Since acquiring Homes.com in 2021, commercial real estate giant CoStar Group has made it crystal clear that it was playing for keeps in the residential real estate market. In less than two and a half years, CoStar has taken Homes.com from a small player in the residential real estate portal space to the No. 2 most visited platform, now only behind Zillow.
In September, Homes.com recorded over 100 million unique monthly visitors, a 1290% increase over the year prior, according to the firm. Meanwhile, Realtor.com reported 74 million unique monthly visitors and Redfin recorded 52 million unique visitors in all of Q2 2023.
“Through the years, CoStar Group has been very successful at building up a whole series of very robust businesses that focus on commercial real estate and we’ve been leader in that arena,” Andy Florance, the CEO and founder of CoStar Group, said. “To make the jump into business-consumer or consumer sites as residential is, has always been a big leap. We did the first step with Apartments.com, where we picked up a relatively small player and grew them to a clear-cut No. 1 in the apartment marketing. Homes.com was the next step.”
HousingWire recently sat down with Florance to discuss the Homes.com milestone and future plans.
This interview has been edited for brevity and clarity.
Brooklee Han: What does this milestone mean for Homes.com and CoStar as a whole?
Andy Florance: There were a lot of folks in the industry who were skeptical that we could build the traffic to compete with some of the entrenched players and we are thrilled that within roughly a year of really renovating the site and upgrading it and pursuing some different business model, we’ve basically catapulted into a leadership position in the industry. Our overall traffic for all our sites is now at 160 million unique visitors a month, so we are clearly attracting a lot of folks to our sites and creating a lot of value for the agents. I think the big this this all means is that we clearly have a successful formula for marketing residential real estate.
BH: I have heard some comments from CoStar about how Homes.com is well positioned for success regardless of what happens with the buyer broker compensation lawsuits. Could you elaborate on this?
Florance: I think those lawsuits are really significant. I think this is the biggest residential real estate story in the last two decades. But looking specifically at the portals, the way the existing portals in the United States have worked forever is to take listings from all the agents and then concentrate those leads down to a small percentage of agents willing to effectively split their commission with Zillow or Realtor.com or Redfin and that has created a lot of resentment in the industry. But the only way you can have that business model is with the buyer broker commission rule because otherwise if the selling broker wasn’t required to cooperate with this contractually hired buyer broker that came through a lead call center, they wouldn’t cooperate. If the buyer broker commission rules goes away that revenue model for the portals goes away for sure.
We approached it differently and more like how the rest of the world does it. It is not about trying to capture leads for buyer brokers, it is about marketing the real estate and marketing all agents equally. On Homes.com I can directly contact the listing agent who knows the listing the best instead of being connected to a call center who is going to try to route me to someone who is going to try to get me to sign a buyer broker agreement and knows nothing about the property. We went the route of not leveraging the buyer broker rules from day one because we thought it was a better business model. We think it produces a better agent experience and we think it is a more durable business model and a more profitable business model.
BH: Earlier this year you generated quite a bit of buzz surrounding the possibility of acquiring Realtor.com. As you look to expand further are you looking at any other potential acquisitions?
Florance: When we approached that potential acquisition, I believe our traffic for Homes.com was about 7 million unique visitors a month and Realtor just recently reported 74 million unique visitors, so they presented an opportunity for dramatic growth, but today we are sitting here with 100 million unique visitors, and we’ve been able to achieve that without Realtor.com. The other challenge with acquiring someone like Realtor.com is that you inherit the buyer broker lead generation business model and we really fundamentally believe in “your listing, your lead.”
So, we are looking at acquisitions for sure, but we are not looking at portals like Realtor or Zillow.
BH: Now that you have achieved this milestone, what is next for CoStar Group?
Florance: The single biggest goal we are working on with Homes.com is 200 million unique visitors in a month and I don’t mean to be flip, but we have a very clear roadmap of how we are going to get there. We have a very robust product development pipeline and I feel like we are in the first inning of building that. Our goal is to become the clear number one marketplace in the United States, so we are very focused on that. We are also focused on building internationally eventually, too.
Going in 2024, we have about a dozen different companies within providing solid value propositions, which we will continue to strengthen and grow. But I think the big news is really going to be homes.com and I think we are going to blow people away in 2024 with some of our plans for Homes.com that no one knows about today. I think the 100 million mark is a starting point. It will be a big splash next year.