HomeStore.com Plans to Turn Internet Real Estate Into Equity
Consumers have turned to the Internet to buy everything from stocks and computers to books, toys and cars. Thousand Oaks-based Home-Store.com Inc. is betting they're ready to go online for the biggest purchase of all: homes.
The company has used a partnership with the National Assn. of Realtors to claim the leading position in providing online residential listings through its Realtor.com site. HomeStore.com also operates sites that focus on commercial real estate, rental properties and new construction.
The company, which has operated Realtor.com for less than three years, plans to sell 7 million shares of stock for between $8 and $10 each in an initial public offering scheduled for this week, raising as much as $70 million. After the offering there will be 67 million shares outstanding.
With the National Assn. of Realtors as a partner, HomeStore.com has amassed more than twice the number of home listings of its nearest competitor. That's quite an accomplishment, as its rivals include Microsoft Corp.'s HomeAdvisor, ranked No. 2, and HomeHunter.com, a site launched by Classified Ventures, which is a collaboration of eight newspaper companies, including the Los Angeles Times' parent company, Times Mirror Corp.
But Homestore.com's lead in home listings is temporary, industry watchers say, and only buys the company a modest period of time to build its brand and develop a broader range of services.
A home is "a very personal, touchy-feely, high-consideration product that doesn't lend itself to the Internet as neatly as other products, like cars, books and music," said Chris Charron, an analyst with Forrester Research.
"The realization of the industry about a year ago was that staying in the home-listing space was not enough and that they needed to move into ancillary home-related services and products."
Those areas include financing, repair, remodeling and landscaping. HomeStore.com says it has plans to enter all of those service niches.
"To support their business model, they absolutely need to offer a wide range of services to consumers and parlay the eyeballs they get from offering information about homes for sale into advertising and commerce revenues for other products," Charron said.
In addition to owning Realtor.com, the company operates HomeBuilder.com, which focuses on the sale of new houses; SpringStreet.com, which has 6 million apartment listings in 50,000 buildings nationwide; and CommercialSource.com, a listing service for the commercial real estate industry.
