Microsoft spins off HomeAdvisor

Microsoft's march into the home has another connotation. MSN real estate site will stand alone and jump into the mortgage business.

Microsoft is continuing to slowly but surely divest itself of its online content properties. Its latest move: On Thursday, the company announced plans to spin off its MSN HomeAdvisor real-estate site as a separate business.

Microsoft (MSFT) has spun off a number of verticals over the past couple of years, including its MSNBC news site, Expedia travel site, and CarPoint car dealer site. A few of these, like Expedia, have gone on to become standalone public companies. CarPoint, a Microsoft-Ford Motor Co. joint venture, likewise could be poised to go public, as Microsoft officials have hinted as of late.

"We could issue HomeAdvisor stock at some time, although there are no immediate plans," acknowledged Bryan Mistele, CEO of the new HomeAdvisor company and former general manager of the MSN HomeAdvisor site.

Currently, each of MSN's verticals, whether Microsoft already has spun them out or not, operates as a separate profit and loss center. In addition to HomeAdvisor, CarPoint and Expedia, these entities include MoneyCentral and WebMD, the Healtheon medical exchange site in which Microsoft has invested. Mistele calls these properties as B2B2C, business-to-business-to consumer, exchanges.

On Thursday, Microsoft officially launched HomeAdvisor Technologies Inc., a venture in which Microsoft will remain the majority stock holder. Freddie Mac, Chase Manhattan, GMAC-RFC and Norwest Mortgage are also partners in the venture.

The real estate/mortgage market could pan out to be a major ecommerce opportunity, if Microsoft and its partners can find a way to get potential buyers to do more than just browse. According to Mistele, Forrester Research predicted that five percent of mortgages in 1999 would be generated online; the actual percentage was closer to 1 percent.

While Microsoft talks up HomeAdvisor's 750,000 home listings and 2.5 million unique visitors per month to the site on MSN, it's the underlying transaction platform that Microsoft is hoping will make the new company successful.

This platform, to which Microsoft refers internally as "Mortgage ATM," is one of Microsoft's first implementations of its BizTalk technology. The platform basically provides an XML-based infrastructure that links home buyers and sellers. HomeAdvisor Technologies plans to customize the transaction platform and distribute it, through partners, to banks, lenders and real estate professionals

In the coming weeks, Microsoft also is adding an automated loan/credit-approval platform to the HomeAdvisor site, as well.

"We are reengineering the process," explains Mistele. "And we're building out to extend the platform to realtors. We don't want to cut them out."

HomeAdvisor.Com will continue as an MSN property and one of the primary ways that the new HomeAdvisor company plans to make available its services and technologies. The new company will cut additional distribution deals, says Mistele, like the ones it currently has with Infospace and Expedia. He claims the new company currently has between 10 and 12 deals in the works.