IggysHouse.com "has been a disappointment" according to its new owner, Webdigs Inc., which has scaled back marketing and support for the site and is now running it out of a $300-a-month office space in Florida.
In its annual report to investors, Webdigs said it issued stock valued at $1.77 million in June, 2009 to acquire IggysHouse.com, a website that helps home sellers list their homes in the local multiple listing service, and other assets from Iggys House Inc.
The site, which originally allowed home sellers to list their homes in some MLSs for free, was a money loser for Iggys House Inc., a Chicago-based company that offered discount real estate services and mortgages.
After racking up $9.45 million in losses in its first two years of operation, in January 2008 Iggys House abandoned plans to raise $14.2 million in an initial public offering.
Webdigs — which also runs Minneapolis-based discount real estate brokerage, Webdigs.com, and flat-fee MLS listing site theMLSDirect.com — relaunched IggysHouse.com in January 2010 with a new $49.95 per month, pay-as-you-go business model.
Sellers were offered a free introductory 30-day listing in MLSs in Florida, Minnesota and Wisconsin, where Webdigs has brokerage operations. The listings also gave sellers exposure on Realtor.com.
But in the first seven months of operation, IggysHouse.com generated only $2,026 in revenue, and "the prospects for the brand reaching a breakeven point seem dim," Webdigs said in its annual report.
To address the "significant costs" of operating IggysHouse.com, Webdigs said it discontinued the site it acquired, instead switching to "a low-cost Internet provider" to operate a scaled-back version of IggysHouse.com.
IggysHouse.com operations are now based at Commercial Center Self Storage in Oakland Park, Fla. — a facility east of Fort Lauderdale that also offers "virtual office space" and Internet access. Webdigs has a month-to-month lease at the facility, paying $300 a month.
IggysHouse.com’s new digs in Oakland Park, Fla.
Webdigs said it recorded a $1.26 million impairment charge in July to reflect the diminished fair market value of the intangible assets it acquired from Iggys House Inc. The only remaining intangible asset relating to the Iggys House acquisition is the website and an associated database, which Webdigs has valued at $100,000.
"To date, IggysHouse.com has been a disappointment," the company said. "We still remain convinced that the seller-controlled low-cost MLS listing model will continue to gain traction as time passes — the advancement of technology will continue to empower consumers to actively manage their own home-selling process."
Webdigs said IggysHouse.com competes with "multiple flat-fee discount real estate listing services across a broad spectrum of pricing models," including ForSaleByOwner.com and BuyOwner.com.
"Results of our scaled back operating philosophy have been encouraging and we will continue to monitor Iggys House closely in the months ahead," the company said.
Webdigs said its discount brokerage business, Webdigs.com, also struggled last year. Revenue was down 12 percent for the year ending Oct. 31, 2010, to $441,944.
Webdigs.com, which launched in October 2007, accounted for 94 percent of parent company Webdigs Inc.’s revenue. Another flat-fee MLS site Webdigs acquired in May 2009, TheMLSDirect.com, generated "very low" net revenue of $20,262 during the year ending Oct. 31, 2010, the company said.
The weak revenue picture, coupled with the write-down of the value of Webdigs’ investment in IggysHouse.com, helped drive a $3.08 million net loss for Webdigs Inc. for the year, up from $1.08 million in fiscal 2009.
Webdigs Inc. Chairman and CEO Robert Buntz has invested $100,000 as equity and loaned the company $528,500 since Aug. 1, 2009, the company said. Webdigs said it will need approximately $150,000 in additional financing before the end of October 2011 to cover salaries, contracted website maintenance and development, and other needs.
The company has three full-time employees and nine real estate agents who are independent contractors. Webdigs said its long-term strategy is to focus on finding buyers and sellers for Webdigs and developing a larger agent base.
Since the company launched through Nov. 30, 2010, buyers represented by Webdigs.com had closed 235 purchases of properties, and received $819,000 in rebates, the company said — an average of $3,489 per transaction.
After collecting a minimum $3,000 per transaction fee, Webdigs.com pays buyers a cash rebate of up to 1 percent of the purchase price of their home.
Webdigs.com had also represented sellers in 110 transactions since the company was launched through Nov. 30, 2010, offering full-service listings for commissions as low as 4.5 percent, with 1.7 percent paid to Webdigs and 2.7 percent to the buyer’s brokerage.
