Tribune’s New Real Estate Push
Important Details: A newspaper company put up a different kind of for-sale sign this week.
On Monday, Tribune Inc. announced that it is buying ForSaleByOwner.com. The for-sale-by-owner acronym – FSBO – has been a four-letter word, spat out in disgust by realtors and those newspaper publishers who’ve taken their plentiful advertising dollars over many decades. ForSaleByOwner.com specializes in advertising homes for sale and provides links to related services, but doesn’t provide related services itself. The site is among the top 10 real estate sites, with 1.6 million average monthly unique visitors. Terms of the sale were not disclosed. In fact, real estate advertising is one of the big three (along with recruitment and auto) classified categories generating high revenues and good profits. Though business is still good for newspapers – growing as much as 10-12 percent a year for the past half-decade – Tribune can see the handwriting in the MLS books. Those Multiple Listing Services, largely owned and controlled by real estate brokerage firms, have been at the heart of a simmering controversy for a decade. Without access to the MLS, sellers have a harder time reaching a critical mass of would-be buyers. And access to it, and listing in it, has meant signing up with a realty firm.
It’s those time-honored relationships, seller/broker and buyer/broker, that are under fire. Several active court cases are testing brokers’ hold on the MLS, and the U.S. Justice Department is considering anti-trust action.
Meanwhile, sellers, who have an increasing share of net worth tied up in their homes, are questioning why they have to pay the same commission on house sales (5.1 percent is the national average sellers pay) that they would have paid in 1990. After all, house prices have inflated wildly, buyers are doing more of the searching work (via the Internet) and realtors have no more (and maybe less) work to do than they used to.
So you can see Tribune’s logic. FSBOs may yet break through. We can expect to see the Web disintermediate the traditional real estate industry, as the MLS barriers are breached and more new middlemen take a la carte services to Web. Want to hire a real estate attorney to handle the legal? Want to find your own home inspector? Want a marketing company to present your house best, in staging and in advertising? Rather than buy a one-size-fits-all inclusive package from your local realtor, you’ll be able to pick and choose, and maybe save the equivalent of two or three percentage points.
Not that the decision can be an easy one for Tribune. "We also remain strongly committed to realtors, to whom a majority of consumers turn for real estate transactions," emphasized Tim Landon, president of Tribune Interactive. Its own press release falls over backward to proclaim its love for old friends. Still, times demand a new bet, and Tribune is making it.
In Outsell’s Opinion: This is a bet that newspaper companies need to make to try and hold on to real estate-related revenues. While it’s not welcome among brokers, it shouldn’t surprise them. Realtors themselves, through sites like Realtor.com and their own, have already tried to break out of their newspaper channels. Their own slide shows and home videos represent a recognition that traditional advertising has its limits. To find success, Outsell believes companies like Tribune will need to go beyond sites like ForSaleByOwner.com and find real estate businesses all along the sales-and-home-improvement chain to goose new revenue lines.