RateMyAgent, which was formed four years ago, is set to float on the ASX.
Its new share issue at 25¢ per share values the company at $92 million.
The RateMyAgent business charges estate agents, who market their services to prospective vendors, a monthly subscription plus one-off fees.
It is one of numerous property agent matching websites including LocalAgentFinder and OpenAgent, which claims to be the number 1 agent comparison site.
Its prospectus warms if an existing, well established online residential real estate services provider, were to offer an agent review and rating feature, it could materially affect RMA’s ability to grow its revenues and profitability.
It has a current annual revenue run rate of $5.6 million with costs at $6.6 million, according to the prospectus.
It made a first half net profit after tax of $220,000 in 2018, after research and development income of $1.3 million.
The prospectus states its future revenue growth was expected from increased market penetration in Australia and New Zealand and the United States.
Rate My Agent says 27,000 agents have signed up to the service.
It says it covers 77 per cent of active agents in Australia with 30 per cent of those paying monthly subscriptions that start at $39 a month.
It notes a property downturn resulting in lower agent advertising on the site could hit the business bottom line.
During the year to March 2018, RMA’s database showed that vendors and buyers posted over 173,000 reviews (14,000 reviews a month) on 121,000 properties sold.
This equates to a review for around one in every three residential properties sold in Australia, RMA said.
Of the vendors who posted an agent review, 24% said they used RMA to help select their agent.
Nine months after its 2014 launch, the site advised it had some 8000 agents as members, with 500 paying to advertise their businesses on the site which at the time had more than 25,000 client reviews, with 1100 new reviews being posted each week.
Its existing shareholders, which include chief executive Mark Armstrong, will own 87.4 per cent of the company after the Bell Potter float.
The main shareholders are only letting go of 12.6 per cent of the company.
RateMyAgent, which allows home owners to search online and compare real estate agents, has recently been caught up in controversy over underquoting estate agents in Melbourne.
Earlier this year its chief executive Mark Armstrong defended its "agent of the year."
The RMA business has attracted well-known investors including Dean Smorgon and Catch Of The Day founder Gabby Leibovich, who participated in a $5 million fundraising two years ago.
The company made a full year loss in 2017 of $2.9 million, on sales of $2.5 million.
The latest profit of $224,000 was thanks to a its R&D grants.
It also noted that it might have to pay back some or all of $2 million in R&D tax incentives since 2015.
“There is a risk that the some or all of the R&D tax incentives received to date could be required to be repaid (plus interest and penalties) in the event that audits of the claims are conducted and it is determined that the requirements of Division 355 of the Income Tax Assessment Act (1997) have not been met in full or in part,” it said in the prospectus.
The company has increased sales, rising from $873,000 in the first half of 2017 to $2.8 million in 2018, but the prospectus advises given its only recently commenced operations in Australia in 2013 (transitioning to the paid subscriber model in 2014), in the US in 2017 and in New Zealand in 2018, that there are uncertainties surrounding the rate of growth and prospects of the business.
"RMA’s products and services are in the early stages of development and its is not yet cash flow positive.
"RMA’s limited financial and operating track record is not sufficient to provide any certainty or assurance that the Company can or will achieve the growth and other objectives set out in this Prospectus.
"An investment is, therefore, speculative and the directors are of the view that an investment should be regarded as high risk," the prospectus said.
Rival property agent matching service LocalAgentFinder secured a $5.5 million capital raising round last year and a further $5.5 million this year. LocalAgentFinder recruited former iSelect chief Mat McCann as its CEO to prepare for a possible IPO this year.
It recently announced a partnership with Commonwealth Bank.
“LocalAgentFinder’s platform will give customers an independent comparison and is a good example of Commonwealth Bank partnering with experts to provide more value for our customers to help them realise their property goals,” Carrie Fox, Commonwealth Bank general manager, said in a statement.
In 2016 the head of the Real Estate Institute of NSW, John Cunningham suggested issues surrounding recommendations meant agents should be wary using comparisons sites.
Last year the head of the Real Estate Institute of WA, Hayden Groves said the market disruptors, including localagentfinder.com.au, openagent.com and Purple Bricks, "offered poor value to consumers."
"As the President of the Real Estate Institute of WA, people will expect me to say that, but if these intermediaries were upfront about what they actually offer I could be more accepting.
"However, they market themselves as one thing and do another.
"Localagentfinder and others like them claim to provide a service that finds the consumer the best agent, but that is just fantasy," Groves said.
OpenAgent was founded by former McKinsey & Company analysts Zoe Pointon and Marta Higuera in 2013.
OpenAgent's capital raising had totalled $20 million by 2016.
