The Seattle Times recently published its list of local CEO’s salaries, and I saw that locally-based national real estate firm HouseValues CEO Ian Morris’ salary went up 227% since last year. Considering the latest inroads by Zillow and other 2.0 real estate websites have made in delivering an approximate value over the net, I would have thought that HouseValues would be hunkering down and re-examing their business plan. John Cook did make a note that they bought The Loan Page last year, so it’s obvious they’re not putting all their real estate eggs in one basket. If a homeowner can just type in an address and get a “value”, why would they give up all kinds of private information just to be contaced by a real estate weasel who’s under the mistaken impression that they want to sell their home? Zillow has also branched out with their loan page, and I expect other real estate portals to do the same.
HouseValues.com does not get it’s revenue from real estate buyers or sellers, but from real estate agents who are desperate for leads. These agents pay up $200, maybe as high as $500-$600 a month, for zip codes in targeted areas. For this, they are promised a certain number of leads per month.
But read the entries from angry real estate agents from across the country on Rip-off Report.com:
Realtors & Mortgage Brokers Beware!
Please read this notice carefully. Beware of HouseValues.com. They will do a bait & switch on you, they are basically scam artists. They promise you the world and pressure you to join, they say “just try it out” and they won’t lock you into any contract if it really doesn’t work for you. If you hesitate, they call with urgent messages saying another broker is about to buy out all the subscriptions and put a LOT of pressure on you. Then they say just try it out, they tell you if you really hate it, they won’t lock you into any contract (do not believe anything they say) but as soon as they have your credit card and rush you through the sign up process, it is too late.
Once they have your credit card information, they will continue to charge whatever they can on your card, they claim by signing up (regardless of promises your sales rep made to you about not locking you into any contract), you are locked in for 1 year, and in order to get out of the contract you have to “buy it out.”
Click HERE to keep on reading.
StockLemon.com suggests that HouseValues is not a viable business model, that it faces too many competitors offering the same information for free (i.e., not asking for personal information), and that there is radically increasing customer acquisition cost, since HouseValues already spends nearly 50% of every revenue dollar on line item “Sales and Marketing Expense.” They have recently begun to give seminars to teach agents how to “work the leads”. Seminars are a costly business that will eventually eat into the bottom line, and that in a declining market, their customer base (i.e. agents) will be leaving the business.
If Housevalues.com was providing a valuable service to real estate agents, if the leads were good and the service worked as promised, agents would be ecstatic and happily pay their monthly fees.
However, that is not what happens. Homeowners are promised that they will receive their homes value, online. What they receive, however, is an email or phone call from an agent. Why? Because the information the homeowner enters online is sold to an agent as a “lead”. Even if the homeowner isn’t planning on selling. But each homeowner contact is sold to an agent as a lead because there is not an option on the HouseValues input screen that says “Just Curious” or “Just Wondering”. It’s not the agents fault. They think they’re buying viable leads. It’s not the homeowners fault, as they think they’re just going to get a number spit out of a computer program.
According to the SEC filings on HouseValues, their churn rate, which measures the rate at which subscribers cancel, ranges from 6 to 6.5% per month. Essentially, 72% to 78% of its customer base cancels its subscription every year. This does not speak well of the HouseValues product. It could be that its questionable marketing tactics, the high customer (agent) churn rates, and the importance and validity of such sites as Zillow will soon catch up to Housevalues.com.