December 21, 2005

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Palo Alto Online

One-click shopping?

by Carol Blitzer

Henry Shao, CEO of iGenHome, is counting on the hordes shopping online for Christmas to extend that methodology to houses.

His combination of online real-estate information service and brokerage debuted Dec. 5 -- and scored 1,000 hits before most people had even heard of it.

What iGenHome offers is a vast clearinghouse of information, from broad home pricing trends over time to where the nearest restaurant is to an open home.

"When people think about buying stock, they look at pricing history, go to reports and surveys on those stocks," Shao said. But when it comes to investing in a house, which is generally a lot more expensive, "they had nowhere to go. That's why we put this feature together."

In the section on schools, for example, a Web site user (www.iGenHome.com) can quickly ascertain the latest API score, how many teachers are fully accredited and what the ethnic make-up and parent-education levels are.

The site is aimed at people who are thinking about buying homes, Shao said, noting the "business model is to give value to the real estate buyers. (That's) why you don't see banner ads and things jumping up at you. You're not bothered."

Anyone can access basic information on pricing trends or local schools, but for specific details on open houses or comparable prices a prospective buyer would have to register and agree to the terms and conditions.

He acknowledged the goal is to generate connections with buyers, who would work with an iGenHome broker -- such as Dan Lorimer in Palo Alto, one of iGen's founders. Lorimer has been an independent agent since 1982.

During the real estate boom of 1999-2000, Lorimer developed a plan to integrate real-estate sales and the Internet, "but I was so busy doing transactions I never got around to doing it," he said. When Shao approached him, Lorimer said it seemed "an odd, serendipitous thing."

"The interesting thing about us is that we're a brokerage firm, so we have tremendous domain knowledge and expertise, put together with I.T.," said Francesca Freedman, vice president of business development.

The Web site was under development for about a year, she added, mainly put together by a team of software engineers in Shanghai. Lorimer also offered input, from the broker's point of view.

iGenHome is not the only online broker, but they differentiate themselves mainly by offering their Web site and by not requiring users to become contracted clients, according to Shao. "Agents pay like $100 for an e-mail address and people don't return their e-mails. The agents are very frustrated with these leads. Our model targets consumers. We're not serving up agents' leads who will bombard you," he said.

ZipRealty, headquartered in Emeryville, Calif., has offered online homebuying services since 1999. Rich Roberts, ZipRealty's vice president of marketing, said Zip has expanded to 15 primary districts nationwide, and has plans to open four to six additional districts this year. The company went public in 2004.

"We feel like we're different than a lot of traditional full-service realty companies because we offer superior service; we also save our consumers quite a bit of money," Roberts said, adding that Zip offers buyers a 20 percent rebate and sellers can save up to 25 percent in commissions.

ZipRealty is among the top real-estate companies in the country, Roberts said, with $100 million in revenues in 2005 and more than $11 billion in sales in six years. "Naturally, there are many competitors," he said, "Real estate is a very fragmented business. Even the largest companies on one market, have at most 5 percent. ...It's a big market; there's a lot of business going on.

"My first reaction (to iGenHome) was flattered. It's nice to see other people validating our approach," he added.

Shao counters that "the (ZipRealty) Web site itself is fairly different. It's harder to navigate and get to the data. The most important thing, we believe, is the product, the Internet site."

IGenHome has no plans to offer agent rebates. "We believe that's like shooting yourself in the foot," he added, asserting that Zip pays its agents less and therefore gets less experienced agents.

"We will control the quality of our agents much better," he said.

While Zip is concentrating on expansion -- they're forecasting growth at 50 percent next year, as opposed to 84 percent this year -- iGenHome is beginning in San Mateo and Santa Clara counties. "We will make sure when we cover new areas, we will cover local needs in that area," Shao said.

Shao is no stranger to start-up software companies. With venture-capital funding, he began Cranite, a San Jose wireless security software company. Earlier he began MediSpark, which deals with health-care information systems, before it was acquired by iScribe.

Rather than go the VC route, iGenHome is self-funded by management, Shao said.

If all goes well covering Santa Clara and San Mateo counties, the plan is to expand to the rest of the Bay Area, then California, then the nation over the next few years, he added.

Early feedback on the site has been positive, Shao said, adding "When a lot of people use it, people like it. ...A portion will end up using our services and a portion won't. Our goal is to provide the best online product, as well as the best service. We're not just an online company; we're right here in Palo Alto."

Shao cited a study by the National Association of Realtors that found 74 percent of homebuyers use the Internet as an information source.

"We want to capture these people. They're going to find some Web site. They'll have questions about a particular house. We can answer those questions and help them with the transaction, just like a normal real estate agent," Shao said.

Assistant editor Carol Blitzer can be reached at cblitzer@paweekly.com.

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