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R.com – Finally a bailout that interests me… ;-)

I am not a fan of the recent bailouts. (Too many reasons…Let’s don’t go there.)

But Russell Shaw put forth a bailout plan that has intrigued me. You see…the stock market being low has its advantages. Now’s the time to buy back REALTOR.com, NAR. You should be able to get it for a song.

Additional note: Some person named Torb had the audacity to comment on Russell’s post saying that we did not know about how much it costs to pay the engineers who design the site, write the software, blah blah blah…

Well, thanks to the miracle of public companies, the SEC and enquiring minds that want to know…YES WE DO. (grin) According to Move, Inc.’s 10K report for 2007 (dated February 29, 2008), it was $34,656,000 …give or take. And that was for MORE than REALTOR.com. That included Move.com, Moving.com, and TopProducer (a sister company under the Move Inc. umbrella). So that means (in English) that REALTOR.com was only a FRACTION of that. Since I only have access to the consolidated financials, that is as far as I can break it down.

If I said that REALTOR.com was 50% of the engineers would I be too far off? I don’t think so. Let’s just make it an even $20 mil for grins. (It is less IMO, but I am in a generous mood.)

OK, Torb..but those engineers have to be supervised, right? OK, general and administrative expenses were almost $81 million compared to that +/- $35 million. And hang onto your hat…on the same financials, Sales and Marketing Expenses were $108,633,000. Much of those sales and marketing dollars were directed towards marketing AT REALTORS…that’s a LOT more than the guys coding the sites got! Did y’all really need THAT much supervision and sales??

If we did a bailout, wouldn’t much of that be SAVED? (Methinks..YES!)

Torb? If you are looking close I will help you with some other accounting fun…you ready? How many REALTORS are there in NAR? Well, let’s just say that we suffer big losses in our industry and go back to the scary number of 1 MILLION.

And then let’s go back to the $20 Million for the Technicians and Engineers. And let’s add another $20 Million for Administration. (Yes, I am assuming that we spin off TP, and other extraneous stuff.) Let’s say that the R.com Sales and General Expense number is somewhere near $10MM.

Torb – That’s Roughly $50 per member per year. (and it doesn’t count the revenue the site already generates from other industries…which would REDUCE the cost significantly).

While I know that some of us have huge issues with NAR. (point granted. I know that many would rather be done with the whole kit and kaboodle.) But wouldn’t this be a great place to start? I think so and am throwing this out simply as a discussion starter.

The idea of REALTORS actually owning their own trademark again interests me.

If I made any factual mistatements relating to the financials for 2007, please someone at Move, Inc, correct me and they will be edited post haste. (I don’t think I did.) (Check your Consolidated Statements of Operations. That’s where I pulled the numbers from) I want to make sure I have the facts as correct as possible as I further what I think is a capital idea that Russell Shaw started.

Whaddya say?

20 comments

20 Comments so far

  1. Joshua Hanoud November 23rd, 2008 7:42 pm

    I say this…I have absolutely no problem paying $50/year or even $100/year for that service, which ultimately is significantly less than my “featured listings” cost as it is…

    Seems to be one of those “you’re dumb if you don’t think this is smart” ideas…I love those.

  2. Missy Caulk November 23rd, 2008 7:57 pm

    I’d do $50.00 in a minute, heck I would do $100.00 per year. But, I will NOT do enhanced listings ever again.

  3. Dave Phillips November 23rd, 2008 8:24 pm

    “The idea of REALTORS actually owning their own trademark again interests me.”

    I assume you mean url instead of trademark. NAR still owns the trademark and actually they own the url. R.com just has a lifetime contract to operate the site.

    You may have come up with the only possible way to take control back. Nice creative thinking, but it will not be done.

  4. Eric Blackwell November 23rd, 2008 9:29 pm

    @Dave P- yes. I should have said “web presence” instead of “Trademark.” The net effect is taxation without representation. I would love to see REALTORs have that control…especially given the amount of REALTOR directed marketing expense that turns into a direct cost to REALTORS. IMO that is sick and wrong.

