Dressed in a karate outfit, Stuart Wolff is swinging a sword and stabbing a toy dragon in his front yard. It's not a distinguished pose for the CEO of a 2,000-employee company with a market value of $1.5 billion, but Wolff isn't worrying about being respectable. Even as the Internet revolution has been widely discredited, his performance as a sensei in a training video for his firm is just one sign that this online real estate company is maintaining its new-economy attitude and ignoring the naysayers.
From Homestore's new Southern California headquarters, with its freshly painted purple walls and orange file cabinets, the 37-year-old Wolff continues to proselytize about the ways the Internet will revolutionize the buying and selling of houses. This quarter the company is beginning to roll out a Web-based platform that is supposed to help realtors and consumers close sales over the Internet - an idea so ambitious that one industry expert compares it to brokering a peace deal in the Middle East.
Homestore's initiative comes on top of the company's dominance in real estate listings. Homestore.com (HOMS) features more than 1.4 million listings - at least 90 percent of the home listings on the Internet - though many are duplicated elsewhere. That number could grow if Homestore succeeds in acquiring rival Move.com, the real estate portal for Cendant (CD), franchiser of the world's largest real estate brokerage system, including Century 21, Coldwell Banker and ERA.
What makes these aggressive steps so remarkable is that Homestore is taking them in the face of a Department of Justice investigation. Last spring federal officials began looking into charges that Homestore's attempts to gain exclusive control of home listings may constitute anti-competitive business practices. In October, Homestore announced its plan to acquire Move.com for about $761 million in stock, and now that deal must also be cleared by antitrust regulators before it can be completed. (Homestore shareholders are expected to approve it on Jan. 11.)
A green light from the government, which Wolff predicts he'll get in the next three months, will allow the CEO to continue building on his dot-com-style growth. He has established alliances with the biggest players in the industry, trading equity for their support. He buys out competitors, using his still-sizable stock-and-cash arsenal. And he isn't satisfied with controlling just one industry segment - real estate listings - but is looking to be the online agent for all facets of home buying.
"At some point the paper goes away [from home buying]," says Wolff."I think it will be an Internet transaction. The question is not if, but when."
Homestore started in the early 1990s with home-listing kiosks. The firm struggled until 1996, when it took over www.realtor.com, the ailing Web site for the industry's biggest trade group, the National Association of Realtors. Under Wolff's guidance, Homestore courted local multiple-listing services, offering stock in exchange for exclusive online access to their residential listings. Homestore also acquired other online real estate operations, like rental site SpringStreet.com and moving site Homefair.com. Its latest deal is the Move.com acquisition.
To compete with Homestore, other sites such as
HomeSeekers.com have gone through the painstaking process of asking individual real estate agents or offices for their listings, says John Giaimo, HomeSeekers.com CEO. But such efforts have not proved as successful. Homestore's 1.4 million home listings outnumber HomeSeekers' 1 million and HomeAdvisor.com's 800,000.
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