Homestore has expanded its alliance with iPIX into a $12 million licensing agreement which allows Homestore the exclusive right to sell IPIX tours in the U.S. real estate industry. Why is this deal so important?

Because listings enhanced with virtual tours will shortly be the standard presentation of property on the Internet.

If that seems like an ambitious statement, consider how much progress has already been made in the online homebuying industry recently and you will see why the iPIX/Homestore deal is a natural evolution in online listing presentations. This is a standard that Homestore helped build and create the demand for, along with other listings portals, by enhancing the basic MLS listing with maps, school, neighborhood and crime information, and property data. Now the revenues will come full circle as Homestore cashes in on the most desirable listing enhancement of them all.

Let's look at a few statistics:

1. The number of U.S. Internet users has just passed the 100 million mark, representing half of the entire adult population, according to research from the Strategis Group. Just one year ago, that figure was 68 million.

2. Out of the 100 million users, nearly four in 10 U.S. home buyers used the Internet last year to shop for a house, an 18-fold increase in four years. And 37% of last year's surveyed homebuyers used the Internet to facilitate homebuying; 48% of those who used the Web to find homes visited a property with an agent, dispelling notions that the Internet would disintermediate agents. (National Association of Realtors' 2000 Profile of Home Buyers and Sellers)

3. Jupiter Research estimates that 50% of home buyers used the Internet for research during the home buying process in 2000. The research organization anticipates that 80% of home buyers and renters will use the Internet as a search tool by 2005. The factors driving the growth are:

* Further acclimation to the Web as a research and purchasing channel

* Increased availability of listings online

* Greater use of multimedia features to enhance browsing

* Greater use of integrated content

4. The Internet is no longer a black marketing hole. Brokers and agents are making money. Nearly 7 of 10 real estate firms have generated business from the Internet (2000 National Association of Realtors Profile of Home Buyers and Sellers Survey)

5. Two-thirds of home buyers expect to use the Internet in their next home purchase ( 2000 National Association of Realtors Profile of Home Buyers and Sellers Survey)

6. People who use the Internet for house hunting find a home in half the time it takes for traditional buyers. Internet home shoppers in California spend about half the time -2 1/2 months-as traditional buyers do from the time they start looking to the time they settle on a home. (California Association of Realtors, 1999)

Is it starting to fall into place? Showcasing over 1.4 million listings, Homestore.com has a clear advantage over other competitors in terms of attracting consumers due to its volume of content. If listings are the number one item that homebuyers want to see, it stands to reason that the number one feature they want to see are photos of properties.

Stu Roberson, senior vp of marketing for iPIX says, "iPIX virtual property tours are viewed over 1 million times a day. Homestore fits perfectly into our strategy because they are dominant in the marketplace and they do the selling." There are also over 60,000 unique iPIX tours viewed in the real estate industry. Over 400 real estate Web sites contain iPIX full service Virtual Tours, and over 94 percent of Real Trends Top 50 Brokers use the full service tours. Some brokers such as Virginia Cook Realtors and John L. Scott Realtors offer virtual tours on all listings, regardless of listing price.

Why are virtual tours so popular? Internet technologies and improved bandwidth have made the single photo MLS feature sheet presentation of listings obsolete. Because consumers can search homes on the Internet in privacy, they want to use their invisibility to find out as much as possible about homes before calling an agent. Virtual tours are used as much for an elimination tool as a selection tool for this purpose. That makes the timing perfect for Homestore's acquisition of iPIX's sales rights.

Now, Homestore has a lead generation tool that agents already love and don't have to be sold to use. Agents feel the virtual tours distinguish them from other agents, and they like how virtual tours impress sellers. "Unlike the very limited exposure of an ad in a newspaper or real estate magazine, an iPIX "ad" is posted on the internet for as long as the property is available," says Jean Andrews, a Scottsdale agent. "And unlike the print media, the iPIX tour shows the property from any and all favorable aspects that I select. The price is a bargain...for the level of satisfaction that the seller feels." Miami agent Jim Lankes, says, "We represented the seller in the sale of her Arroyo Madera Estates condo. The buyer's agent previewed the home and the buyers viewed the iPIX tour. They purchased the property for 98% of the asking price and closed in 10 days, sight unseen!"

Capturing iPIX's revenues is also a sweet deal. In 1999, the real estate listings composed 47 percent of iPIX's revenues. But don't feel sorry for iPIX. Homestore didn't buy the farm out from under iPIX. They got what they wanted out of the deal and then some.

Like other technology stocks, iPIX has taken a beating. In October 2000, IPIX restructured and let 20 percent of its staff go. This and other measures was an attempt to "reduce expenses by about $4 million per quarter going forward and facilitate the company's goal to reach profitability in line with expectations in the fourth quarter of 2001 on a higher margin, lower revenue basis. Accordingly, management is reducing top line expectations by 20% for 2001 to $141 million."

After Tech-Wreck in the spring of 2000, iPIX management hit upon the idea of revenue channels. Instead of using Other People's Money, they will use Other People's Sales Forces. While they licensed the U.S. real estate rights to Homestore, iPIX will still collect cash as well as nice royalty and management fees on all iPIX tours.

iPIX currently manages over 250,000 virtual real estate tours, but the company also has self-service third-party host solutions which aren't as easily tracked, but are estimated to bring in another 25 percent of listing visitors. This is a strategy that has already worked with IBM and eBay. iPIX has an exclusive online auction channel arrangement with eBay, where iPIX is already servicing over 20 million images a day. Run those numbers. iPIX just found the fast track to saving costs, improving margins and reaching profitability.

The future for both iPIX and Homestore looks nothing but rosy.

Published: January 17, 2001

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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.