Where Real Estate Gets Its Dirt

Can CoStar pull off real estate’s greatest magic trick?

CoStar unlikely to dethrone Zillow in portal wars: DelPrete

“The primary value a real estate portal provides its customers is exposure to the most potential homebuyers and homesellers. In the U.S., Zillow’s traffic lead over CoStar’s recent acquisitions is astronomical.”

More on this later.

“The challenger portals are succeeding with the easy bit: securing listings. Traffic is the hard part.”

Securing MLS listings is easy? I guess when you write a big enough check.

“Hundreds of millions of dollars have been thrown against the top portals for years with no effect on their dominant position whatsoever.”

This is the crux for me. I just don’t see CoStar’s move here. You either win two ways, differentiation or exclusivity. As Mike states, hundreds of millions of dollars have spent trying to win via differentiation, and it hasn’t worked. Jeff Goldblum isn’t going to save you. That leaves exclusivity. That means brokers pulling their listings from one site and only show them on another. Meaning the end of IDX. But, Sellers wouldn’t allow their listings not to be on Zillow. That has been tried before. See Edina or Vegas. Plus 84% of brokerages are “independent” and non-franchised, so getting any sort of consensus is comical.

Having said all this I’m still left super curious, what does CoStar’s Andy Florance have up his sleeve? What does Andy know?

Got me thinking about something I love, Magic. As the great sleight of hand artist Ricky Jay once said,

“Magic is all about structure,” Jay said. “You’ve got to take the observer from the ordinary to the extraordinary, to the astounding.”

He goes on to explain, in this article on Alta,

“Jay explained that The Prestige is the payoff, the third act of any magic trick. First comes The Pledge: The magician shows you something relatively ordinary, like a dove. Second is The Turn: The magician takes the dove and makes it do something extraordinary, like disappear. Finally, there’s The Prestige: The magician tops that disappearance and makes the dove reappear.”

At this point of the CoStar show we are at the The Pledge. But if CoStar can make Zillow disappear, it would be one of the great magic tricks of all time.

  1. They are not trying to make Zillow disappear. They want the “good” traffic and will be happy to leave the “bad” traffic to Zillow. Good traffic are real buyers and sellers whose contact information can be obtained and who are willing to be contacted by an upstream Costar partner. That is where the money is. All the eye balls in the world are worth nothing if you cannot monetize them. Yes Zillow has traffic. Lots and lots of bad traffic.

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