LOS ANGELES -- When online real estate pioneer Homestore.com debuted 3 1/2 years ago, its flagship site, Realtor.com, was supported by a few PCs sitting in a tiny office in Westlake Village, Calif.
Today, more than 300 Dell work stations in Homestore's 80,000-square-foot headquarters power the fast-growing real estate hub, now one of the world's 50 largest Internet sites.
Homestore's tumultuous expansion underscores the Internet's growing influence on the nation's $1.3-trillion real estate industry. The site, with help from the National Association of Realtors, or NAR, made myriad home listings available to consumers for the first time.
The association "set the gauge for success for real estate Web sites: the number of listings you have on your site," said David Clark, president and chief executive officer of Homebytes.com. "So in the past few years, everyone focused on replacing the multiple listing service."
Homestore's focus on listings -- it has about 1.4 million entries -- has made it the most popular real estate Web site. But its exclusive contracts with many of the country's largest residential property listings services raised questions at the U.S. Justice Department, which opened an investigation last spring into possible anti-competitive business practices at the company.
Plenty of other sites are competing with Homestore for consumer attention. In fact, some analysts estimate that there are more than 500,000 real estate Web sites. And recent figures show that four out of 10 home buyers use the Internet, up from only 2 percent in 1995, according to NAR.
Certainly, the Internet made information that Realtors hoarded until a few years ago, like listings and comparables -- prices for similar homes that sold within the same area in the last six months -- available to consumers for the first time.
But the nascent online real estate category hasn't lived up to predictions that it would steer consumers away from agents, cut commissions and simplify the frustratingly complex home-buying process.
"The Web has hugely impacted the way people find a home," said Stuart Wolff, chairman and chief executive at Homestore. "But I don't think it's done much to impact how people buy a home and how people own a home."
Until now, most real estate sites have focused on providing buyers with listings packaged with information on relocating, home improvement, schools, crime and financing. Some analysts say this deluge of information has cut the time it takes to shop for a home in half and saved buyers money.
"Based on our surveys, mortgage rates online versus local market rates are on average about half a percent cheaper," said Nick Karris, an Internet real estate analyst at Gomez Advisors, a Lincoln, Mass.-based market research company. "So on a $200,000 loan we're talking about saving $15,000 over the life of a mortgage."
But the majority of buyers still ultimately rely on real estate agents to help them find homes. In fact, only 4 percent of buyers eventually purchased a home they found online last year. And it's still tough to get all home listings in one location on the Web.
"The Internet is being used as a secondary information source, like newspaper ads and yard signs," said Kevin Roth, a senior economist at NAR.
A recent association survey shows that consumers use newspaper ads more often than they do the Internet during a home search. And they rely on yard signs for information almost as much as on the global computer network, according to NAR's 2000 Profile of Home Buyers and Sellers.
But other surveys show consumers are pulling real estate information off the Internet, such as statistics on neighborhood schools and crime, that they can't necessarily get from other sources. And in some cases listings online have added features that save consumers time.
For instance, a recent report from Gomez Advisors found that consumers look to the Internet for home listings that include pictures of the home's exterior and virtual tours that showcase a 360-degree view of the home's interior.
Now that the market for sites that cater to buyers is maturing, new entrants are focusing on sellers and on trying to simplify transactions by putting them online. These sites are intended to decrease consumers' reliance on agents by promoting "menu-type" pricing.
But even if the Internet has aided in information gathering, it hasn't saved consumers much money. That may change soon.
Some analysts expect that the Web will ultimately cause real estate agents' commissions to fall, just as sites for investors caused stockbrokers' commissions to drop and travel sites that sell discounted airline tickets negatively affected travel agents' commissions.
For example, this spring Homebytes.com introduced a service for consumers who want to sell their homes themselves.
"One-third of homeowners in the U.S. are predisposed to want to sell their home by themselves," said Clark, Homebytes.com president and chief executive. "But they're at an ultimate disadvantage because they can't get exposure for their home in the listings."
(Only a real estate agent is allowed to place a home in the MLS, but Homebytes.com is licensed in all 50 states, giving it access to the MLS in each of its markets.)
In paying a onetime fee to Homebytes.com, sellers eliminate 3 percent of the 6 percent commission they might typically pay when a deal closes. And they're assigned an agent they can work with over the phone if they have questions, Clark said.
Several new e-brokers are also slashing commissions. Berkeley-based ZipRealty.com, one of the first full-service real estate brokerages online, offers "rebates" to sellers or buyers who complete transactions through its service.
"Before us there were no choices. You did 'fisbo' (for sale by owner) and did everything yourself or you paid full-service commissions to agents," said Scott Kucirek, president of ZipRealty.com.
Consumers who register with ZipRealty.com are assigned a broker who remains their primary agent throughout the process. Then the clients are sent packets of state-mandated paperwork. Once the forms are done, clients can tap into the listings.
When buyers are ready to look at homes, they work with a field agent in their area. When they're ready to make an offer, they work with their broker over the phone. They continue to work with the broker by phone and e-mail through closing.
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