New Name For Homeseekers
January 25, 2002
Real Estate Technology Company Aims To Remake Itself As Realigent Solutions
By Bridget McCrea
Inman News Features
In a few months, HomeSeekers--as it has been known--will be gone for good. The company isn?t closing, but it is under going a major overhaul that will result in a vastly different company, according to CEO Thomas Chaffee.
The most obvious changes will be a new name, Realigent Solutions for Real Estate, a new branding strategy to be unveiled this spring and a new corporate culture.
In his one-man-band role as head of the company and the only member of its board of directors, Chaffee has spent the last two months laying off employees, seeking out partnerships and whittling 11 offices down to a single location in Brea, Calif., soon to move to nearby Irvine.
"When I took over in October, the company had 11 offices and some serious (cash) burn," he said. "It was obvious that HomeSeekers? core competency was technology, not sales channels. As a result, they spent a lot of money going after a small market."
The company burned cash in the MLS technology sector, but a reasonable return on investment couldn?t be attained without significant market penetration, Chaffee noted.
"That?s one of the things that brought the company to its knees," he said.
Chaffee listed a number of revenue sources on which HomeSeekers will rely going forward: data aggregation services, a desktop software division, the Lightning CMA Plus and Formulator products, HomeSeekers.com and agent Web sites, an MLS division and custom software development.
Chaffee plans to remain the company?s sole director for the time being.
"As CEO, I?m able to effect (change) without a whole lot of B.S.," he said. "Once we get to where we want to be, we?ll fill the board seats with industry experts and excellent businesspeople."
Other executives include President Steve Crane, Chief Technology Officer John Hensley and VP of Sales Greg Robertson.
"This company was in need of a fiscally-oriented leader, and that?s why Steve is here," said Chaffee. "He was brought in to close the books and get HomeSeekers on track a few months ago, then I extended him an offer to be president and COO."
Chaffee said the company?s employees stand to benefit from the reorganization and have remained on board "because they believe in its products and services."
Asked about HomeSeekers' position in a market where competitor Homestore.com is struggling with its own management and accounting issues, Chaffee said Homeseekers already has weathered the storm Homestore is in now.
"They?re going to be reeling," he said. "They?re experiencing what we?ve already been through. I feel very good about our prospects for growth. (Homestore) is going to be battling shareholder lawsuits and other issues for a long time."
Asked whether HomeSeekers defaulted on an acquisition agreement with HomeMark, which in June agreed to acquire a 61 percent stake in the company in a deal reportedly worth $100 million, Chaffee said the deal died when HomeMark?s due diligence revealed a company in no position to be purchased.
"During the due diligence process HomeMark made several loans to HomeSeekers to keep operations going, but in the end the buyer said, ?We can?t do this deal. The company is too ugly. Pay off your loan,?" Chaffee explained.
Chaffee said there now is no relationship between HomeSeekers and HomeMark or HomeSeekers Management Inc., which in October announced it was investigating the possibility of insider trading by former executives of HomeSeekers.
"There was an SEC investigation and the last we heard, there was no further cause for action," said Chaffee. "The last note I saw was that the (investigation) was finished."
HomeSeekers has been tight-lipped about its cash situation. According to Chaffee, cash is "understandably tight," though the company is "standing on its own feet."
"In the past, this company would just go get money when it needed it," said Chaffee. "Our feeling is, by now, wouldn?t most companies be sustaining themselves off of their own revenues?" He wouldn?t speculate as to when the company will be profitable.
The company?s position was strengthened when it sold its XMLSweb division to Fidelity National Information Solutions. "That gave us enough cash and a credit line to effect the changes we needed to effect," said Chaffee. Cutting employees was the biggest expense. "Everyone knew we needed to get rid of about 100 people, but thanks to California?s paid time-off laws and other issues, we couldn?t afford to," he said.
HomeSeekers also needs to hire a replacement for Ernst & Young LLP, which resigned as the company?s independent auditor in October.
Chaffee said the company will hire a new public accounting firm in the next few weeks, and plans to transition from a fiscal year ending June 30 to a calendar year. Accounting is being handled internally and the books will be reviewed by outside accountants once they are hired.
"We understand the perception that we?re not in a good place," Chaffee concluded. "But we?re actually doing better than ever because we?ve established solid goals that are centered around our customer base of agents and brokers.
"We realize this is a space where early business models didn?t work, but companies flexible enough to understand the marketplace and create the right partnerships will survive and thrive."
Copyright: Inman News Service
Contact ALTA at 202-296-3671 or [email protected].