Crappy Real estate lead-generation website, HouseValues.com says in its recent press release that it lost over $1.5 Million in the third quarter of 2006. Probably because its one of the lamest business models and websites in the known universe of market conditions, costs associated with additional support staff, and the increased cost of marketing.
Look, here’s the thing about HouseValues. It is a lead generation tool that deceives the public into thinking they are getting free information about the value of their home, but really just collects their information and sells it to the highest-bidding real estate agents. And it’s not like they give the consumer’s information to a highly-trained and qualified Realtor that has passed a thorough screening process. No, they just sell it to whoever will pay.
Do they qualify these real estate agents to make sure that they are good, hard-working, decent people? No.
Do they check for the qualifications of the agents? No.
Do they care at all about the agent, other than their ability and willingness to pay for the leads? No.
I’m not saying that it is their responsibility to. They developed a company based on a need and they have grown very fast because they filled that need. What I am saying is that the company sucks and nobody should pay them for leads, but instead spend their money marketing themselves and generating their own leads. And do it with some integrity.
What made HouseValues successful was their recognition of the fact that most real estate agents/brokers were way behind the times with using the internet to attract consumers, turn those consumers into leads and those leads into sales.
What will cause the company to ultimately fail is the fact that as brokers slowly embrace the potential in the Internet and continue to create tools that are better, and as the public becomes more aware of these sorts of practices, the amount of leads generated by these types of whore-companies disintegrate. And the industry as a whole and the entire general public is better off for it. Who better to design information portals for real estate consumers than real estate companies and their clients?
Update (11-10-06)- See Andy Denton’s post about this same topic.
When a real estate site has lead generation as it’s focus, the consumer will not be served well. But if the focus of the website is to give the best tools and information available, then the consumer is taken care of first, and there will be plenty of ways to make money once the consumer is taken care of. Goole did it, MySpace did it, YouTube did it- and that’s why they became embraced so quickly and have become so successful. Obviously not all websites will be as big, but wouldn’t it be great if more sites took that approach?