Where Real Estate Gets Its Dirt

CoStar’s big bet against MLS

Lots of chatter about Andy Florance’s interview with Brad Inman last week at Inman Connect.  Andy has certainly gotten better at his storytelling since his last interview with Brad.  According to Mr. Florance Zillow is “hijacking” listings by placing other agents around the listing.  But what Mr. Florance fails to mention is that any broker or agent that has an IDX website is also “hijacking” listings.

What’s at stake here is at the very core of the principles behind the MLS, “cooperation and compensation”.  Basically, you help me sell my listing, I’ll help you sell yours.

In a perfect “CoStar world” cooperative compensation goes away, and agents must directly pay to advertise listings.  “The Australian model”, some have dubbed it.   In this case, CoStar’s acquisition of Homes.com serves as their listing portal and Homesnap for their agent toolbox.  Sidenote: I find it kind of funny that Mr. Florance has beaten Rupert Murdoch and his News Corp to the “Australian model” of real estate.  Since realtor.com is so very entrenched in Opcity’s broker referral model.

Now, this is a completely sound business strategy.  Break up the MLS-Broker model and go directly to agents and consumers. CoStar, Homes.com, and Homesnap have made a bet, in my opinion against the MLS. Okay, you do you.

But, I personally don’t agree with this solution.  I think having a strong MLS, makes the market work. And I think as we evolve policy in regard to transparency in commissions and listing attribution we can make things better for everyone.

And let’s be honest. The Seller doesn’t give a shit about any of this. They just want their house sold. Zillow and other IDX sites do a great job of giving listings the greatest exposure in the market. All the broker needs to do is, put it on the MLS.

I also don’t agree with the fear-based message Mr. Florance is sending out.  It seems that Mr. Florance’s whole value proposition is that they are “not Zillow”.  Zillow is the “mafia”.  Zillow is “hijacking” your listings.  He even readily admits that CoStar is not coming out with any innovations in regard to the “UI or UX” of its software.  It seems their entire go-to-market strategy is just tapping into all the Zillow haters. Granted, Zillow has done a lot of stupid things to make it easy to pick on them but I wish Mr. Florance would tell us why his site and tools are better than everyone else’s instead of just bashing competitors.

Next week CoStar/Homes.com/Homesnap is shutting down part of the Gaslight District in San Diego and throwing a huge party and concert with Country Music Star, Keith Urban.  And I’m sure a lot of wining and dining will happen.

But, I’m not a big fan of Country Music, especially Australian Country Music.

  1. Because I dont believe any of us really know where the CoStar strategy is going yet, Im not ready to say that because Andy Florance doesn’t like Zillow that he’s ready to get rid of IDX altogether. In other speeches he has reinforced his support of Fair Display Guidelines which is in complete alignment with IDX. I think we need to just let it all play out and see where we go from here. And to your point about innovation, Im interested in the new ideas and innovation coming from all of the Mega Players now – Lone Wolf, Costar and Zillow. With a. bunch of capital behind you, it’s easy to roll up products – now what are you going to be do with them? Im interested in hearing how all of the big players are going to help agents and brokers be more profitable. Frankly, Im not as interested in how each of them are going to be more profitable – its all about the customer right?

  2. In the 2021 NAR Technology Survey, the top “Tech Tools That Have Given The Highest Number of Quality Leads” were #1 Social Media (52%), #2 CRM (31%), #3 MLS site (28%), #4 Email Marketing (21%), and #5 Listing Aggregator Site (21%).

    So this whole idea of “Aggregators are stealing your leads!” that Andy is railing against was the 5th place tool for actual lead generation. I agree that the argument feels weak.

    Besides, the whole landscape of this conversation changes on Nov 15th if the recommendation from the MLS TEIAB for Listing Broker Attribution passes NAR BOD.

  3. I hope that your readers can recognize what is clear to me: an attempt to paint a picture of doom and gloom behind CoStar’s residential strategy without understanding it, and certainly without objectivity.

    Homes.com and Homesnap are both longtime, acknowledged partners of the industry, strong advocates of the cooperation and compensation principles underlying the MLS. By extension, CoStar will strengthen the ongoing commitment both brands have to the Broker Public Portal and our extensive MLS partner network. We welcome our ongoing obligation to build and maintain trust, and we enjoy a strong foundation on which to build.

    Nobody here is making any bets against our partners in the brokerage or MLS world. You can be provocative to stir the pot and attempt to further the position of your own company, but you know better than to question our MLS commitment. On the contrary, we look forward to bringing agents, brokers and MLSs innovative alternatives to promote their businesses with a cooperative partner instead of a competitor.

    Too bad you don’t like country music – it should be one heck of a party. Any of your readers who believe in supporting brokerages and MLSs as much as I do, email me and I will get you a ticket … andy@homes.com.

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