Your points are well thought out and it seems you are an experienced investor. I happen to agree with your prediction as far as HV in this market, company value, unreasonable short position (seeming to have stemmed from Stock Lemon article� do you think the major short position is retail investors?) and acquisition opportunity.
HV business model will continue to develop. I think they see the changing landscape of the industry and might even be a few steps ahead of what most here believe.
Remember cell phones back in the start when they dropped calls every other call, MSFT Windows would crash 5 times a day, Email systems that would not allow attachments, 20 meg hard drives....things evolve and the folks at the company are the key ingredient.
With that said, at this time, as is, I believe HV is worth quite a bit to a few different suitors in this market space...
Sorry, didn't see this post before I posted my last one. It might be a big impact on Housevalues' revenue, if the leads are better they might sell the a smaller amount of agents with a much higher price... you never know. In fact, it may actually be in Housevalues best interest to advertise Zillow on their website. Maintaining leads, payments and all that for less agents while selling their product at a higher price means less operational overhead.
On the main page you can view a sample report, from a real estate agent. Aside from that, I signed up for a CMA about a year ago and got it in email (which is "online"). People have to fill out their contact info, so they know someone will contact them.
Zillow didn't really invent anything either, they're using the same model Microsoft's Homeadvisor did more than five years ago. Typically I have this discussion about Microsoft (since similarly, people demonize Microsoft), but people generally don't understand what "innovation" is. You don't need to "invent" something at the high level to be innovative. Toyota did not "invent" the automobile, but they've been innovative in many ways. I'm sure Housevalues could have done the same thing, but they chose the route of homepages.com, which shows listings (which are more interesting to me, to be honest, than valuations which I've noticed tend to be lacking in the accuracy department). Zillow is great, but once I'm actually interested in selling, I'm going to talk to an agent.
The "instant information" has been around for quite some time, and it's never really made a dent in the CMA. Even if it does reduce the lead flow, I'd like to know how that hurts their business. From what you're saying, only people who really want a CMA, really want an agent and really want to sell are going to use Housevalues now. Other people will use Zillow or whoever if they don't really want to sell. Housevalues doesn't make money based on how many leads flow from their site, they make it based on (according their description) selling leads to agents. So if your scenario is true, now the leads will be people who are more interested in selling and agents will be more interested in buying the leads. That means more money for the company (not that they're doing bad now). Let's say they only get half the leads they are getting now, but 1/3 of them become listings consistently, agents would pay through the nose for the leads.
Given the CEO of Zillow helped found Expedia, I imagine that their purpose will be to try and do to real estate agents what Expedia did to travel agents. Put them out of business. There are a lot of things I'm willing to buy completely online (a plane ticket or book a hotel room), but not a house. Zillow lacks a sound business model from my perspective, and in the end they won't shake up the real estate market any more than Homeadvisor did when the offered the same thing, similarly without requiring registration.
HV and Zillow may, in some ways, be offering the same thing. This, I think, is a negative for Zillow.
Let me tell you why.
The number one problem for HV is they are selling leads of consumers who are interested in how much their homes are worth. Same reason consumers go to Zillow.
This is not the same thing as when a consumer goes to a web site and starts searching for a home in a particular neighborhood. Sure, a certain percentage of the Zillow/HV crowd are also starting their search for a home, though perhaps a minority.
Lead generation is a great business, but HV's disconnect between agent and consumer expectations is fatal, in my opinion. Zillow, under an advertising model may have legs. But HV has shown how much more profitable selling leads can be.
If people truely used HouseValues.com as a way to request a CMA from a Realtor, then yes the leads would be of higher quality but there would be less of them. HV would need to change their business model and sell fewer leads at higher prices. I don't know how you'd handle all the existing contracts you aren't able to honor lead guarantees for though. Do you refund or extend the contract with free months until you deliver the leads (like they do now). Either way, it's a big impact on HVs revenue.
>True, but that means that the leads Housevalues generates will be better qualified (they will be more likely to actually want to sell right away), does it not?
I totally disagree.
What is the main heading when you come into the HV.com site?
"Your Home's Market Value Online". No mention on this page of any Realtor being involved.
It's not until the bottom of the 2nd page hidden under a divider graphic that it mentions that the request is being forwarded.
They are not getting what they advertise: "Your Home's Market Value Online".
The awareness around Zillow will only help to educate people that when they fill out a form on the HV site, it's sold to a Realtor. The only way HV has to combat this, is to increase their advertising.
Free CMAs have been advertised by Realtors for years. HV didn't invent anything. They just do advertising with the promise of an online home valuation. If their radio ads said "Come to our site, fill out the form, and we'll forward your info to a local Realtor to do your CMA" do you really think that as many people would fill out the form?
Zillow and other online services that give INSTANT information will reduce HV.com's lead flow. The only question left in my mind is how much and how quick it will happen.
True, but that means that the leads Housevalues generates will be better qualified (they will be more likely to actually want to sell right away), does it not?
Would this not make Housevalues a better place to get leads for agents?
I don't know whether or not they know (it seems apparent on the site, it says that it will be forwarded to a real estate agent), but I am suggesting that for about six years or so Housevalues has gotten a lot of people to fill out those forms, they've gotten CMAs and that system (of agents doing CMAs to get business) is not going to change anytime soon. Do you disagree?
Please quote where I said I didn't expect them to solicit me for business.
If you go to a car dealership and the salesman brings you a cup of coffee are you unethical if you don't buy a car from that dealership? What if I decide they don't have cars I like? What if I decide I can't afford a car? What if, when I went to the dealership I didn't know if I would even want a car?
I don't think it's unethical to accept something that is offered to you freely. I would have no problem with the salesperson asking me if I want to buy a car and never said that I would.
Your posts do have some good stuff in them to prove why Zillow is a big threat to HV.
If you may not sell for a year or two, you aren't that serious at the moment. You'd probably be happy with Zillow and you'd get a CMA when you were closer to selling.
Bringing this all back to HouseValues...
It sounds like you're saying that people will continue to fill out a form on HouseValues.com because they know that this is a request for a CMA from a Realtor?