CoStar Group, the real estate conglomerate that has been making a concerted push into the residential space, posted overall revenue growth of 11%, to $693 million for the third quarter, as well as continued growth in its consumer awareness and web traffic, with traffic up to 130 million unique visitors to the Homes.com network.
Acknowledging what has been the “hard work” of launching a residential portal with an entirely different business model from competitors, CoStar Group Founder & CEO Andy Florance told investors on an earning call this week that the company is bullish on its Homes.com business despite a drop in bookings.
“You don’t build a $1 billion product in seven months,” Florance commented to investors.
Florance pointed to larger shifts in the real estate landscape as being favorable to the Homes.com model, continuing to criticize the “lead diversion” businesses favored by rivals Zillow and Realtor.com®. He also pointed to both the NAR settlement and the pressure to change Clear Cooperation as a potential boon.
“We are watching a shift in the industry, away from buyer agency lead diversion to something where folks are looking to have the portals do what they do in the rest of the world, which is to market the home for sale,” he said. “Which is the whole point to begin with. So we’re pretty excited about everything that’s occurring despite the fact that it’s hard to launch it.”
CoStar CFO Chris Lown said the company expects improvements in net new bookings this quarter and into early 2025, claiming the company is already seeing an “upturn.”
To that end, Florance said CoStar will continue to invest in Homes.com in 2025 at roughly the same level it did in 2024, adding a dedicated sales team—275 people by the end of 2024, and 600 by the end of 2025—and believes that its residential business is well positioned in the market more broadly.
During the call, Florance fielded questions from investors, allaying concerns by emphasizing the long-term viability of the Homes.com model. “I feel very comfortable about what we’re selling as a value proposition, which is the ability to win new listings in a competitive market, at a rate greater than you were before,” he said.
Florance added that “over time,” people will view Homes.com as an annual subscription, focusing on productive agents, who he said quickly benefitted from their membership while less productive agents dropped out.
Florance also reiterated his belief that Homes.com’s “your listing, your lead” model is what both consumers and agents actually want in the long run, something he previously described as aligned with the foundations of the business.
“Generally speaking, the brokerage firms are unhappy. Post-NAR settlement in March earlier this year, more than 100 brokerage firms, including industry giants Anywhere and Compass have gone public wanting to take back control of the listings that their agents work hard to get,” Florance said. “Ninety percent of home shoppers will still use a buyer’s agent, but they want to do so on their own terms with transparency, honesty and with their own timing.”
