Commercial PropertyReal Estate Book Partners With LendingTree
It"s looking a lot like 1999 again with real estate becoming a primary focus for some companies, and the pressure to succeed is creating some pretty strange bedfellows. Or soulmates?
Consider the strategic partnership that just formed between LendingTree and The Real Estate Book(TREB).
Network Communications, Inc.(NCI), parent company of TREB, has entered into an agreement with LendingTree to provide LendingTree.com and its new subsidiary Realestate.com with real estate listings, which will "soft launch" on February 5th, 2004.
But there"s a lot more to say about it than that.
TREB, with approximately 300,000 listings in about 250 MSAs, covers what its management says is about 77 percent of population centers. Realestate.com has about 300,000 listings from new builder coalition NewHomeSource and about 400,000 from other sources including participating brokers, giving it about one million listings at any given time.
Until this deal, consumers had only one place they could peruse large numbers of listings anonymously - Realtor.com. Realtor.com has two million listings, not counting new homes, but it may not be the number that matters so much as the availability of listings.
Consumers have voted that they don"t like to register to see listings, which has hampered some real estate business models. So, in favor of a better user experience and the chance to be the other locale where consumers can see aggregated listings, LendingTree is providing visitors with a way to see listings.
But why would TREB partner with LendingTree? TREB is a leading magazine advertising solution for Realtors. Why participate on the Web?
Glenn Goad, senior vice president of NCI"s interactive business, says he could see the business possibilities if only the partnership could work for his advertisers - real estate agents. "We wanted magazine exclusivity, where we are the only providers of magazine-based real estate listings that prominently display our advertisers," says Goad.
TREB"s customers, he says, believe in magazine advertising, but they also want their listings to be found on the Internet. However, many don"t trust that their listings won"t be used as lead generators for other agents. TREB deals with portals and other partners have to meet the criteria that any leads that come through the listings are managed by TREB and go to TREB"s advertisers.
TREB learned the hard way that listings could be used nefariously. The company had just settled a lawsuit with an affiliate of the previous owner of Realestate.com which had used TREB"s listings without permission.
Listings were once a hot commodity. With Realtor.com sewing up many MLSs with exclusive agreements to showcase broker listings, listings from companies like TREB were in hot demand by Realtor.com competitors like MSN, Homes.com, HomeGain and others. But these portals soon decided that they would prefer to be paid than to pay for listings or showcase them for free. In addition, IDX and VOW solutions enabled brokers to make deals with portals like Yahoo! directly. Demand for TREB"s listings trickled away.
But portals soon learned that consumers hate registering to see listings, and consumer "user experience" returned as a priority. Soon, TREB listings were hot again, and especially with LendingTree. The company had been embarrassed by its previous partner, and management was emphatic about mending fences with TREB.
What makes LendingTree a potentially controversial partner is that the firm has an agent-consumer matching service along with its lender-buyer "make banks compete for you" service. But Goad believes that a quality partner like LendingTree brings a lot to the company"s advertisers.
LendingTree, according to spokespersons, is one of the largest providers of affinity relationships in real estate, operating real estate buying affinity programs for Delta, Northwest, Continental, US Airways, United Airlines, Priority Club (Intercontinental Hotels), Home Depot, American Express, Costco, and AAA.
That"s a lot of potential clients. So it"s not just about what TREB can do, it"s about what LendingTree brings to the table.
"We believe that in 2005 and 2006, LendingTree is going to get consumers," says Goad. "They are spending the money and they will get the consumers."
But LendingTree has had its share of reality checks recently, too. Like many others who entered the real estate industry with plans to make those old-fashioned brokers come to heel, LendingTree found that the industry bites back.
On at least three fronts, LendingTree has been soundly slapped down. Cendant brands took LendingTree to court for using their namebrands and goodwill to build credibility, and won an injunction. TREB"s lawsuit smeared LendingTree by association, since LendingTree was the unknowing recipient of the "stolen goods" or listings. And, industry leaders from Cendant, RE/MAX and the National Association of REALTORS have spent the last year preaching to broker affiliates against "referral-fee" companies and in some cases, naming LendingTree.
No longer allowing Realestate.com to direct its entry into real estate sales, LendingTree has regrouped, and is ready to present a kinder, gentler, and better business opportunity to Realtors.
While the company still plans to promote its agent-consumer matching service, LendingTree"s true goal is to get consumers to use its lenders by supplying friendlier content, and other ways for Realtors to get found on the site who would not otherwise participate in the matching service.
"We"ve created a relationship that really puts a new channel on LendingTree"s site that allows our advertisers to get leads through our lead management system," says Goad. "This is a way for us to promote our advertisers who are not willing to participate with Lendingtree"s broker network to pay referral fees."
Explains Tom Reddin, president and COO of LendingTree, consumers can visit both LendingTree.com and Realestate.com and view homes for sale provided by TREB.
"It"s a better consumer experience," says Reddin. "Most people will buy a home through a Realtor. Realtors are our partners."
In addition to its killer list of affinity affiliates, LendingTree also plans to spend $70 million in advertising in 2004. Today, according to spokespersons, LendingTree already enjoys brand recognition among American consumers of over 73 percent nationally, and 82 percent in major metropolitans (MSAs.)
"Most of our traffic comes through the "front door" at www.lendingtree.com," says Reddin, "which is driven in large part by our brand awareness."
That means that consumers keyboard "lendingtree.com" on their computers when they are ready to learn about loans, shop for a home, or talk to experts, instead of going to search engines or other sources.
When you look at it that way, the deal is a win-win for both sides.
It also makes LendingTree a new force to be reckoned with as a potential advertising channel for Realtors as the company explores other "user-experience" options for its consumers. And the company plans to protect its partners, too.
TREB is the default source of listings on the site, and will be the only magazine source of listings.