Homestore to Buy Real Estate Rival
The Internet’s largest real estate portal, Homestore.com, said Friday it will acquire Cendant Corp.’s Move.com in a $761-million stock transaction that further solidifies the Thousand Oaks-based firm’s dominance of the fledgling online real estate category.
With 1.5 million home listings--considered the key ingredient for online real estate firms to draw traffic to their sites--the combined clout of Homestore and Move.com would far outpace the second-largest contender in this category, HomeAdvisor.com, with 800,000 listings.
Because Homestore already had temporary access to New York-based Cendant’s 400,000 home listings, the planned acquisition is likely to have a greater impact on a race by real estate Web site operators to develop new technologies they hope will lead to paperless real estate transactions.
Internet real estate companies have largely conquered the task of making home listings available to the public, and now plan to attract consumers by moving most of the home buying transaction onto the Internet.
“If Homestore can lock up the transaction automation space with Cendant brokers, it certainly gives them a leg up,” said Nick Karris, an Internet real estate analyst at Gomez Advisors, a Lincoln, Mass.-based market research firm.
Cendant is the franchiser of the world’s largest real estate brokerage system, with 200,000 real estate agents operating under the Coldwell Banker, ERA and Century 21 banners. Together, these agents sell about one of four homes in the nation.
The stock market applauded the deal, driving Homestore’s shares up $8.98 to $37.94 on Nasdaq, a 31% gain over Thursday’s close of $28.95. The deal is valued at $761 million based on Thursday’s closing price for 26.3 million shares of the company’s common stock.
The deal, which Homestore’s Chairman and Chief Executive Stuart Wolff expects to close in about six months, is subject to approval by Homestore’s shareholders and the Department of Justice, which is investigating the firm for possible anti-competitive business practices stemming from exclusive contracts Homestore has with many of the country’s largest residential property listings services.
Homestore owns a family of six Web sites that provide listings for new and existing homes and apartments, as well as remodeling, financial and relocation information. Its flagship site, Realtor.com--in which the National Assn. of Realtors owns a minority stake--received more unique visitors last month than any other real estate site, according to Media Metrix, an Internet market research firm.
Homestore currently has exclusive rights to Move.com’s listings, but these rights were set to expire in a few years, Wolff said. Friday’s agreement provides Homestore with exclusive access to these listings for 40 years.
As part of the deal, Cendant will make an equity investment in Homestore’s electronic transaction platform, which is under development and has other well-known industry backers, including the National Assn. of Realtors, Fannie Mae, GMAC Real Estate and Verisign.
“Our philosophy and business model is to partner with the industry, not compete with it,” Wolff said. “We want to be the technology developer for various professionals in the marketplace.”
Under the agreement, Cendant Mobility, Cendant’s relocation company, and NRT Inc., its largest real estate franchisee, have agreed to use the transaction platform exclusively for three years. NRT represents about 32,000 real estate agents, or 16% of Cendant’s total franchisee network.
Among other options, the platform would provide consumers with their own Web sites where documents for an entire transaction would be posted--and eventually signed--and where consumers could chat with their brokers and find other resources related to their deals.
When the deal is final, Cendant will own 15% of Homestore, said Henry R. Silverman, chairman, president and chief executive of Cendant. Silverman said Cendant isn’t getting out of the online real estate business altogether, pointing to its franchisees’ Web sites and those for its relocation and retail mortgage businesses. But according to the deal, Homestore also has the option to design and operate Web sites operated by Cendant’s franchisees.
“We put $40 million into Move.com and we’re getting close to $760 million out of it--it’s a pretty good return on a year and a half of work,” Silverman said.
As part of the deal, Homestore will integrate Move.com and its assets, which include Rent Net, a leading residential rental listing and apartment finder service, into its network. Homestore will also acquire the rights to Cendant’s Welcome Wagon, a direct marketing firm that introduces neighborhood retailers to new homeowners.
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Moving Home
Homestore.com and Move.com’s properties dominate a list of the 10 most popular Internet real estate sites for the month of September, according to Media Metrix. Homestore announced Friday that it will acquire Move.com in a $761-million stock deal. Top online real estate sites before the acquisition:
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Number of unique visitors, in millions*
Realtor.com: 2.13 million
Homestore.com: 1.67
HomeaAdvisor.com: 1.36
Homebuilder.com: 0.83
Springstreet.com: 0.83
Rent.net sites: 0.73
Homefair.com: 0.71
Move.com: 0.70
Realhome.com: 0.63
Apartments.com: 0.47
* Unique visitors are the individual users who visited the reported Web site in the given month.
Source: Media Metrix
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