HomeSeekers finally gets the partner of its dreams with Fidelity National Financial's spin-off - Fidelity National Information Solutions (FNIS.) Not only is FNIS the leader in property information services, it's got real money and MLS experience behind it.

FNIS has just purchased HomeSeekers' XMLS division for an undisclosed sum. At first glance, it may appear that Fidelity National Information Solutions (FNIS) has just picked up a bargain (excluding some overlap of agent seats,) but there's a lot more to the story than that.

HomeSeekers, with only one year in the MLS business, managed to acquire nearly 100,000 agents using its parallel Internet MLS system, leeching those agents away from its competitors including FNIS, which had handled MLS information management via proprietary legacy systems for decades through its acquisition of VISTAinfo, formerly Moore Data Management Systems. But FNIS isn't concerned about overlap in areas such as Chicago, because it has its eye on not letting an Internet-based competitor accomplish any further cutovers, as HomeSeekers did in Southern California with SoCALMLS. With XMLS, FNIS gets to keep or acquire significant market share. Further, HMSK's systems are so well liked, says FNIS's president and COO Eric Swenson, that it rounds out choices for all its MLS customers.

The good news for HomeSeekers is that not only is it selling its MLS division for much needed working capital, but the relationship will be ongoing. According to Tom Chaffee, HMSK's remaining board member and acting decision maker, the company will continue to design and enhance MLS and productivity software for FNIS.

"There are three paths to revenues - either cutting costs, increasing margins, or revenues, and with the sale of this division, we've done all three," says Chaffee. "I'm a strong believer in revenue per employee - and the sale of this division gets us close to meeting our goal."

Synergies exist in location, too. Southern California happens to be a stronghold for two of parent company FNF's largest title companies, Chicago and Fidelity Title and the company plans to use its title services transaction platforms to benefit brokers and agents in a shared environment. That makes FNIS the first company to come up with a transaction management plan for brokers and agents that comes in a shared customer relationship management environment from the settlement services direction.

HomeSeekers' money troubles have been well documented, but, according to FNIS' CEO Eric Swenson, its new subsidiary's problems were never about the quality. "HomeSeekers has never operated with the benefit of venture capital oversight, so in realty the company never had the strategic investor that enabled them to move business processes forward," he explains.

Now they do.

And that makes the deal a win for HomeSeekers customers, too. Not only are the MLS customers going to experience no interruption of service, promises Swenson, but they will have the benefit of support by an experienced company dedicated to customer service. HomeSeekers' 15,000 Web site subscribers can now rest assured that their Web sites are safe, and in fact, will soon have access to some extraordinary environmental disclosures and other property information through HomeSeekers ongoing strategic relationship with FNIS.

Agent News' Blanche Evans talks with both Eric Swenson and Tom Chaffee in an exclusive interview.

B.E.: What pieces of HomeSeekers are you buying?

E.S.: We have entered into asset purchase agreement to buy the XMLS Web division from HMSK, the MLS business or component. We are not only purchasing the XMLS Web division which will add to the strength and market penetration of our MLS division - this will provide us with 90,000 agents seats.

B.E.: You have a history of merging MLS companies, so this play is not a surprise, but what are you gaining? HomeSeekers so far has been a parallel service provider. How many seats are you taking away from competitors? How many are people overlap?

E.S.: I don’t have an exact number but a big number of overlap is in MLSNI in Chicago, but what is very nice is that there are a lot of seats that aren't overlapping in existing marketshare. That would include SoCal, and the Bay Area.

The significance is that FNF title has a large market share in each of those areas through Chicago Title and Fidelity Title, and in addition we are entering an agreement with HomeSeekers to enhance and develop the existing MLS software platform MLS.8.0.

We will see that shortly from HomeSeekers in the first quarter. HomeSeekers is Internet browser based and has a nice front end.

B.E.: Better than Paragon? (FNIS's MLS product)

E.S.: No, equivalent. FNIS' customers will have the best of all worlds, they will have the choice of Paragon and Listview, our IDX solution, or the HomeSeekers existing software. Both of those are highly scalable up to the largest MLS' in the country.

B.E.: What about overlap with VISTAinfo technologies?

