Stirring the emotions of the real estate industry as a whole, it was recently announced that Rupert Murdoch’s News Corp. will be acquiring Move, Inc. for $950 million. The deal is expected to close before the year’s end, and staff will remain at the company’s San Jose headquarters.
The news attracted support and criticism, with a healthy dose of fear of change. What will happen now, and will realtor.com really become rupert.com as some have jested? Was News Corp. really the best partner to pair up with, and will all of Move’s subsidiaries remain in place?
To answer these questions, we spent time talking with Move, Inc. CEO, Steve Berkowitz whose leadership has ushered in this new era for the large company.
Will NAR terminate the operating agreement?
Some people firmly believe that due to a vocal minority that are against the acquisition, the National Association of Realtors (NAR) will buckle under the pressure and terminate their operating agreement with realtor.com, Move’s flagship brand. Others believe the agreement will be nixed before the ink dries on the deal, effectively turning over the apple cart, which would scare off any investor.
Although NAR CEO, Dale Stinton debunked this in a previous interview, noting that the agreement cannot be cancelled unilaterally, we enjoyed Berkowitz’s answer.
When asked about this possibility, Berkowitz said, “I think the 1944 Battle of the Bulge “NUTS!” said it best.”
Well said. The short phrase was once typed up as the official response by Brig. Gen. Anthony McAuliffe to Nazi officers’ request to surrender.
Berkowitz adds that their relationship with NAR “has never been stronger,” and that a strong realtor.com means a strong operating agreement.
A focus on the overall Realtor brand
Spend five minutes talking with Berkowitz and you’ll immediately understand that his focus is not just on the brand realtor.com as a website, but as a word, a profession, a theory – they all tie together and are symbiotic in his eyes.
Berkowitz notes that this deal empowers the brand to serve consumers even better. “If we make consumers trust the [Realtor] brand before they meet the person (and it’s not just trusting the brand but the profession by delivering a great experience), everyone in the value chain benefits.”
“If someone else meets that need of the consumer,” Berkowitz adds with emphasis, “then the question of the role of the Realtor changes.”
Is Move reacting to the Zillow/Trulia deal?
Zillow announced recently that they will be acquiring Trulia, which has some buzzing that the News Corp. deal is a response to that new powerhouse combination.
Put aside for a moment how long it takes to pull together a $950M deal with two massive companies, Berkowitz tells us that the Zillow acquisition could be actually considered a reaction to how well realtor.com is doing.
He brought up the fact that earlier this year, there were rumors that Trulia was going to buy realtor.com, and here we are.
Berkowitz rejects any notion that this deal is a reaction to Zillow. “The strength of what we’ve done in marketing has changed the playing field.”
Taking a look at the long term play here
So if it’s not a response to Zillow, so what is the deal a response to?
“Look at the premise of what we are, a media company,” Berkowitz explains. “Our job is to connect consumers with Realtors. Think about what we have to do in order to do that and build that reputation of Realtors in the mind of consumers, because personally, I believe (and both sides agree) that this is a huge transaction.”
Further, he says that they’re looking to the future of the unknown competitors, not just who is currently at the table, and that he had to look at the value of what Realtors do from an integrity point of view, and how that balances with News Corp.’s values. Ultimately, it was a match, giving them a competitive edge in the long run, so they can better serve consumers.
The long view is about more than just garnering page clicks. Berkowitz said that “today, every dollar that we spend in promoting the [Realtor] brand promotes the profession. Every dollar our competitor spends actually potentially does the opposite.”
How so? Berkowitz explains, “we’re saying ‘meet this Realtor, see what the realtor sees and learn from them.’ We’re going to give you all of the information in a single place with professionalism and accuracy that the profession itself goes by. At the end of a transaction, the majority of people create a strong relationsip with their Realtor that goes beyond the selling of a house. The brand itself defends homeownership even after a purchase – they’re going to pay their dues, advocate in Washington, and so forth.”
He emphasizes that this relationship is “not just transactional, it’s long term,” and Move is there to the forefront of that process, now with a strong partner.
Shouldn’t NAR members have bought back realtor.com?
For many years, an argument has been made that if every NAR member chipped in so many dollars, they could buy back realtor.com to be operated by NAR. So why wasn’t that a consideration instead of a third party like News Corp.?
“It’s to the members’ benefit that it’s run as a for-profit in addition to being run as an independent business,” Berkowitz notes. “The hardest part of real estate is that locals compete. Realtor.com is run by people who realize that [the Realtor’s] name is associated with the human and [run by people who] are looking out for both sides.”
This formula, he says, “gives us the ability to make things happen at a pace that doesn’t typically happen at [non-profit organization] level.” Bingo.
What most need to take note of, however, is that “the brand goes back to NAR if shut down. There are protections in the operating agreement that require the site to be viable and competitive. The protections go both ways.”
Will ad rates be going up now?
We asked Berkowitz to respond to peoples’ fear of change by telling us what is actually going to change after the acquisition is finalized. It has been stated that News Corp. won’t disintermediate Realtors, but how does he know that for sure? Let’s talk about these fears.
“If we don’t deliver value, people don’t have to buy in,” he states bluntly. “We understand the importance of delivering that value. News Corp. isn’t into the transactional side of the business – the job of listing agent is to sell a house, and we hope to facilitate better than anyone else.”
Nails are being chewed over the possibility of ad rates going up for Realtors advertising on realtor.com. “We don’t have the capability necessarily to jack up prices,” Berkowitz notes, “because ultimately, we are part of that ecosystem.”
He then lays out a manifesto of sorts to explain where he is coming from. “My goal in this industry is to take all of this money people are spending in advertising and have them spend 20-40 percent less, but more with me because I deliver the ROI. If we can bring efficiency to the system and help you get consumers at a cheaper way as part of your total ad budget, you spend less, keep more, but still spend more with me.”
“We want to make agents productive and consumers smarter,” he adds. “By just generating more leads, we’re not making the system more productive, rather harder on agents, so our job is to make consumers and define those consumers, improve the quality of leads, and make it more valuable to agents and brokers because we’ve saved them time by helping them understand what consumers are looking for.”
Berkowitz summarizes, “I want to increase productivity of agents/brokers without increasing the cost of the consumers.”
But won’t realtor.com become a right wing zombie?
You may find it laughable, but there are people who have real fear about a Murdoch brand being involved in their own brand (realtor.com, specifically). Some have told us that they think this will influence the NAR’s advocacy agenda and alter NAR’s political dealings.
“NAR had Hillary Clinton speak at their convention,” Berkowitz scoffs. “I’ve been to a broker meeting George Bush up front speaking. This is not about a political bent. Business people make money because they appeal to the masses, not one side or the other, and at the end of the day, you can find a reason not to like every company. I’ve worked at Microsoft, I’ve worked with Robert Maxwell, Pat McGovern, and endless media people – never have their political affiliations affected their business judgements. They’re smart because they know that business is business.”
He adds that “the great part of NAR is that it’s an ecclectic mix of every walk of life as is homeownership.”
And now, the way forward
Berkowitz concluded that he believes the industry as a whole is “starting, for the first time, to realize that having the Realtor brand be something that’s strong is to the industry’s benefit.”
“If we can make realtor.com become something that not only the consumer loves, but that Realtors are proud of, everyone wins. I am more proud of it today than yesterday, or when I started.”