On Monday, HouseValues reported a third-quarter loss of $900,000 and revenue of $13.8 million, which was down from $21.1 million for the same period last year. This follows news from July that they had laid off 100 workers, which was about 1/3 of their workforce.
The same day that they released news of their $900K loss, HouseValues agreed to pay $51,000 in costs and attorney fees and revamp some of its business practices in order to settle a case that alleged that the Kirkland company’s real estate lead generation services violated Washington State’s consumer protection laws.
As part of the settlement, the company agreed not to misrepresent the quality of leads it provides to real estate agents as well as give better disclosure of its subscription term. It also will not be permitted to charge an early termination fee unless it is clearly disclosed. The Attorney General’s Office said that the leads provided by HouseValues were not of a high quality and the company locked real estate agents into restrictive agreements.
According to the earnings announcement:
“Revenue declined due to fewer customers and lower average revenue per customer. The company believes that agents reduced their investments in marketing as transaction volumes continued to slow in many major markets.”
Maybe. It could also be that revenue declined because homeowners can get free home valuations online now and are getting too smart to enter their contact info into an online form to be sold to the highest bidder. Or maybe it’s because agents are getting smarter too, and are beginning to complain about inferior or bogus leads being sold to them by a strong-armed sales staff.
Rip-Off Report on Housevalues
John Cook posted copies of the complaint and consent decree online at his Venture Blog.