Joel Burslem snagged an interview with Ian Morris, CEO of beleaguered HouseValues, and the take-away was that they were going to focus on their Customer Relationship Management (CRM) platform which allows the agents to manage any leads they receive and develop a business relationship with that individual, probably using drip campaigns involving emails and follow-up phone calls.
Brian Villanueva of Omega Realtors in Northern California made the following points recently on an Inman message board:
HouseValues is a classic investment banking (later called dot-com) scam:
1) Spend millions on marketing to create industry buzz.
2) Ramp up volume very quickly without regard for sustainability.
3) Deride critics as “behind the times”, not able to understand your “superior business model”.
4) Go public to create liquidity.
5) Have your board members and angel investors sell their shares and cash out.
Don’t take my word for it though. The proof is in the results:
IAN MORRIS (CEO) – $1,037,249 in shares sold
MARK POWELL (founder) – $9,900,000 sold
MICHAEL NELSON (board member) – $18,089,854 sold
and many more….
Since 2005, the executives, board of directors, and venture capitalists of HouseValues made $43.4M in options sales. That’s 40% of the market cap of the entire company today. While they were cashing out, HouseValues share price has dropped by 80%, completely screwing the small investor.
These guys fleeced Realtors and investors to make themselves extremely wealthy. And no major trade group (where are you NAR!!!) or media outlet has ever called them on it.
Documentation of all above numbers is at http://finance.yahoo.com/q/it?s=SOLD
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.
There are dozens of entries from angry real estate agents from across the country on Rip-off Report.com and there appear to be dozens of other sites that are filled with complaints about this company.
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.