E.S.: HomeSeekers is known for the quality of its agent desktop productivity tools. FNIS will be announcing a suite of desktop productivity tools in the next few weeks and several applications and tools that HomeSeekers has as part of product offering that we are working together to see if FNIS can license from HomeSeekers as part of our desktop. In addition Tom and HomeSeekers have a long history of developing agent and broker Web sites and in the future HMSK will continue down that path and working more diligently to gain more market share in that area which is very complimentary to our offerings.

B.E.: For example?

E.S.: If the broker puts up their own portal developed by HomeSeekers, FNIS could provide other products and services to create a nice environment with information products, such as our disclosure products (California.) That is a subscription product, but we will work with brokers to sell other public records to help them create a stickiness that will make consumers come to their sites. Consumers like to know what their neighbors home sold for and consumers could come onto the brokers site and get that information, an automated value model which could allow a consumer to get an idea of what their home is worth. We could provide a vast array of information, such as environmental information to a consumer as to any flood zones, fire hazards, leaking underground tanks. The EPA, federal, state, and local sites are all part of our databases that could be information for the brokers' consumers. Our ultimate goal is to transact and create lead generation for brokers. We look at HomeSeekers as a strategic alliance because we have services and products that are very complimentary.

B.E.: Tom, HomeSeekers has 15,000 agents under subscription for Web sites. What happens to them?

T.C.: We are going to realign the business along the agent and broker which is ongoing product development and technology services to those constituents. The MLS is a different customer than the agent or broker and it was natural to offload that and by increasing our dominance with agents and brokers, it provides a valuable channel for Eric's people, and a suite of products that we can monetize.

B.E.: Are you getting out of portal business?

T.C.: No, we will be expanding that.

B.E.: How is the cutover being handled from HomeSeekers to FNIS?

T.C.: I want to make sure that all HomeSeekers MLS customers understand that they will have a solid financial company with customer-sensitive management team. As of Monday, we signed a management services agreement for FNIS to service and manage HomeSeekers accounts.

B.E.: Are you staying on board?

T.C.: I was brought on as a board member by HOMEMARK, and this has been the hardest two weeks of my life. When I took over directorship, I felt that I had to do the right thing. I have an overinflated sense of honor and duty. (Laughs.) I have no stock, financial arrangements or anything with HomeSeekers, and the last few weeks have come out of my pocket. I made some guarantees, financed some trips, and I don’t know how I'm going to get it back. This was difficult both personally and emotionally, but the shareholders got more than they could have bargained for because now we have the partner of their dreams.

B.E.: Eric, you are ahead of your run rate to save $10 million a year through these acquisitions and consolidations - where does integration of HMSK put you?

E.S.: We will have completely accomplished all merger related tasks by 12-31 this year. We have exceeded the cost savings we had initially announced and we'll be relating that in our upcoming earnings report.

B.E.: In my last story about you, we put it all together that when its all said and done, you have the largest property database in the world and that even your competitors will do business with you. What pieces are you still missing? Are you waiting for HOMS (Homestore) to get down to 8 cents a share, too?

E.S.: (Guffaws.) We are going to continue to grow our information assets, and we do have a lot and we are happy about the various things we have put together. We are trying to help brokers and agents and executive officers to the consumers make a transaction.

B.E.: You've put together the piece that nobody else has with transaction management - communication between brokers and closing agents through your parent, subsidiaries, and strategic partners.

E.S.: Nobody has developed a business model for transaction management but as part of our desktop products there will be a robust transaction engine into the agent desktop. This is an application that will allow them to transact more easily. I see that escrow officers and closing agents will be the transaction managers or real estate quarterbacks and most tools will be imbedded into title companies' back office production software. But there are definitely synergies between Fidelity National Financial and FNIS. We are the first ones to pull together the same platform for the agents. Our software tools will be neatly imbedded into back office closing of all our brands and then transaction management will be a value-add.

B.E.: How did you get rid of Joseph Harker and company?

E.S.: We successfully negotiated with them - they can't trade HMSK stock for the next four years.

B.E.: Is FNIS going to have a member on the HomeSeekers' board?

T.C.: We are currently working on getting either a FNIS member or a Fidelity National Financial member on our board, but it's too early to talk about that. In the end, the customers of MLS side are coming to a stable strong company that will take care of them, and that FNIS is the finest, the best in the industry, and they offer a lot of choices.

And we're going to continue focusing on our core customer, the agents and brokers, and this is allowing us to shed a lot of noise in the HomeSeekers system.