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No. of Recommendations: 4
I sold my HouseValues on a little pop a few weeks ago. I broke even and I feel lucky, perfect timing would have netted me a little more, but timing doesn't work.

When I sold it I had not yet seen Now I am more convinced than ever that I did the right thing. I sold HouseValues based on four things:

1. I would not want to be one of their users. They lead you to their site promising to tell you what your house is worth and then they hook you up with a real estate agent. That real estate agent is some combination of self selected (having signed up for the HouseValues program) and randomly selected (if HouseValues truly doesn't send each contact to multiple agents). Is this how you would find a good real estate agent? What about asking friends who sold their house? What about paying attention to the signs to see who is farming your neighborhood? What about interviewing two or three and picking the one that you work best with?

I would not pick a real estate agent the HouseValues way and I consider what they do deceptive which seriously turns me off.

2. I would not want to be one of their agents. First and foremost, any service that forces you to a year long contract does not have enough confidence in the value of their product to trust customers to stay around. Forget the arguments over the churn rate math, forget the questions about whether the agents posting in the flame message boards are a select few or truly represent the majority, and forgeet the endless arguments about whether there ever will or will not be a class action lawsuit. The fitness club sales tactics say it all.

3. I saw nothing compelling about their technology. I've built internet web services with similar technology. What I saw of HouseValues web site I could cook up in a weekend of programming; and I'm not a talented web developer, I'm a hacker. Internet businesses that are succeeding need a combination of fresh breakthrough technology and a killer business plan. TomG looks at HouseValues numbers and evaluates them as a business and I can't argue with him there. I was tempted to stick in there because he makes a compelling argument in their favor and I'm still learning. But, I see plenty of investment opportunities in companies that both the Fool and I like - why hold a stock I don't like? I do know more about internet application development than TomG and HouseValues doesn't have diddley.

4. The real estate market, especially here in Silicon Valley, is a mess. We have huge numbers of new agents. I know far too many high tech refugees that went into real estate because of the low barriers to entry and percieved high rate of return. I also have a couple of agent friends with 30 year RE careers and multi-billion dollar total sales numbers to show for it. The former won't survive and won't re-enlist with HouseValues for a second year - that is if they manage to make their payments for all of the first year. The latter are well known for their skill and experience and don't need HouseValues to help them find sellers.

Now, my dad is house shopping my neighborhood while sitting in his neighborhood 3000 miles away. He's a patient shopper, so I've seen a couple of years of all of the different ways that agents try to 'lock on' to him. And I've seen all of the search tools, auto e-mail tools, and other stuff that they offer him. It's all interestng, but no truly powerful way to understand my neighborhood, town, or county has come along - it still takes a huge amount of local knowledge to know when a good deal comes along. Dad is lucky he has me :-)

Enter Dad found them due to an article in the WSJ this week. I spent the beginning of the week listening to lectures about Internet 2.0 (That Tim O'Reilley is an amazing speaker!) and looking at examples of good internet 'mash-ups' and 'rich internet clients'. You know what? What has is very, very cool cutting edge stuff. It follows the internet 2.0 model- take advantage of the wealth of info on the internet, hook it together in different and powerful ways, and put an intuitive, powerful UI on top of it, make it free, get zillions of hits, sell advertising.

Thanks to zillow, I can look up the value of my house, my neighbors houses, and all of the houses in any neighborhood I want. I can go in and play with some 'what if' scenarios like what if I added a few hundred square feet and remodeled the bathrooms. I can see comps and try to draw my own conclusions about what factors affect the value of a particular house.

Zillow creams Housevalues on the four points above:

1. I like them, I can get 1000 times more info from them than from HouseValues and I can do it the first time I hit their site - no more, 'we'll have someone contact you' model.

2. As I surf they can float relevant ads for agents. If I click one (or three) they can charge the agents by the contact in a Google keywords sort of way. They should be able to give that agent some detail on what houses I looked at and what I may have entered into the 'refine this home's value' tool. To him/her I am a well qualified buyer about whom he can get something more than a fake phone number. Hopefully he can get it without signing a fitness club contract.

3. They have good technology that will be difficult to duplicate quickly, more than I can say for HouseValues.

4. I don't know how zillow plans to sell advertising to the agents that will soon want to hook up with them. But, they can't possibly be worse than HouseValues.

I sold my SOLD and along the way I learned to check out the Fool's recommendations BEFORE I buy them rather than after.

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