    @”Nice creative thinking but it will not be done.” Dave, I have the “audacity to hope” (tongue in cheek-no tomatoes please). Why would something along these lines not be possible? I think it would be the best thing in the interest of REALTORS (just my opinion).

    At what stock price for Move would it make sense for NAR to buy our collective freedom back?

  5. kpellatiro November 23rd, 2008 10:53 pm

    Logical analysis AND sound financial theory? If we could get these to work in our industry, I wouldn’t be up reading about 2.0 at midnight (grin). That being said – could we empower those that would keep to limited, capitalist ideals for the benefit of others? Maybe even generate our own leads through our own labors? Generating more profitable, consistent income to those of us refusing to believe its the dust bowl… really? How can I help?

  6. Bob November 23rd, 2008 11:48 pm

    It doesn’t make sense at this point.

  7. Russell Shaw November 24th, 2008 12:25 am

    The stock price is really not the main issue – getting the right people at NAR to get on board is the issue.

    Once they actually see that the majority of Realtors openly dislike the current set up and would really be in favor of the NAR taking full control (and the profit) out of the site, they will do it.

    Right now they believe that it is just a few (or perhaps a few hundred) internet malcontents who feel this way. Once they know that it is not a few hundred and not even just a few thousand, they will be on board.

    It may take a while. So what? Like anything that matters, we just continue until we achieve the goal.

  8. Eric Blackwell November 24th, 2008 3:34 am

    @Bob – The current 11/24/2008 market capitalization of Move.com is 134 MM. (If I am reading that right) Stock is at a 52 week low and dropping. 2008 earnings are not (IMHO) gonna be stellar…not yet, but soon?

    In essence and theory, with a $150 bucks a REALTOR, we could buy the place and spin of TP with capital to spare. I KNOW it does not work like that in real life (grin).

    @Russell- That was PRECISELY what intrigued me about what you wrote. What this takes is DESIRE on the part of NAR to take back control of the web presence and a REALIZATION that someone else owning the web presence is a HUGE issue for most REALTORS. The rest is details.

    Those HUGE sales, general and administrative costs are what should be instructive to many REALTORS, IMO. As you said we are not a “few malcontents”…there are a lot of people who think you are being way too nice with your thinking. Like you, I am a work from the inside out kinda guy and would rather see creative solutions happen this way.

    And I have a long term view of things as well.

    Thanks for putting an innovative idea on the table, Russ. (and since I haven’t talked to you in a month or two–Happy Thanksgiving, my friend.)

  9. Dave Phillips November 24th, 2008 4:43 am

    Eric,
    What stock isn’t at or near a 52 week low. The price of R.com stock has been very low since the first 6 months of operation when the dotcom bubble burst.

    You can hope this will happen, but until R.com stops being profitable AND is no longer the #1 site of its kind (at least based on traffic), there will be no real incentive to change.

    We are working on this issue from the inside. Next year we will be putting together a group to start discussions with NAR and R.com to see how we can make the situation better. That is your best hope for now. Wish us luck – we will need it.

  10. Malok November 24th, 2008 4:49 am

    @Russell – you bring up a good point regarding them thinking that its only a fraction of members unhappy with the current set up.
    (Seriously though: even if most persons were happy, it still makes long term financial business sense to pull the trigger on this idea.)

    Is there a way to get them to implement a “vote” by the membership?

  11. Eric Blackwell November 24th, 2008 7:59 am

    Dave-

    I do wish you luck. (I do not hold out much in the way of hope for those talks, but I do wish you the best.)

    I agree that in order to pull this off, R.com needs to be less profitable. I think that until folks vote with their feet, it would be hard for me to envision R.com taking NAR seriously. (That said, I am not encouraging a boycott…just making an observation.)

    I still think that the main reason people pay the extor err…enhancement fee is that they just want to satiate nervous sellers or their brokerage has subsidized the purchase. (Brokerages are running lean right now…and will that subsidizing continue? Who knows..certainly not me.)

