[ad_1] Andy Florance, CEO and founder of CoStar “Zillow is no longer a relevant player,” said Andy Florance, the CEO and founder of CoStar. “We have done a million dollars of market research in the last couple of months. And we have found that Zillow is not the leader in the space. Zillow is actually not used by many homebuyers.” Zillow’s 226 million unique monthly visitors? Peeping Toms. “We’re about the attracting the homebuyers not the voyeur checking out the inside of their Tinder date’s house,” Florance said. Florance speaks confidently about Zillow losing its grip on homebuyers. After all, he called that the Zillow Offers iBuying program would flop. “Zillow Offers imploded and that was a joke all along. That was a horrifically ill-conceived business model. I probably got about 100 emails saying, ‘Man, you’re right.’” Florance is speaking on the phone, driving away from a doctor’s appointment. A “major car crash two months ago,” he said, compels doctor’s visits. In his 34 years at CoStar’s helm, Florance has through shoe leather data gathering and aggressive acquisitions built an essential source for commercial real estate professionals. Also, CoStar owns the most trafficked U.S. websites for office space — LoopNet, and residential rentals — Apartments.com, generating revenue from subscriptions by landlords and commercial brokers. CoStar has not significantly grabbed market share of for-sale residential, perhaps the largest total addressable market in U.S. real estate, with over 6 million single-family homes bought and sold each year. But CoStar is starting to try. The Washington, D.C.-based company acquired Homesnap and Homes.com. And they are taking on Zillow’s dominance in New York City via Zillow-owned StreetEasy with CoStar’s own direct-to-consumer product. Real estate agents in New York City — and across the country — are cheering for Florance. “StreetEasy has been biting the hand that feeds it for too long,” said Frederick Peters, CEO of New York City brokerage Warburg Realty. “Nothing would give me greater pleasure than to see a little reverse biting.” “Zillow has been making money off of consumer confusion,” said Courtney Poulos, CEO of ACME Real Estate in Los Angeles. “CoStar is a great, agent-centric alternative.” “I find CoStar to be infinitely more user friendly than the evil Zillow monster,” said David Schepner of Howard Hanna Bainbridge Kaufman Real Estate in Pennsylvania. So, Zillow’s days are numbered. Right? Party time in San Diego Andy Florance graduated from Princeton college in 1986, and a year later started CoStar. “My first interest was residential, but because of capital restraints I felt that commercial was something I could first do,” he said. “It is easier to collect, manage and distribute data with thousands of buildings compared to hundreds of thousands of buildings.” CoStar tracked office space, first in D.C. and then across the country. The information they gathered from taking pictures of buildings and developing relationships with commercial real estate agents led to a role in facilitating transactions, Florance said. CoStar also grew through acquisitions, and, at times, intellectual property litigation. In a 2018 article, The Real Deal chronicled CoStar’s legal war waged against Xceligent, once CoStar’s biggest rival for commercial property listings. CoStar’s actions included collaborating with law enforcement in the Philippines to raid an Xceligent office, and Xceligent eventually fell into bankruptcy. CoStar took exception to how it was characterized in the article, calling it a “toxic stew of half-truths.” Today, CoStar is positioning itself as a friendly alternative in the American home ownership market, especially with agents. But The Real Deal article also reported that in 2011 three of the biggest U.S. commercial brokerages, JLL, CBRE, and Cushman Wakefield plotted designing an alternative database to CoStar. The idea went nowhere, but the brokerages were lodging the same complaint against CoStar that residential brokerages have with Zillow: CoStar hoarded data provided by these brokerages, and then charged brokerages to use the data they provided. Florance downplayed lingering resentment between CoStar and commercial brokerages. He drew an extended analogy between himself and Brent Witte, chief financial engineer at JLL. Witte is like a “longtime neighbor, who I invite over to watch football with, but occasionally have disagreements with about picking up the trash” from the curb. In contrast, Zillow’s relationship with brokerages is like a neighbor “setting fire to 10 propane tanks in the garage.” JLL and Witte did not comment on their relationship with CoStar and Florance. Zillow responded to specific questions, and Florance’s jabs, with a written statement by spokesperson Viet Shelton. “Our sites and apps are a valuable marketing tool for seller’s agents, which is why the vast majority of brokerages and MLSs across the country want their listings on our sites,” the statement partly reads. CoStar began pivoting toward the residential market in 2014, when it paid $585 million to buy Apartments.com, which lists apartments for rent. Apartments.com was one of several acquisitions that has grown CoStar’s revenue, and stature on Wall Street. CoStar reported $1.44 billion in revenue through the first three quarters of 2021, an 18% increase from the first nine months of 2020. CoStar’s net income in the first nine months of 2021 was $199 million, up 4% from the year prior. CoStar has a market capital value of over $31 billion, as of Dec. 20. That’s twice Zillow’s value of $15.8 billion. But CoStar’s growth as a company has, so far, little to do with for-sale residential. CoStar’s residential revenue totaled $54 million in the first nine months, less than 4% of the companies’ overall revenue. CoStar expects this residential revenue figure to grow in the coming years. Last November, CoStar purchased Homesnap, a residential real estate listing platform that partners with MLSs, for $250 million. Agents use Homesnap for information about consumer leads and the performance of rival agents. And in April, CoStar bought for $56 million Homes.com, which Florance envisions as CoStar’s eventual national, consumer-facing competitor to Zillow. A month ago, CoStar declared it was partnering with the Real Estate Board of New York, a trade group representing New York
