HouseValues Feeling the Pain

    sinking-ship.jpg 

Real estate lead-generation siteHouseValues.com is not doing too well and their trajectory is looking pretty bleak. They lost $1.5 Million in the third quarter of 2006 and on the 24th of this month they announced they are laying off 60 workers, or 12% of their total workforce and they eliminated the COO position altogether.

They also announced they are doing away with their mortgage lead-generation business and said they will be “scaling back or eliminating initiatives that are not critical to its real estate agent customers.”

It’s no secret that I’m not a fan of their business model, but it’s not easy to hear of people losing their jobs. And more losses should be expected.

Sound like the company is treading water? Considering that Realtors and brokerages are getting wise and catching up with the consumers want for information over the internet, I’d say HouseValues is a sinking ship.

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6 thoughts on “HouseValues Feeling the Pain

  1. That’s great news, especailly since they bring zero value to the most important person- the consumer. Also, I am tired of their crappy pop up ads.

  2. 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.

    To paraphrase Robert Redford in the Sting, “In a good con, the mark doesn’t even know he’s been conned.” This was a masterful con.

    Documentation of all above numbers is at http://finance.yahoo.com/q/it?s=SOLD

  3. Having to spend marketing dollars to brand three different products, with no umbrella property was a big mis-calculation.

    Television ads aren’t cheap. And neither are internet ads these days. Multiply these costs by 3 and you can see how expensive their overhead becomes just on buzz-marketing alone.

    Add to this a (not-so)wonderful customer experience…
    HouseValues – Lead capture form.
    Just Listed – Lead capture form
    Home Pages – Confusing home listings

    All in all, they are a great company. Their product is top notch. But, they have more then doubled their pricing over the last year or so, and the customer offering is lacking, to be kind.

    It will take a large strategy change to overcome their current public perception.

    **reposted from my comment at the FOREM blog**

  4. Andy- you make some good points. Ads are expensive and getti9ng even more so. One of the challenges they are having is that now they are no longer the only place for Realtors to get online leads. Agents can get leads from many places now, and they are learning to generate their own online leads.

    I agree- they need to adjust their overall strategy, but not just for their perception- also to stay in business.

  5. Im not sure why someone would work with housevalues. Every agent is offering a free cma as part of their marketing. Its always been that way just give then a call or email. Essentially thats exactly what Housevalues does. Except after they connect a seller and an agent together they collect a fee. I guess I give props to HouseValues, Im not sure how you did it but they did.

  6. It is really difficult to come up with a sustainable business model in the real estate field. The gorilla in the field is heavily subsidised by the association fees they charge agents.

    Lead capture is the way many sites justify the investment, although it is painful to deal with

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