|April 17, 2002|
Home-Link Nabs $9.1 Million; Early Adopters Still Tweaking Business Model
By Bridget McCrea
Inman News Features
Shelton, Conn.-based Home-Link Services has generated a lot of buzz about its aim of helping real estate brokers provide home buyers with more of the products and services they need before, during and after moving into their newly bought home.
And investors appear to be enthusiastic about the company?s prospects, judging by yesterday?s announcement that the company completed a previously reported $9.1 million third round of funding.
But some of Home-Link?s participating brokers are hinting that the patent-protected business model is still a work in progress.
One of the first participants, Baird & Warner, joined Home-Link two years ago and remains committed to the service, according to Jennifer Warden, SVP of the Chicago-area brokerage.
But Warden said the company has had to tweak the service to make it work for the firm?s 1,200 agents and that tweaking is still under way.
Baird & Warner has "learned a lot as a founding broker in a startup" and brokers signing up now "have an advantage in that the service has been streamlined," Warden said. "We all have a better idea of what works and what doesn?t, what consumers like and what agents appreciate."
Warden wouldn?t reveal whether Home-Link is generating income for the brokerage or whether it?s even covering its own costs. But she did say consumers like it and agents who are using it like it because their customers do.
And she said the brokerage needs a service like Home-Link because while agents are on the front lines dealing daily with customers, the brokerage itself is not in that position.
"This is the first time we?ve been able to talk directly with our customers," said Warden, "and it?s been interesting for us to learn what they actually care about."
For instance, Baird and Warner?s experimentation with the Home-Link system revealed that a Home-Link move coordinator doesn?t always add value to the home purchase transaction. Warden cited retail services as one area where the coordinator did nothing more than add a layer to the deal.
"The customer doesn?t need to go through a personal move coordination to get a discount at retail," she said.
Warden said Home-Link helps agents get listings and buyers, and the brokerage is pushing harder this year to reeducate agents on how to use the service?s benefits.
Asked whether customers are using the Home-Link service over extended periods of time, Warden said the majority of the activity takes place around the time of the transaction.
Charles Brown, president of McGinnis/GMAC Real Estate of Colorado Springs, Colo., said he wasn?t surprised by that limited period of usage, even though Home-Link has touted its service as one that would be utilized over the entire period of home ownership.
"The reality is that most of the support decisions concerning the purchase of a home are done right before the (sale) closes," said Brown, whose company is a newer Home-Link participant. "From our own experience, that drops off after 120 to 180 days, which was really no surprise to us."
The decline in usage begins once homeowners begin building their own lists of suppliers for household repairs, carpet cleaning and other services, said Brown.
"How to extend usage is definitely one of the challenges Home-Link has," said Brown, who described McGinnis/GMAC?s use of Home-Link as a "long-term deal" intended to add value to the services the company already offers.
Home-Link hasn?t generated any additional income for McGinnis/GMAC, but it does pay for itself, according to Brown.
He said the service helps agents get listings and buyers, but that?s only when they use it and "getting them to use it is an issue."
A spokesperson for another early adopter--Arvida Realty Services of Clearwater, Fla.,--said the company "is not talking about Home-Link right now."
Home-Link didn?t disclose the composition of the new $9.1 million in funding, but said the lead investors were Canaan Partners and J. H. Whitney & Co. Other private investors and Home-Link management and other employees also participated and the latest round increased the level of employee ownership, according to the company.
Home-Link Chairman and CEO William Raveis said in a statement that the additional funds will allow the company to reach profitability and "realize the potential many of us first saw in the home services sector."
Approximately 170 brokerage companies are participating in Home-Link, according to the company. The Home-Link personal move coordinators provide home buyers with free assistance with moving services, major appliances, telephone and Internet services, satellite television hookups, homeowner?s insurance, security systems and other products and services.
Copyright: Inman News Service