The Real Estate Encyclopedia
A Decade of Ravenous Acquisition and Internet Dominance
Category - Real Estate Information Sources - Real Estate Articles
A Glimpse into the Recent Past

The annual Swanepoel TRENDS Report not only discusses the top 15 trends impacting the real estate industry over the course of the next few years, but as an added bonus provides a very interesting snapshot of the last 10 years. Included in the report is a 9-page section devoted to a brief history of major global events that influenced the residential real estate industry. Below is a short extract of highlights from this section.


1995

The letters HFS, speculated by some to stand for Houses for Sale, are introduced to the real estate industry when Henry Silverman, CEO of Hospitality Franchise Services, acquires Century 21 (C21) from Metropolitan Life Insurance. This overlooked acquisition (at that time) would turn out to be the start of what many consider the “Most Significant Real Estate Acquisition of the Century”. Longstanding industry tradition is shattered when outsider Bob Pitman, MTV whiz kid, unexpectedly becomes the new CEO of C21, and draws major attention when he officially introduces the Internet into mainstream real estate in November at the NAR Convention in Atlanta by announcing, “Click a Mouse and Buy a House.”


1996

As national franchisees enjoy a-merry-go-round ride, the largely ignored acquisition of C21 by HFS the previous year is followed by the acquisition of ERA, Coldwell Banker and PHH. A name change to Cendant and a move of corporate offices to unknown Parsippany, New Jersey soon follows. An unsettling fear begins to set in.  Meanwhile, another real estate baby, unknown to most, was founded in Ontario, Canada by Steve Morris. Previously a large RE/MAX franchise, Morris decides to create a new residual program to provide retirement benefits to agents, and christens the company EXIT Realty.  In the short span of four years, the company enters the US market, and by 2005 hits the top 10 list of the largest real estate franchises in Northern America. Like RE/MAX, it appears that EXIT is ordained to re-define the real estate broker/agent relationship for many years to come.


1997

NRT, Inc., the Cendant-owned brokerage-holding company, proves that size does matter when, with a steady diet of acquisitions, it begins to dominate the national rankings, making it the world’s largest real estate brokerage company. This position continues today, with more than 1,000 company-owned offices. In 2004, NRT posts a real estate industry record with $204 billion in closed sales volume.   Microsoft starts what in the end is to be a very brief stint in the real estate industry with the launch of HomeAdvisor.com. What was to become the landmark book in real estate is published, when Real Estate Confronts Reality identifies the key changes that will impact the industry. Reflection on the predictions made in this book would later prove to be very accurate.

1998

It appears that this was a year in which common sense, profits and good management were out of style. The real estate industry surpassed every other industry, including retail, technology, legal and pharmaceutical markets by registering the most URLs. Predictions that new Internet companies are going to topple traditional real estate companies flourish. Popular forerunners include IRED, HomeSeekers, HomeWeb, HomeAdvisor and Homes.com. It is, however, the once still-born NAR baby RIN that is revived into Realtor.com, and HomeStore ends up grabbing the spotlight while unlikely LendingTree.com becomes one of the most successful dot.com startups to emerge from the real estate industry. Meredith Corp. sells its BH&G franchise to GMAC Home Services, Inc., a subsidiary of GMAC Financial Services, as RE/MAX founder and CEO Dave Liniger becomes one of a three-pilot crew who attempts to beat Richard Branson, the Virgin multi-millionaire, in an around-the-world, stratospheric helium balloon race.


1999

This year follows the real estate “dot.com” madness of the previous one, creating new brands in real estate that reach new heights. Ideas are ridiculously expensive, frequently creative, and almost always amusing. ZipRealty introduces a new era of real estate company names while a home-based, lead generation start-up, HouseValues.com, quietly opens its doors and in December 2004 turns heads when it raises almost $100 million in a successful IPO. Back in traditional real estate, college hockey star Ronald Peltier consolidates nine prosperous real estate companies and propels the new corporate parent, HomeServices.com, to the No. 2 spot in sales in the US.  Widely perceived as a discount brokerage, 1970’s Help-U-Sell is revived to allow customers to choose what they would like to pay for real estate services through unbundling. Congress finally completes the long-anticipated revocation of the Glass-Stegall Act, creating a furious debate on whether financial institutions may enter the industry as owners and operators of real estate firms.

 
2000

During January, HomeStore.com becomes the newly born real estate dot.com darling and peaks at $138 per share. Two years later, after the resignation of founder and CEO Stuart Wolff in the wake of an accounting investigation (which results in a substantial restatement of revenues) the company’s share price hobbles at a decimated 32 cents. What starts as “an investigation into potentially anti-competitive conduct involving the online realty listings industry” by HomeStore, the U.S. Department of Justice (DOJ) gradually widens the investigation into numerous facets of organized real estate brokerage. The DOJ formally files suit in 2005 against the National Association of Realtors®.


2001

Early in the year, realty dot.coms burn due to irresponsibly funded, single revenue, difficult-to-implement one-page business plans. Seizing the opportunity with an almost military precision, Fidelity National Financial (FNF) beats other major title companies to the MLS arena with various key acquisitions.


2002

A well-promoted real estate book, “The Millionaire Real Estate Agent: It’s Not About the Money,” by Gary Keller, Dave Jenks and Jay Papasan is published. Consumer adoption of the Internet as a means to search for homes accelerates rapidly, and by 2005 will significantly change the way in which the entire real estate marketplace operates.


2003

Another big name enters the real estate industry, when influential media mogul Barry Diller purchases LendingTree. In the following years his company, InterActiveCorp, also acquires other real estate assets such as RealEstate.com, ServiceMagic, iNest and Domania. London-based Foxtons buys New Jersey-based Your Homes Direct (YHD) and although the acquisition is relatively small, it is the first UK-based real estate company to officially expand into North America. They now operate 27 branches, saddling the Atlantic with both arms operating under a 2% commission.


2004

NAR achieves an unprecedented milestone in Association history by exceeding one million members for the first time, while RealtyU® becomes the nation’s largest educator by surpassing 250,000 real estate agents trained in one year. The first national non-profit charitable organization focused exclusively on helping new licensees in the real estate industry to succeed is formed. Within two years The Real Estate Apprentice Foundation announces the ability to award 5,000 grants totaling $1 million per year. ZipRealty draws attention when, in what was touted as the first initiative of its kind, the company reserved up to five percent of the it’s common stock for purchase at the launch price for anyone who bought or sold a home with ZipRealty prior to September 30, 2004. The IPO raises $68 million.


2005

Celebrating five generations, Illinois powerhouse Baird & Warner (founded in 1855), celebrates 150 years of continuous real estate business as the oldest real estate company in the country. Longstanding RELO network, the organization that encompasses 650 of the foremost local and regional brands in residential real estate, collectively sells 1.4 million homes annually valued at $380 billion, and announces a name change to Leading Real Estate Companies of the World. Homestore revenue for the first nine months of 2005 was $186 million (compared to $162.5 million for the same period in 2004). Net income for the period was $4.9 million compared to a loss for the same period of $13.9 million in 2004. HomeStore ends the year as the top performer in the Inman New Stock Index for 2005.


About The Author

There is little doubt that after a decade of research and 13 books and reports to his name, Stefan Swanepoel has become the leading prognosticator on trends, change and new business models in the real estate industry. His latest 110-page Swanepoel TRENDS Report provides a balanced and objective evaluation of the top 15 trends transforming the industry, together with another five trends that are just bubbling under the surface, as well as a summary of highlights during the last 10 years.  It is a must read for every real estate expert. Visit the Real Estate Books to get your copy today.





References


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