While most of the e-brokers compete on price, eHome has another competitive advantage, a business platform that is so comprehensive that it makes the service offerings of other brokers seem archaic by comparison. Is there a business-to-business revenue model in eHome's future?

With $23 million raised in three rounds of financing from venture capitalists and strategic partners, including TMCT Ventures, AEW, Garage.com and Gary Sparks LLP, it's clear that e-start-up eHome is playing for keeps, but in a universe of brokerages operating within thin profit margins of five percent or less, can they make it on brokerage services alone? eHome claims that it can streamline and save brokerage costs to pass along to consumers. Consumers say they want to save money, but the e-brokers, including eHome, have yet to impact more than approximately one percent of their markets in any one city. Assuming that eHome can reduce brokerage costs, thereby yielding higher revenues, and it is serving consumers who say they want to save money, thereby garnering greater market share, there isn't any reason to assume that the e-brokerage won't meet its five-year plan of national penetration and one day, going public. But at the rate it's going, that could be a long time coming.

Granted, it's early in the game, but the e-brokers have a long way to go to gain market share away from the franchises and independents who are already entrenched in the marketplaces where the e-brokers are trying to gain ground. In Dallas/Fort Worth, where eHome recently opened with a store-front and a mobile sales team, the e-broker has 32 homes listed in a the North Texas market area out of 31,291 listings, so far the best showing of the e-brokers. Homebytes.com currently has 10 Dallas properties, two of which were sold and two pending. zipRealty has three listings in Dallas, one of which is sold. eRealty has 22 properties for the Dallas/Fort Worth area.

'We've really only been in business since May (in the D/FW area,) says Tina Flammer, vice president of marketing, "We're the same as any business starting out. It does take time to build a business, and real estate is a slower build than other businesses. It's an incredible commitment to try and define and refine the best combination of tactics to penetrate the market.

"We are pleased with how fast we have been able to gain traction. We've only got one office that has been open more than six months. When we look at our numbers compared to our competitors, we are pleased at our performance," says Flammer.

With a salaried staff of 120 agents, eHome has closed over 300 transactions to date. "Three of our offices have only been open since June," says Flammer. "We look at how long we have been open and that's impressive."

But is it enough to warrant the expectations of venture capitalists? eHome's long-range plans are to focus on the regions (18 states that generate 68 percent of resales, according to Flammer) that generate significant residential resales. "We will take a look at other business opportunities," says Flammer.

A sizable opportunity has just come eHome's way. According to company officials, other brokers are making inquiries about eHome's proprietary broker management system that seems to offer what other transaction management platforms do not - a sophisticated, fully integrated management tool that serves the broker, agent, and client simultaneously.

Recently, Alex Perriello, president of Coldwell Banker announced that the franchise brand will test market an online service model in a couple of markets that will involve salaried agents and reduced fees to customers. The platform that would facilitate this service model was not announced, but it could be that eHome's platform is a contender. eHome refused to comment as to whether or not they are negotiating with Coldwell Banker, but spokespersons did say that the platform has generated "significant interest among brokers."

According to Flammer, a business-to-business solution such as licensing its broker management platform to competitors was not part of the company's original business plan.

" Our core business is residential resale brokerage," says Flammer, "but we have developed a broker management software that is aimed at facilitating the client and agent back-end. Unlike other transaction management programs, ours is different in that we are more than a desktop solution providing basic calendaring and e-mail functions. Our back-end fully manages every task and set of communications in the real estate transaction. A typical transaction may take a typical agent 50 hours. It takes us 20 hours to do the same work and without sacrificing service or human touch points."

eHome's broker management includes:

• contact and lead management
• full MLS integration
• Client communications
• document and task management
• calendaring
• client profiling
• ancillary service management (IPIX, home inspections, title and escrow)
• full financial integration
• any new platform applications (such as wireless-enabling applications)

So is eHome going to become a business-to-business service provider? "We have been approached with some serious interest by some folks in the community because they identify our platform as unique and sophisticated," says Flammer. "The interest has come to us as a result of our performance. The online brokers have not developed technology, and they are relying heavily on the Internet and third party transaction management systems. We believe our technology allows us to scale into new markets and allows us the foundation to develop into a large business entity."

The bottom line is that eHome believes that their business model is supported by the synergies supplied by the broker management platform and that the platform is the key to delivering significant profits over and above the broker industry standard of five percent. "We specialize our agent activities, and by supporting them with document flow we are able to focus on the needs of the client and to deliver services in a timely and effective manner with a high level of client satisfaction."

Part III - What Does Full-service Really Mean Anyway? will run tomorrow.

Published: October 9, 2000

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