Real Estate Broker's Insider, Jeff Ostrowski, May 2009 issue

RealEstate.com, Realtors is the rare brokerage that closed more deals and generated more commissions in the fourth quarter of 2008 than in the fourth quarter of 2007.

The company says its closings spiked 55 percent over the year as RealEstate.com embarked on an aggressive strategy of recruiting agents and buying companies.

Launched in March 2006, RealEstate.com, Realtors now has 1,200 agents in 20 markets. It aims to continue that growth. “Our company is starting in one of the worst real estate economies in our lifetime,” says Victor Vaca, national vice president of sales at RealEstate.com.

To keep growing, RealEstate.com, a division of Charlotte-based Tree.com, has built a call center recruiting team, Vaca says. The company has bought lists of agents from multiple listing services, and its recruiters are calling agents to pitch the business model.

A primary selling point: The leads generated by the popular RealEstate.com site. In March, it ranked 20th among Hitwise’s list of the most popular real estate websites. Vaca’s pitch: “Say you’re doing 10 deals a year. Imagine doing all the deals you’re doing now, and we can feed you another five to 10 transactions a year.”

To generate leads, Vaca says, RealEstate.com is spending “a ton” on search engine marketing and search engine optimization. A typical RE/MAX agent, Vaca says, might spend $40,000 to $60,000 a year to generate online leads, RealEstate.com is doing the lead generation for them.

“We are going to fight this very expensive battle,” he says. Agents do pay for the leads. For closed transactions where the lead came from RealEstate.com, the agent pays a 35 percent “success fee.” Even so, Vaca says, it’s not all about the leads. “You don’t come here for the leads. You come here for the leadership,” Vaca says. RealEstate.com brokers train agents how to respond to leads and how to build up their repeat and referral business.

But responding to leads is a key part of the business model. A consumer who makes a request on RealEstate.com can be on the phone with the call center in seconds, and

on the line with an agent in a couple minutes, Vaca says. “We want to provide a worldclass consumer experience to the customer that’s on the phone,” he says.

Leads are doled out based on where an agent does business and also based on the agent’s success in converting leads. Vaca admits the demands of responding instantly to leads can be grueling, so agents are able to call time-out. If an agent will be out with a client or dining with her family, she can hit an online “pause” button that means leads won’t come to her for a time.

But in a slow market, agents find RealEstate.com’s lead machine a boon rather than a burden. “They love having leads delivered to their cell phones,” Vaca says. RealEstate.com has grown not only through recruiting but also through acquisitions. Its most recent deal, announced in late 2008, was for Tampa, FL-based New Homes Realty Inc., which had 200 agents and brokers.

In 2007, RealEstate.com bought  Distinctive Homes and Land of Tucson, AZ, and it also took over a brokerage in Salt Lake City. RealEstate.com has kept many of the agents after mergers, in part by keeping on a manager from the acquired company. “Trying to keep that family whole is important,” Vaca says. RealEstate.com has offices from New England to Southern California, but Vaca notes that the company isn’t investing much in office space. Its Los Angeles office reaches through Central California because most of the agents work from home.

“We opened with 3,000- to 4,000-square-foot offices, but we can function with half that space or less,” Vaca says. “We have a very efficient, very scalable operation.”

Contact: Victor Vaca, RealEstate.com, Realtors, www.realestate.com.