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Author: aardvark26 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120  
Subject: Something to chew on... Date: 11/21/2005 7:24 PM
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Recommendations: 3
Reasons why SOLD is overvalued IMHO

1.) Cyclical Market Slowdown

We are coming out of one of the most active
real estate markets ever and an extended period of
historically low interest rates. Over 30% of agents
currently in the business are expected to leave
and many that remain will go from full-time to
part-time finding other work (same for mortgage
loan officers). A part-time agent
is not going to spend the money on marketing like
you may imagine. Full-time agents will continue
to spend on marketing but are going to make sure
they get the most for their money. HV has burned
bridges with some of these agents and new competitors
are coming into the market.

2.) Downside Pressure on Real Estate Fees

There is downside pressure on real estate fees....
particularly on the sell side (listings). This reduced
compensation is going to cut into money available for
marketing AND make agents more resourceful in their methods
of advertising. HV is very expensive and you can get
more bang for your buck elsewhere. Agents will pay
good money for referrals or leads that are genuine
and that close in a relatively short period of time... but... according to many of thier customers, that is not what they are getting.


3.) MLS and Data Feeds


HV homepages site appears to use MLS data feeds
and info from H&L Magazine. There is a growing
movement by agency owners to take control of the MLS out
of the hands of local Realtor boards and put it into that
of agency owners. The MLS is not one system, but a series
of about 900 seperate units that all operate independently.
IDX, VOW and (IDL) products have transformed the way data
is shared among agents and the public... but reforms are coming
that are going to greatly restrict data feeds and cut off
information flow to people and businesses other then those
particpating agencies (already happening). Homes & Land data
tends to be old, and without up-to-date data... homepages.com
is toast. Additionally when brokers learn that H&L is selling
info to homepages and others, they will probably force them to stop
selling info all together. If HV can somehow maintain their
datafeeds their costs will most likely rise.


4.) Alienation of Customers

It is important to note that many agents & brokers are
getting fed-up with 3rd party lead aggregators that
do no work and sell poor leads. All it will take
to put HV out of business (and all the other
lead aggregators) is for agents to say "no".. were
not going to pay that or buy non-active leads anymore
... and take matters into their own hands. The big
3 franchises are already doing this and others have
plans.

5.) Competitors

New competitors are coming into the market everyday and
HV is not the first to offer lead generation services.
The uniqueness of thier "get the value of your home" and
"just listed" concepts is waining (everyone is doing that now)
and they appear to be trying to maintain sales volume with
their homepages and loanpage products. They're
also going after other "lead" sale business either directly
or as an affiliate.


Add all this up, give HV some benefit of the doubt
regarding projected sales figures, and the value of their stock should be
about half what it's trading for.

No hype, no hidden agenda. There is value here... but not what the marketmakers want you to think there is.
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