Industry News

New biz models poised for growth in 2005

Consumer awareness of alternative commission structure increasing

The success of online real estate brokerage ZipRealty's initial public offering has buoyed other companies with alternative business models, boosting their optimism about prospects for 2005. ZipRealty, a full-service brokerage that rebates part of its sales commission to home buyers and sellers, made its IPO of 4.55 million shares of common stock at $13 per share in November. Net proceeds totaled $61.3 million, higher than the company originally predicted. ZipRealty's stock also has continued to do well since its IPO, trading between $14 and $19 a share in the first month. "We are just in shock – there's no other word for it – at the success of their IPO," said Lyle Martin, co-founder of Assist-2-Sell, which sells houses for a flat fee. "It just demonstrates there is public support of an alternative model and that the investors apparently see that as a trend in the future. Otherwise, why would they risk their money on the stock? It lends credibility to the idea...