in return for royalty payments to the NAR.

In 1999, RealSelect, Inc. — with a new name of Homestore — went public and raised $140 million. Although NAR retained a significant equity position, Homestore negotiated agreements with hundreds of MLSs and brokerages to secure direct feeds of listings.

Then some funny business happened with Homestore restating portions of its financial statements. A quick Google search of Stuart Wolff shows he was convicted of insider trading and falsifying the company books. Wolff’s conviction was overturned on appeal in 2008, but he eventually plea-bargained for a sentence of three to five years. 

In February 2006, Homestore changed its name to Move, Inc., and on September 30, 2014, News Corp. and REA Group announced the acquisition of Move, Inc.

Five things are significant to realtor.com’s loss of relevance in this chain of events.

1. Under the terms of a 1996 Realtor.com operating agreement between Move and NAR, NAR had the right to sever ties with Move in the event of a change in control or if it was not represented properly by Move’s board of directors. Had NAR terminated its agreement in 2014 when Move was acquired, it would have retained its greatest asset in Realtor.com.

2. And the next head scratcher? NAR tendered its own shares in Move and gave up its seat on Move’s board of directors, thus having no say in the future direction and vision of Realtor.com except for two seats on a nine-member advisory board.

3. Furthermore, NAR granted News Corp. and REA Group “the exclusive and perpetual right to operate Realtor.com,” according to News Corp. Chief Executive Robert Thomson in a conference call with investors.

4. Annual royalties in the form of licensing fees paid to NAR in 2013 and 2014 were approximately $1.81 million and $1.84 million, respectively — a drop in the bucket to what it could have been.

5. None of these critical decisions were ever put to a referendum with members of the Realtors community.

The net effect: Brand implosion

In essence, what took 100 years to build was removed in a few strokes of a pen as NAR was relegated to spectator in its online presence going forward. As an example, if you look at an average listing on realtor.com, save a small footnote, there is no mention of a Realtor member anywhere.

[Tweet ” In a few strokes of a pen, the NAR was relegated to spectator in its online presence.”]

An extreme deviation from the principles on which NAR was founded, the listing misses an opportunity to assist the NAR member with an online marketing presence and ability to grow its business, fails to communicate the benefits of using a Realtor and, in essence, looks more like a Zillow clone.

The NAR cash payouts could never compensate for the amount of lost future revenue and the seemingly irreversible damage to the brand name. Hence, it will be hard to envision a viable NAR in 10 to 15 years.

Of course, there will be real estate agents, but perhaps the name “Realtor” will become as common as “Zillow Premier Agent” or any other cool, trendy marketing name that develops.

The $1.77B home turf war

So, if things weren’t devastating enough for realtor.com and NAR, events took an even nastier turn in 2014.

During that year, former Move execs Errol Samuelson and Curt Beardsley abruptly resigned from Move to join Zillow, and Move filed an initial suit against Zillow, Samuelson and later Beardsley.

The two senior Zillow executives will soon be put on the spot in a $1.77 billion lawsuit about whether they purposely destroyed evidence or committed wrongdoing by running file deletion programs and participating in other related questionable activities upon its departure — which resulted in the loss of Move data — to cover up stealing trade secrets from Move and realtor.com.

Based on the outcome, Samuelson, Beardsley and Zillow might face evidentiary sanctions. An investigation has been underway following a series of court orders since last year, and the case is currently set to go to trial June 6.

Zillow CEO Spencer Rascoff ramped up rhetoric against Move and its parent company News Corp. after Zillow recently revealed its legal expenses related to the case in its fourth-quarter earnings report. The report said the company had spent $27.1 million in legal bills by the end of last year and that this amount was expected to increase to $36 million for 2016.

[Tweet ” Zillow spent $27.1 million in legal bills at the end of last year.”]

“We are focused on innovating. News Corp. is focused on litigating,” Rascoff told CNBC after the earnings call. “Unfortunately, you see this all too often in business where companies who lose on the business battlefield resort to the courtroom out of desperation. … It is vindictive; it is baseless.”

[Tweet ““We are focused on innovating. News Corp. is focused on litigating.” – Spencer Rascoff told CNBC”]

Move immediately responded, saying in a statement that its lawsuit was filed before News Corp. acquired Move and that the lawsuit is “based squarely on the merits of the case, not emotions.”

Move pointed to Zillow’s SEC filing in which the real estate aggregator acknowledged “reasonable possibility” that it will incur liability in the litigation with Move.

In addition, last year former Zillow vice president Chris Crocker wrote a whistleblower letter to Move’s attorneys alleging misuse of stolen Move data and other misconduct by Zillow. Zillow filed a counterclaim, saying Move defamed the aggregator and revealed trade secrets by publicizing the letter without ascertaining whether its contents were factual.

