Giaimo contends that Homestore's approach is more than just playing hardball. "Homestore's philosophy is to conquer and control," he says, adding that Homestore's efforts to lock in listing exclusives could some day allow it to overcharge consumers and realtors who use the data.
Still, some antitrust experts say the presence of other competitors, including Microsoft (MSFT)-backed HomeAdvisor and HomeSeekers, which has a partnership with eBay (EBAY), undercuts the idea of Homestore as a monopoly power. Wolff says Homestore's exclusive agreements with listing services is just like NBC's exclusive rights to the Olympics.
Homestore's advantage in the listings competition comes as consumers take to online house-hunting. In October, 41 million people searched for real estate information online, nearly double the number eight months earlier, according to a study by research firm Gomez and real estate news service Inman News Features.
And Homestore's lead in the listings department is paving the way for more than just transforming how consumers shop for homes; it also wants to change how they buy them. This quarter it will test its real estate transaction platform, eRealtor.com, with agents in the San Francisco Bay Area. The idea is to provide a site for all the parties in a real estate transaction - from the agent and home buyer to the title company and lender - to share information and exchange paperwork.
Homestore already has a solid customer base. In addition to the 131,000 agents who subscribe to its services, the company got Cendant to agree to promote eRealtor.com exclusively among its agents as part of the sale of Move.com. (In return, Cendant may become Homestore's biggest stakeholder with 26.3 million shares.)
Homestore is certain to face competition from HomeAdvisor as well as a number of smaller startups. The biggest challenge, however, could be getting the different parties involved in a house closing to abandon the old ways of doing things. "Bringing them together - what a nightmare," says Brad Inman, owner of Inman News Features. When buying a house three years ago, Inman says he signed 102 forms and spoke with 48 people.
Adds Nick Karris, a senior analyst at Gomez: "We're talking about a trillion-dollar industry that is technophobic in many ways. To say that one provider can satisfy all those different needs with the same platform may not be realistic." Complicating matters are the variations in state laws regulating home sales, though Homestore insists it can address this. Wolff concedes real estate transactions will not move to the Net overnight, estimating they will take five years to be accepted and perfected - about the same time it took for house listing searches to go mainstream.
Meanwhile, Homestore isn't burning cash. Although its share price dropped from a high of $138 a year ago to about $18 last week, the firm posted a small operating profit of $554,000 in the quarter ended Sept. 30, excluding noncash charges.
Other real estate dot-coms have died, but Homestore employees still talk about changing the world. Wolff, who received a doctorate in engineering from Princeton and has never worked as a realtor, is brimming with confidence."It would be a mistake to walk away thinking we're fun and games - It's work hard, play hard," he says, noting that the company has never received much hype. "It's an evolutionary model, not a revolutionary model."
Still, it remains to be seen whether the ultimate brick-and-mortar industry really can evolve.
