| BUSINESSWEEK ONLINE : OCTOBER 18, 1999 ISSUE | ||||||||
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| BUSINESSWEEK INVESTOR
For Sale: A Stake in Virtual Real Estate The growing connection between real estate and the Net has spawned a handful of related initial public offerings in recent months. Like so many dot.com stocks, real estate IPOs are losing money and remain highly speculative. But if you have faith that the economy will remain strong and interest rates will stay low enough to maintain a robust housing market, you might consider these stocks as long-term plays. Current trends in the online real estate market bode well for these companies. For example, a recent report by Forrester Research estimates that $91.2 billion worth of mortgage commitments will be made via the Web in 2003, up from $18.7 billion in 1999. POISED FOR GROWTH. E-Loan is poised to gain from that growth. The Dublin (Calif.) company is one of the leading online-mortgage brokers, offering clients a choice of loans from more than 70 lenders (table). In 1998, E-Loan closed 3,865 loans valued at $835.1 million. It exceeded that figure in the first six months of 1999, closing 4,377 loans worth $846 million. The company sees its growth coming from sectors besides mortgages. Already E-Loan arranges car and small-business loans on its site. Plans are under way to offer credit cards and provide mortgages through lenders in Australia and Europe. Mortgage.com, which acquired its domain name in January, started operations as a mortgage lender in Plantation, Fla., in 1994. The company originates mortgages, generating gains and losses when it sells them in the secondary market. Like E-Loan, its site allows customers to survey numerous current options and apply for a mortgage online. Mortgage.com reports that it closed 10,720 loans for a volume of $2 billion in 1998 and 8,460 loans valued at nearly $1.6 billion in the first two quarters of this year. Homestore.com provides listings for the National Association of Realtors' huge Realtor.com site, as well as other Web sites for buying, selling, and renting homes and commercial properties. In July, Cendant, franchiser of Century 21, Coldwell Banker, and ERA residential real estate brokerages, sued Homestore.com for more than $300 million, alleging it had reneged on an agreement to give Cendant shares prior to the IPO. Homestore has since suggested that Cendant, which is planning an IPO of a competing site called CompleteHome.com next year, might seek to have its affiliated brokers stop sending Homestore their listings. Cendant said it has no plans to do so at this time. SHOOT TO SELL. One of the more interesting Internet-related real estate offerings is bamboo.com. This Palo Alto (Calif.) company produces 360-degree house tours that real estate agents can buy for $99.95 and up to post on their Web sites. Unlike competitors such as IPIX, which sell software and cameras to enable agents to shoot their own virtual tours, bamboo.com uses its own videographers in 5,000 cities in North America. Bamboo.com has made deals with RE/MAX, Prudential, and other national real estate franchise companies to promote the use of its technology. But those arrangements don't guarantee the agents will purchase the virtual tours. Revenues have soared in the last year, from $77,410 in 1998 to $536,074 in the first six months of this year. It's just one more sign of how the process of buying and selling homes is shifting to the Net. By Ellen Hoffman _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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