To all the agents in the house,
"CoStar: the residential real estate version!" is coming to a town near you – if you live in New York City. On an earnings call Tuesday, CoStar CEO Andy Florance declared that Citysnap – a consumer-facing alternative in New York City to Zillow's StreetEasy – would roll out in July. And CoStar Chief Financial Officer Scott Wheeler said that after investing $100 million in 2021, CoStar would spend between $300-$320 million bulking up residential real estate in 2022.
Agents, many of you have expressed excitement about the prospect of CoStar as a Zillow competitor. But Wall Street investors on Tuesday's earnings call pressed Florance for clarity. After all, the company is also expanding internationally, pouring more money into LoopNet, Apartments.com and Ten-X. Why the rush to boost up Homesnap, an app for real estate agents, and Homes.com, a consumer-facing listings website?
"For those of us who might be a little denser, slower on the uptake, one of the things I'd love to hear you articulate as concisely as you can," said Andrew Jeffrey, managing director of Truist Securities on the call. "What exactly is the strategy? Who are you going up against? How are you going to monetize? How are you going to go up against competitors like Zillow and Redfin and so forth? Really concisely, I think investors want to know what you're spending all this money on. How do you get from point A to point B?"
Florance responded with – let's not put too fine a point on this – a dig against Zillow.
"We have gotten clear market research that there's demand for collaborations, pure and simple. Today, agents and buyers are in two disconnected ecosystems," Florance said, a knock against Zillow Premier Agent, in which ads for buyer's agents pop up, angering listing agents. "We are working with the industry rather than working to disintermediate the industry."
Florance did add a couple of planks to CoStar's strategy. One is that CoStar – unlike Zillow, which takes an internet data exchange feed from the Multiple Listings Service to produce a listing, will add pictures of the local school or extra information about the neighborhood to their listing. And this information may lead to a higher placement on Google searches.
Florance also made clear that the revenue strategy is simple. Like Apartments.com, Homes.com will sell ads for more prominent listings and allow people to "market their services in a way that's not repugnant to the industry."
Agents, what are you seeing from CoStar now? Do you feel they could still make your life easier?
Please send me your thoughts at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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