Home-Link on the brink
|September 24, 2002|
Broker home services company faces losses, customer defections
Inman News Features
Home-Link, the home services company founded by successful real estate broker William Raveis, is facing financial losses and customer defections, according to sources close to the company and documents faxed to Inman News.
Unaudited financial statements show the Connecticut-based company lost more than $3.2 million in the first four months of this year. Total revenue for the four-month period was $846,000, but selling costs amounted to $1.3 million. It appears from the financial statements that a $3.9 million operating loss was partially reduced by a one-time extraordinary item of debt reduction in the amount of $694,000. The financial statements also showed more than $4.7 million in cash and $1 million in accounts receivable at the end of April.
Home-Link President Bob Albus declined to comment on those financial statements or the company's current financial position. He said Home-Link is "a private company and such information is confidential."
Home-Link is a marketing company that works with a network of real estate brokers to provide new homeowners with referrals to moving services, major appliances, telephone and Internet services, satellite television hookups, homeowner's insurance, security systems and the like.
Some large real estate brokerages that signed up for the service have not continued the service or have cancelled it. One defector was Clearwater, Fla.-based Arvida Realty Services, which in May bowed out of its Home-Link contract when it was acquired by Cendant Corp.-owned NRT Inc. Realty Executives of Nevada and Coldwell Banker Devonshire in Illinois also are among those that have decided to terminate their Home-Link licenses, Inman News has learned.
Another problem at Home-Link, according to sources, is that brokers have failed to deliver consumers leads to Home-Link, which was expected to be a key method of acquiring customers.
Home-Link last month eliminated four managerial and four call center positions. Albus attributed the shrinkage in payroll to completion of development work and efficiencies in processing systems. He said at that time the layoffs were "consistent with any developing company" and that Home-Link was "still very much in a growth mode." Home-Link now has approximately 100 employees.
Meanwhile, the Raveis brokerage company appears to have changed its name from William Raveis Home-Link to William Raveis Real Estate and Home Services, judging by the use of both names on the brokerage's Web site. The brokerage has 43 sales offices and 1,300 agents and is a Home-Link licensed broker.
A document obtained by Inman News showed the company in March implemented a 13 percent salary reduction plan that was to last for 15 months, after which participating employees could receive two times the salary forgiven and the right to purchase stock options, but only if the company meets certain financial conditions.
Home-Link has raised $46.6 million in three funding rounds: $12.5 million in late 1999, $25 million in September 2000 and $9.1 million in March of this year, according to company announcements.
Copyright: Inman News Service