ZipRealty Inc. has hired its first-ever president of brokerage operations, former Foxtons North America CEO Van Davis, to help revive the company’s downsized brokerage business.
Last year, the Emeryville, Calif.-based brokerage eliminated buyer rebates, closed offices in a dozen markets, and embarked on a new strategy of using its popular website to generate leads for other brokers. ZipRealty currently operates as a brokerage in 20 markets, and provides "Powered by Zip" referrals in eight others.
Although revenue fell 28 percent last year, to $85.1 million, ZipRealty was still ranked by Real Trends as the nation’s 15th-largest real estate brokerage by dollar volume, with its agents handling $3.3 billion in transactions. ZipRealty’s referral partners, by comparison, closed $85 million in sales using Powered By Zip leads.
In announcing the new hire, ZipRealty CEO Lanny Baker said the company created a new position for Davis, "to help ignite the next stage of growth within our owned and operated brokerage business."
Davis, 53, is an industry veteran. Although the discount brokerage Foxtons North America is largely remembered as a bold failure — Davis departed in 2005, two years before the company filed for bankruptcy — he served for four years as president and CEO of Century 21 Real Estate Corp. before leading Foxtons.
Davis also served as an advisory board member for Trulia when the company was in startup mode. He’s been the owner and operator of Tennessee-based F.V.O. Davis Consulting since 2007.
"We plan to continue to leverage ZipRealty’s core competencies of agent and online technologies to enhance the consumer’s real estate purchase and sale experience," Davis said in a statement.
"I am looking forward to using these assets to help ZipRealty’s agents grow their businesses in the future. I see a great fit between ZipRealty’s significant business opportunities and my own passion for team development, training, marketing and operational improvements."
According to his offer letter, Davis will receive an annual base salary of $250,000 and be eligible to earn a bonus amount equal to 50 percent of his annual base salary if the company achieves income targets. He’ll also have an option to purchase up to 180,000 shares of ZipRealty common stock with an exercise price equal to the closing price on the date the option is granted.
Davis said he was "tremendously excited to be joining the ZipRealty team at this pivotal point in the company’s development."
In announcing a $3.1 million first-quarter loss today, ZipRealty said revenue was down 19 percent from a year ago, to $16.1 million. Excluding markets that were closed during 2011, revenue was down 12 percent.
As of the end of March, ZipRealty had 1,624 agents engaged, down from 2,422 at the same time a year ago. Agent head count was little changed from 1,701 at the end of the year.
Based on current trends, ZipRealty expects second-quarter net revenues to total $18 million to $19 million, and that for the full year, the company will post positive adjusted earnings before interest, tax, depreciation and amortization (EBITDA).
"The housing market does appear to be stabilizing in some areas, although the dampening effects of high unemployment, declining inventory, further foreclosures and tightened lending standards still present challenges," Baker said in announcing first-quarter results.
Two brokerages joined the Powered by Zip network during the first quarter, bringing the number of referral partnerships to eight. ZipRealty is shuttering its brokerage operations in both markets.
In New York’s Hudson Valley, 17 former ZipRealty agents have joined Better Homes and Gardens Real Estate Rand Realty, whose more than 800 sales associates serve Westchseter, Rockland, Orange, Putnam and Dutchess counties.
In Utah, ZipRealty transitioned its brokerage operations to Prudential Utah Real Estate. With 18 offices covering the Greater Salt Lake, Ogden and Park City areas, the brokerage is the largest residential brokerage under single ownership in the state.
The six other Powered by Zip partners are Better Homes and Gardens Real Estate Metro Brokers in Atlanta; Long Realty in Tucson, Ariz.; Coldwell Banker Howard Perry and Walston in Raleigh, N.C.; Coldwell Banker Hearthside Realtors in Philadelphia; Bob Parks Realty in Nashville; and Coldwell Banker Vanguard Realty in Jacksonville, Fla.
Powered by Zip partners feed Internet Data Exchange (IDX) listings to ZipRealty.com, and ZipRealty provides leads and customer relationship management (CRM) tools, collecting a fee whenever it helps a partner brokerage close a transaction.
Although MLSs typically restrict the display of IDX listings to their members’ own websites, ZipRealty maintains it has the right to display IDX listings in markets where it’s not in the brokerage business because its partner brokers’ branding is prominently displayed on ZipRealty.com.
The company has acknowledged that risks and uncertainties associated with future projections include ZipRealty’s ability to build its "new and unproven Powered by Zip network," and "to access leads and MLS listings from third parties that it does not control."