Despite challenges in the national real estate market, Chicago discount real estate service Iggy’s House plans to try its luck with an initial public offering that could raise up to $15 million, according to a filing with the Securities and Exchange Commission.
If successful, that would be just $3 million more than what Seattle-based Redfin, one of Iggy’s primary competitors, raised in its venture round in July.
In addition to traditional real estate firms such as Prudential Financial, RE/MAX and Realogy, Iggy’s House also faces direct competition from upstarts such as Redfin, ZipRealty and iNest. It also may face competition in the future from Zillow.com, HouseValues and others, according to the filing.
Iggy’s House, you’ll recall, is the ultimate discount lister.
How ultimate? All the way. Allowing for the buyer’s agent’s commission, Iggy will give you a limited service MLS listing for free. A sister company, BuySideRealty.com, will rebate 75% of the buyer’s agent’s commission when they (don’t actually) represent you as the buyer.
How can they do it? They’re lenders. Both real estate businesses exist to drive loss-leader business to their loan brokerage business. Pondering the spreads on the loans they underwrite will probably repay your effort.
And: Even though the company is appealing directly to share-holding suckers, rather than the venture capital suckers favored by parasite sites like Redfin.com, Iggy is so far living up to what you might anticipate for its financial performance: “Iggy’s House posted revenue of $425,000 and a net loss of $5.1 million last year.”
Technorati Tags: disintermediation, real estate, real estate marketing, Redfin.com
Bruno Roldan says:
Nice post – I am definitely looking forward to see how their business model holds up and what they raise at the IPO.
I wonder when a real estate blog will ever go public…
September 7, 2007 — 12:44 pm
Frank Borges LL0SA- Trust Me, I'm a Realtor says:
So they are raising $15,000,000 on what valuation? What % of the company are they giving up? Or is that determined the day of the IPO.
I wish I could lose $5,000,000 and buy $1,000,000 worth of business and raise $15,000,000. Sounds like some Enron math to me.
Frank – Broker Va FranklyRealty.com
September 7, 2007 — 1:09 pm
Patrick Hake says:
Isn’t that the model for most start ups. Build up hype, claim to have an inovative, ground breaking answer to a problem.
Then get bought out by a bigger fish, or issue shares through an IPO and fleece gambling penny stock trading investors.
Enron was a much longer con. I think they are operating more along the lines of Webvan or Pets.com.
I read somewhere that some of the speculative builders in Central California are starting shift there investments towards almond groves. I wonder how long it will be before someone launches http://www.onlinealmondgrove.com, which will revolutionize almond groves by removing farmers from the equation. Why pay a farmer to tend to your almond groves, when you can use our trusty online almond widget to do the same work for half the price.
September 7, 2007 — 5:50 pm
Brian Wilson says:
It will be interesting to see how the online discount players act when they are pitted against each other. Can you imagine hearing a Redfin agent pitching his listing agreement pitch to a seller against a Iggy’s House agent? I would pay money to see that acted out.
In my imagine it would go something like this… “Well, Mr.Seller, yes, Iggy’s House will list your home for thousands less that I will, but they are a quarter-service agent and I am a half-service realtor. What price do you put on getting that whole extra quater or service???”
It’s just too rich.
September 8, 2007 — 5:20 pm
Tampa Real Estate Professional says:
Companies like Iggy’s House will come and go. This market is starting to get rid of a lot of discount and un-qualified real estate companies.
If all it took was to put a home on the MLS – there wouldn’t be companies like Coldwell Banker, C21, Keller Williams…
April 9, 2008 — 3:15 pm