By Roberta Maynard. Two years ago, the large-volume builders came together to form their Homesite consortium, vowing to leverage a key commodity: new-home data. Who knew better than building companies, they reasoned, how to use and re-sell that information? Plenty of skeptics said that competitiveness would kill the effort. And, at the time, not even the builders knew for certain whether the alliance would bear fruit. But with two news-making partnerships earlier this year, the group of 32 investor builders took two steps closer to controlling the prized information.
First came Homesite's multi-year deal with HomeBuilder.com to extend its members' new-home listings reach. Together, say the partners, they can reach more than 90 percent of the Internet user audience, one that continues to grow rapidly.
At one time, and not very long ago, such an alliance was inconceivable. But times have changed, and so have many of the players.
"We have reached a point in the evolution of the building industry where cooperation is more important than competition," says Tim Costello, president and CEO of Builder Homesite. Allan Merrill, HomeBuilder.com's president, calls the alliance an "important step in the maturation of the Internet as a marketing medium for home builders."
The two say that the overlap between the two companies is less than 7 percent. HomeBuilder has a huge investment in call centers and sales forces, but has a limited number of products to sell builders. Builder Homesite is developing the product match. And significantly, the two will collaborate on creating desperately needed data standards.
It's all about control. "Builders were very concerned about third parties owning the [online listings] market and representing their brands," says Costello. "They didn't want to become hostage to one player that would be able to drive costs."
Then came part two: Internet sales. In February, Homesite inked a deal with the ubiquitous conduit for online selling, eBay. Transparency of process and high buyer comfort levels are eBay's stock-in-trade. The builders' contribution is inventory--communities that are new, closing out, or simply suffering from mid-life blahs.
Photo: Katherine Lambert
Beginning with small regional events, the partners expect to end the year with 3,000 "event" homes. Doug Galen, eBay's vice president of real estate and new business, told me that themed listings, such as golf course communities and energy-efficient homes, will be among the specialty offerings. Lead generation will be the pleasant by-product. Half a dozen big builders now working on the pilot program will start by offering an average of one home in each of their communities. Then, it's in the hands of the marketplace. "What's starting to happen is that the big builders are building critical mass, which is essential to creating a new distribution channel," says Costello.
Down the road is the next step: using captured information to sell more services and products to homeowners.
"No one owns new-home data other than the home builders," Costello says. "It's theirs to give to somebody else or to monetize." Can they make it work? With more than 235,000 units produced annually by the top 20 builders, there's never been a better time to try.
BIG BUILDER Magazine, April 2002