    FTR- I was not pointing out the 52 week low to say that R.com was bad…actually I was agreeing with you that things were tough all over, but here was an opportunity among the ruins. I was agreeing with Russ that if there ever was a time to do something, would it not be now?

    Best;

    Eric

  12. Dave Phillips November 24th, 2008 8:10 am

    Eric,
    The irony of your idea is that NAR made a ton of $$$ ($56 million I think) selling R.com stock several years ago. That same money could be used to buy Move.com now. You are correct, now is the time to buy if you have money.

    Our local association sold our shares as soon as we were allowed to and something like $25K. I think we sold half at $100+ per share and the balance at $55+. We would have sold earlier, but the rules of the stock issue at the time were tight.

    We can all say that NAR made a bad deal by signing away the lifetime rights to R.com, but they made a bunch of money and so did the locals. Would we give back that money to re-take control? I doubt it, but buying a controlling interest is a great idea.

  13. Bob November 24th, 2008 8:30 am

    “but until R.com stops being profitable AND is no longer the #1 site of its kind (at least based on traffic), there will be no real incentive to change.”

    Agreed, and the basis for my earlier comment.

    Question: Is there a line somewhere that if crossed becomes collusion? Is admonishing paying customers to stop paying so that stock value drops illegal?

  14. Eric Blackwell November 24th, 2008 8:35 am

    Bob;

    I was VERY careful to state above that I am not encouraging that.

    While I do not like what R.com does to REALTORS and I do not wish their price to go up, that is PRECISELY why I said what I did.

    I do not see value in their product. I think often times REALTORS buy it to take the easy way out…and I have asked several times for local traffic figures to justify expense, but I do not encourage a boycott in this post for that reason.

  15. kevin pellatiro November 24th, 2008 9:27 am

    Dave – the idea of buying a controlling interest just seems to ring true. Keep the feet to the fire of a group thas has continued to hold dominance (not allowing NAR to sqander R.com), and yet offer some hold on what we support and use.

    Eric, what might that look like for us?

  16. Brian Larson November 24th, 2008 4:14 pm

    Interesting idea. This would actually put us on the road to being more like our neighbors to the North. The Canadian Real Estate Association (CREA) has the most popular real estate site in Canada. And it’s run by the association with dues dollars (though they are Canadian dollars – not sure if that makes a difference). The site is so popular that IDX and VOWs are much less an issue there than here in the U.S.

    -Brian

  17. Jim Gatos November 24th, 2008 5:58 pm

    Well, I’d gladly pay $50 or even $100 yearly. Some companies get deals for their agents for either enhanced listings or Showcase, i.e.; Coldwell Banker Residential Brokerage and Connect Realty are two companies I can think of right off the top, so I shouldn’t even complaining. I am complaining though because when I see so many of my fellow blogger agents spend sooooo much money for pretty much useless fluff in a “mafia” style presentation by a bunch of high pressure sales jerks, it bothers me. Generally speaking, real estate agents are considered easy target for some of these “3rd party” providers, okay, that’s bad enough. But to get victimized by what some of us consider an extension of our own trade organization; that’s very very very sad…

  18. J Boyer Morristown NJ November 24th, 2008 7:35 pm

    I agree with you Eric, it is time to get realtor.com back into the hands of REALTORs.

    Jim your discription of mafia style presentations is funny.

  19. Ernie Tabel November 26th, 2008 4:49 pm

    Keep in mind that, the way Move works today, the Engineers and other technical staff do not design the site; they merely implement designs prescribed by a very disjointed and inefficient Product Management group and related business interests. If you saw the internal execution structures that live under those financial numbers you’ve cited, you might understand better why Realtor.com is what it is.

    And no, I don’t work there, but I know people who do.

  20. Susan December 27th, 2008 9:42 am

    The idea of REALTORS actually owning their own trademark again interests me.

    I like this concept alot myself. I know ALOT of realtors in my area that have dropped the features that they previously purchased from realtor.com. With the economy the way it is, realtors are examining their marketing expenses closely and the fees are just too high.