Despite an ongoing U.S. government antitrust probe into the online real estate sector, America Online (NYSE: AOL) and Internet home and real estate network Homestore.com (Nasdaq: HOMS) announced a five-year, $200 million (US$) deal today that expands Homestore.com’s real estate listings and moving services across the entire AOL network.
The companies said that the terms of the agreement call for Homestore.com to issue AOL 3.9 million of its shares and also to post a $90 million letter of credit that AOL can draw on if Homestore.com does not meet certain performance standards. AOL is slated to receive $20 million in cash.
In exchange, the Thousand Oaks, California-based Homestore.com will become the exclusive national provider of apartment listings and professional home and moving services across the AOL network. The company was already the national exclusive real estate listing provider to AOL under the terms of a previous agreement.
“This agreement we’ve reached with AOL is a huge testament to the strength of our three-year relationship and is a sign of the respect our companies have for one another,” said Homestore.com CEO Stuart Wolff.
The U.S. Department of Justice (DOJ) has been looking into whether Homestore.com monopolized online listings by establishing arrangements with local listing services for exclusive rights to list homes online.
If speculation that Homestore.com has obtained exclusive rights to 85 to 90 percent of aggregate MLS listings is well-founded, the company could be treading on dangerous ground with respect to antitrust laws.
Additionally, the National Association of Realtors (NAR) acknowledged that it too has been contacted by the DOJ. The NAR said that it has been asked for information regarding its official Web site, Realtor.com, which is also the home listing service used by Homestore.com.
Comforts of Home
Homestore.com offers a wide array of home and real estate-related listings, content, products and services. Its listings of 1.3 million homes and 45,000 apartments is expected to roll out over AOL’s properties in the next few months.
The company will also be a premier content provider to AOL’s Home Security, Hardware, Lawn and Garden, and Home Decorations categories, and will also contribute content to its Commercial Real Estate, Home Office, Home Technology and Home Finance categories.
AOL has 22 million members, while Homestore.com recently hooked three million unique users for the month of March, a figure that it says puts it out front by a margin of more than two-to-one over its nearest competitors.
Despite the ever-increasing amount of users, Homestore.com is losing money at a rapid rate. It booked revenues of $28.1 million for the fourth quarter and $73.4 million for all of 1999, but lost $16.2 million for the quarter and $71.1 million for the year.