The rumor is already out in the open that Homestore or HomeAdvisor is acquiring Homebid. Who will it be and what does that mean to Realtors? It could mean that the dream transaction management system you've been waiting for is here at last.

No one will comment, so let's have a little fun speculating. Who could the mystery company be and why would they want to buy Homebid?

Homebid is an offer/transaction management application service provider. They sell software. To brokers. What is this product? Knowing the answer to that will lead us to who covets it.

"Offer Manager provides an engine for making online offers with or without contingencies, organizing all the homes an agent has listed," explains Richard Burger, director of communications for Homebid. "They (the agents) can see all the offers that have come in, keep them organized, generate forms (contracts, etc.) link to demographic information, (provided by AXICOM.) and it integrates with the transaction manager module."

Offer Manager can work alone or with other platforms. Homebid has already proven that by modifying its transaction engine (purchased from Internet Strategy) to accommodate it. So what makes this super transaction engine so unique?

According to Burger, with Offer Manager:

• You can create forms from both the offer manager and transaction modules
• There's an integrated checklist on buyer and seller sides with specific items relevant to them protected by firewalls.
• The engine creates a deal briefcase - all documents are included in a single folder
• The engine has both agent-centric and broker-centric sides, giving choice to the broker of whether to have a transaction coordinator handle transactions or allow the agent to manage the transaction engine themselves. This is crucial to future brokerage business models as fee compression and competition from other sectors (banks) forces brokerages and agents to operate more efficiently. The only way to do that is to take away time-consuming details from agents so they can do more selling.
• Brokers and agents can insert their preferred providers and checklists into the system. This could be significant as a revenue regulator.
• The system creates an archive of every original of every document. If you have a problem, there is a paper trail, and a cheaper way than storing it offline.
• There are special alerts to notify you if anything falls behind schedule. According to a systems designer with Homebid, the company has a "complex risk level assessment." Some documents are crucial to closing, and their absence can jeopardize closing. The prioritized system of alerts identifies those documents at key points from estimated completion date following acceptance or prior to closing escrow.

Is Homebid a better mousetrap?

"Our Java and HTML programmers have enhanced the system so that it has some bells and whistles to make value-added features for any transaction engines out there," hedges Burger. "It wouldn't have to replace their engines but it can add significantly to what they already have. Some of the original bells and whistles were extraordinary, such as a bar code capability so that if your termite inspector doesn't have email, you can send him a barcoded fax. When he faxes his inspection back, the barcoded document automatically distributes to all principals email and the transaction system." This solves a key problem of how to include vendors that aren't Internet-ready.

So which company needs these bells and whistles the most?

Both Homestore and HomeAdvisor are already beta-testing behemoth transaction management systems which employ multiple modules including productivity, business and office sections. Of the features listed above, many already appear on HomeAdvisor's transaction system, Realty Desktop, including broker and agent windows, document alerts, preferred providers, and more. Further, HomeAdvisor has announced a delivery system for Realty Desktop, with a business model, something Homestore has not yet done. HomeAdvisor will be delivering its transaction system as an upgrade to Interealty MLS access systems, giving it instant availability to over 120,000 Internet MLS-ready agents, and future access to another 150,000 more agents whose MLSs are upgrading to Web-based access systems. And that doesn't include any other MLSs that Interealty may contract with in the near future.

Homestore has fewer announced components on its transaction system, eRealtor, and more subsidiaries to integrate than HomeAdvisor. The company has productivity software (Top Producer) and affinity partners (Firetap and others) but to date, Homestore has never announced which subsidiary is designing the transaction portion of eRealtor. Could it be that the delay in debuting eRealtor has been getting all the pieces to work together more efficiently? What better way to get that done than to acquire the IT team that has done it before?

When I asked Burger what is the crown jewel of Homebid, he didn't hesitate. "Our technology staff. They took a terrific transaction engine and rewrote it to work with Offer Manager and made a state-of-the-art product."

HomeAdvisor is a technology company. Homestore buys technology, so for the above reasons, I'm leaning toward Homestore.

If Homestore is the buyer, what does it have to gain besides cool new technology?

Homebid has a ready-made customer base, something Homestore looks at strongly in its acquisitions, along with a recurring revenue stream. Homebid meets both criteria, as well as a third - it is sitting on some cash.

Homebid sales staff have spent the last two years painstakingly calling on the top brokers on the nation. According to Homebid CEO Kevin Hickey, Homebid has sold the system to about 40 brokers, almost all of which are Top 100 brokers (sales volume,) and most of which are multi-office owners. While revenue models differ, most of the sales are done on a subscription basis based on the number of homes that the broker commits to list on Offer manager. While some brokers are offering the system at no charge to agents, others are asking agents to pay a small fee per listing.

Interestingly, Homebid is up for sale just when it is about to cash in on all those contracts. Believe it or not, Offer Manager is about to be beta-tested, just like all the other big transaction systems, and has yet to start collecting on this revenue stream. That means the system will soon be available for use to about 10,000 agents. Does Homestore want to step in and drink now that the hard part's been done? Is Homestore eliminating competition through acquisition?

Why would Homebid sell now when they are finally going to realize some revenues? A simple market reality. No matter how well Offer Manager performs it is a technology that could be sooner or later duplicated as easily as Colonel Sander's seasonings and Mrs. Field's cookies. Is that worth investment capital of $50 million? Maybe once, but not now. But, it could surely be worth some stock options. Homestore could have the use of the remaining cash, get the technology it wants, and pay off the investors with stock. Heck, they can even issue more stock if they want to. In other words, acquiring Homebid will give them an asset, a revenue stream, a sell-through to 40 key brokers, and the answer to their transaction problems, and the beauty of it is that it won't cost Homestore any cash.

In January, Homebid received a $ 5 million second round and is reported to be conserving its cash. All three original investors ponied money up, Chase Partners, Canaan and Accel. They must have had a good reason. Throwing good money after bad isn't one, so they must think there is a real deal there to be made.

These are the reasons why I'm betting the buyer is Homestore.