Declines in home sales are impacting the volume and value of real estate sales for brokerages across the country. Tree.com, the online lending and real estate listing provider, is responding to drops in its home sales business with a new strategy to franchise its Web-based brokerage to local brokers.
Tree.com is making its company-owned, Web-based brokerage RealEstate.com a trademark license company, an arrangement that will allow participating real estate brokers to market themselves with the RealEstate.com brand, similar to a traditional franchise arrangement local brokers have with national chains. The company hopes the new strategy will entice real estate agents and brokers to use the company’s online listing and sales service, and turn back the recent trend of declining agents and brokers on the platform.
While high volumes of refinance mortgage activity boosted lending volume, revenue in the Tree.com real estate listing and sales division dropped 32% from the previous quarter and 60% from 2009 during 3Q10. Across all of Tree.com’s lending platforms, revenue was up 30% from the second quarter and 44% from 3Q09. The company credited historically low mortgage interest rates for a spur in refinance activity, but did not break out home lending from its auto and other lending sectors.
Tree.com’s online tools connect consumers to mortgage product, pricing and lending, real estate listings, home price data, homeowners insurance, home repair and improvement, as well as lender-focused mortgage lead generation marketing services on eight of the 12 websites in the company’s portfolio.
Overall, the company had revenue of $53.2 million in the quarter, up from $45.8 million in 2Q10. Earnings before interest, taxes, depreciation and amortization totaled $5.5 million, up from $2.4 million quarter-over-quarter and a $3.5 million loss in the prior year’s quarter.
Last week, the company hired Steve Ozonian to serve as CEO of RealEstate.com and lead this new business strategy. Ozonian has served on Tree.com’s board of directors since 2008 and previously held CEO positions at Prudential Real Estate and Realtor.com.
In addition to the marketing opportunities of the Web-based brokerage, RealEstate.com will offer training, technology, and lead generation services to its franchise brokers. In addition, the brokerage will promote lending opportunities with Tree.com’s other lending websites.
In 3Q10, the real estate division posted an operating loss of $1.2 million off $3.2 million in revenue. The operating loss is down slightly from the $1.3 million loss ($4.7 million in revenue) in 2Q10 and $1.7 million ($8 million in revenue) in 3Q09.
Closed home sales were down 31% from the prior quarter and down 51% from the third quarter last year. Sales volume totaled $137.7 million in 3Q10, down 31% from $200 million in 2Q10 and down 58% from $330.4 million in 3Q09. In the 20 markets where RealEstate.com lists homes, agents participating on the site declined to 787 from 804 in the second quarter and 1,304 in last year’s period.
