Nobody likes to see a good company down for the count. Despite valiant efforts to remain on its feet, iOwn.com, one of the first online lenders, is throwing in the towel. It took all fifteen rounds, and over $45 million in venture capital, but the company was finally KO'd by consumer apathy and Realtor reluctance to suggest its services. iOwn.com, like the other contenders still on the ropes, E-Loan, Lending Tree, Mortgage.com and others, failed to deliver the promise of the Internet - faster, cheaper, better services. Their intentions are good, but they didn't count on one little thing - the amount of force it takes to affect a change of behavior in consumers.

In 1999, iOwn.com seemed to have it all - marquee name partnerships, investment capital, and the inside track that all early pioneers believe they have. The site had a partnership with Homescout, a home listing service making it the first large national player on the Internet to organically combine homes and loans at one site. That advancement alone should have given the site the champion's belt, but it didn't. In July 1999, iOwn, Inc. announced its partnership with AOL, to be the exclusive mortgage servicer fro AOL's Netcenter and Digital City cites. Access to AOL's 19 million subscribers should have declared the site champion, but it didn't. The company optimistically filed for its IPO in December 1999, but was KO'd by April 2000's "Tech Wreak" which is still continuing.

Showing only $4.6 million in revenue in 1999, the company posted a loss from operations of $44.6 million and a total net loss of $45 million. It had only $27.3 million in cash to last from December 1999. Numerous companies put their IPOs on hold. Finally, the cash ran out.

But iOwn's not alone. The mortgage site's two competitors who recently went public, E-Loan and Mortgage.com are both trading at a fraction of their opening prices due to stock market conditions, higher interest rates, expansion costs, and other reasons.

According to a recent report filed in The American Banker, online lenders have been more successful at educating customers than getting them to sign for loans. With only one to percent of the market share, online lenders have failed to reduce costs to consumers, reducing incentive for them to change their offline behavior and transact with online entities that they can't shake hands with. A mortgage loan is simply too big not to be able to look someone in the eye. Ditto for Realtors, who prefer to work with people they know on a first-name basis. If something goes wrong, they want to be able to get someone they know on the phone who is dependent on them for leads. They'll get action quickly. The anonymous Internet doesn't lend itself as well to strong alliances. Realtors also don't like to be in the position where they are doing all the lead generating. They like an expression of gratitude once in a while. A thoughtful local lender can't necessarily cut them in on a piece of the transaction, but they can sure send a productive Realtor a gift certificate or something.

Despite the slow acceptance of online loans, analysts expect a slow but steady rise to 10 percent by 2005. One reason is that the online lenders are partnering with large banking entities who are also doubling as investors, as in the case of Intuit and Rock Financial, and E-Loan and Charles Schwab.

The only question remaining is who will emerge victorious? Whose bloody, grinning face will make the crowd roar for more? Right now, the victor is an invisible man. No one knows who it is. But some guesses are emerging.

Learning from past mistakes, a new generation of lenders are coming to the Internet. Some are offering platforms to overcome both consumer and Realtor resistance by either compressing savings or putting more money and incentive into the Realtor's pocket.

The premier example of cost savings is Homeadvisor. Homeadvisor is a technology company, not a lender, but it is virtually functioning as a mortgage broker. It has a transaction management and lender platform partnered by Freddie Mac, Chase Manhattan, GMAC, Bank of America, and Wells Fargo, to name a few. The company boasts from its site in plain language that it can save consumers $2,000 off their loans.

Onepipeline.com and Computer Mortgages of America have business models that are designed around bringing Realtors to the table. The companies both claim to have compliance methodologies which enable Realtors to become loan originators. The purpose? They can leverage the Internet to get quick loan approvals for their clients, and pass the savings along if they choose. Both companies claim that the loan rates are attractive enough so that the Realtors are truly offering the lowest cost loans available. Realtors also benefit by not having to turn their customers and their deals over to some dotcom or mortgage broker they don't know. The buck stops with them.

All of these innovations are too late to save iOwn.com, however.

We're sorry that you had to learn the hard way that the Internet is not paved with gold. That consumers and Realtors have to be strongly incentified to try new things like online loans. That stock investors are a little too skittish about interest rates, and they can't be relied upon to react favorably when they hear good news.

So all we can say is that we admired what you tried to do and we're sorry you are closing your doors.

To Ned Hoyt, CEO of iOWN, Inc., and all of your staff,

We couldn't reach you by phone, but we want to tell you goodbye and wish each and every one of you well.

You were innovators and with the talent and imagination you showed early in the game, we know that we can look forward to reporting your comeback.

From the staff of Realty Times and Agent News.

Editor's note, 8-19-2000: Following the publication of this article, Realty Times has continued to try to get in touch with officials at iOWN.com for an update, with no success.

Published: August 16, 2000

Use of this article without permission is a violation of federal copyright laws.

Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.