Is this why they call the real estate biz a buyer's market these days? HouseValues (NASDAQ:SOLD) certainly seems to fall under the category of distressed realty at this point. The company is packing more than $3 a share in cash, yet its shares can be had for less than twice that sum right now.

Last night's third-quarter report helps shed some light on why HouseValues has become a condemned property. Net revenues rose 3% higher to $24 million, and it posted its first loss since going public two years ago.

How could the top line have inched up so little, after all the money that the company has been spending recently? HouseValues' dollars have lately been dedicated to ramping up its HomePages and TheLoanPage sites to help offset the waning popularity of its namesake site as a lead generator for Realtors. Doesn't this move validate the pessimism that began swirling in earnest over the summer, when the company swore off providing future guidance as its CFO left the company?

After kicking the tires of its invasive namesake service earlier this year, I walked away terribly unimpressed. Apparently, I'm not the only one. With a supply glut in the marketplace, no one expected real estate to remain a vibrant online endeavor, but companies like Move (NASDAQ:MOVE) and IAC/InterActiveCorp's (NASDAQ:IACI) seem to be getting by. Then again, Move posts its quarterly results tomorrow, so we'll get a little more industry insight after that.

The problem I see with HouseValues is that its investments into real estate listings (HomePages) and mortgage referrals (TheLoanPage) are all tied to a sector that may not be bouncing back anytime soon. We've been led to believe that the lead-generators can do fine in this kind of environment (since desperate real estate pros presumably need to spend more to market their properties), but it's just not happening with HouseValues.

This has been one of the rare clunkers in the Hidden Gems newsletter service. Trading so close to the value of the cash on its books, it's almost a shame to let it go at this point. What will it take to aggressively start growing that cash balance again? Can HouseValues be fixed when its model may have been broken from the start? These are the kind of questions that shareholders deserve to have answered, but that seems unlikely from a company that has sworn off providing guidance.

Longtime Fool contributor Rick Munarriz isn't interested in selling his home, even if he recognizes that the once red-hot South Florida market is cooling off quickly. He does not own shares in any of the stocks mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.