The way forward: A blueprint for realtor.com

From these smoldering ashes, there is still hope for realtor.com. Its greatest asset is the name “Realtor” with all of its history, recognition and local neighborhood members that have taken the courses and follow a strict code of conduct governing its dealings with the general public.

What does Zillow have? A state-of-the-art website, a monopoly of Google rankings and now “Premier Agent.”

However, technology is agnostic. Yesterday it was AOL; today it’s html5, mobile and apps. It is ever-changing, but a Realtor pretty much stands for and is governed by the same ethical code of conduct from 50 years ago.

One would reason that it would be easier for realtor.com to adapt to technology and grow than for Zillow to fabricate a history and code of conduct to which its “Premier Agents” adhere. As wise man Guy Kawasaki once said, “A 50-year-old company can innovate as well as two guys/gals in a garage.”

[Tweet “A 50-year-old company can innovate as well as two guys/gals in a garage.”]

As a 10-year veteran in online marketing, I would recommend the following blueprint for NAR and its website:

  1. Provide a robust course in online marketing with credits assigned from the NAR toward licensure requirements. Real estate agents could, for instance, learn how to make its open houses more interactive through video or upload additional new images. All would be a constant source of original content generators for realtor.com. Follow this up with an online marketing support team ready to help real estate agents navigate the steps to optimize its websites.
  2. Partner with Facebook, Twitter, Yelp, Google and Bing on developing local SEO strategies focused on helping local agents get their brokerages listed on local Google and Bing maps. This would make it easy for potential homebuyers to find local real estate agents in areas where they want to purchase a house.
  3. Provide real estate agents with their own easy templated websites with About Us information and MLS listings as well as local area knowledge of schools, parks, restaurants, etc. Based on the number of members, I am sure a revenue stream could be created for the NAR by providing base and premium real estate website templates for agents. Zillow is already providing this service.
  4. NAR should invest further in the .realtor top-level domain. Rather than just offering Realtors the ability to tie their realtor.com profile to their .realtor domain, NAR should make more of a concerted effort to require the .realtor as the standard for all Realtors. This could pay dividends down the road in terms of setting Realtor apart from “Zillow Premier Agents.” However, this has to be adopted by everyone, including Google.
  5. Stop running Google banner ads on realtor.com. Banner ads on the right-hand column from Lending Tree and other mortgage companies cheapen the site. Instead, offer these opportunities to local real estate agents to market themselves to a highly qualified audience in their specific geo-locations.
  6. Update the property listing pages. Here’s an example. Realtor.com has glaring omissions like no real estate agent name or picture. In the event there was a Realtor listed, he or she would be placed close to the footer. Comparing the two listings pages, Zillow at least shows a few agents near the top as well as their photos. One would assume that Zillow had the best interests of real estate agents and not realtor.com!
  7. Hire better SEO people. Realtor.com shouldn’t be losing the war on rankings to Zillow. For example, if you Google “New York Realtor,” realtor.com offers up this page firstfollowed by this one. Both pages are property-focused and do not mention one real estate agent — but remember the searcher is looking for a Realtor! Hence, these search results from realtor.com have no benefit to the many New York real estate agents looking for new leads. At least Zillow answers a searcher’s intent with this search result page.
  8. Focus on your strengths like accurate data. Consider off-market or up-and-coming listings that a broker isn’t marketing yet that hasn’t loaded into the MLS database. Explore syndication partnerships with Re/Max, Century 21, Coldwell Banker and Sotheby’s so that realtor.com always has the latest and most accurate data.
  9. Together with the NAR, develop a better version of Zillow’s Zestimate. The Zestimate is a poor indicator of anything resembling true market value for any home.
  10. Give off-market homeowners the option to put their home back on the market by contacting a real estate agent through realtor.com. This could be an excellent revenue stream for real estate agents as most potential homeowners tend to search to find out what their property is worth.

If by landing on the realtor.com website homeowners had the option to contact a real estate agent in the area rather than filling out the generic lead “free analysis” form, local real estate agents would see the benefit from the realtor.com website and would be more inclined to invest their time more into the success of realtor.com.

To realtor.com’s credit, it looks like it is already testing this feature.

In summary, if realtor.com is the official site of professional real estate, then it should act as a force of good to help the million-plus Realtors. If done correctly starting with some simple solutions mentioned above, realtor.com could reap remarkable results and help secure the Realtor future for the next 100 years.

[Tweet “Realtor.com should act as force of good to help the million-plus Realtors.”]

If done incorrectly or not taken on at all, realtor.com and NAR risk alienating the majority of Realtor members, which would lead the association to lose what made them great in the first place — the name Realtor and what it represents, a neighborhood that Zillow can never touch despite any other cool-sounding internet name for an individual charged with the important mission of delivering the dream of homeownership.

Peter Brooke is the CEO of For Sale Marketing. Follow For Sale Marketing on Twitter or connect with it on LinkedIn.

Email Peter Brooke

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