Where Real Estate Gets Its Dirt

Good Luck, Felix

Homes.com names new president after 2-year leadership gap

“Our model and his are the same: you win by putting the property and agent first, not by selling agent’s leads to multiple agents. I am confident Felix is the right leader to get Homes.com to number one in the U.S.”

Yikes! “Number one in the U.S.”, Andy Florance put a quota in a press release with a brand new executive’s name on it, in public, on day one. Felix Kusch hasn’t found the break room yet and he already owns the Zillow problem.

Looks like he’s legit. He ran Immoweb, the number one portal in Belgium, and Immowelt, the number two portal in Germany. M&A at Axel Springer, board seats at Meilleurs Agents and Lamudi (BTW I have no idea what those companies do). But, hear me out, the guy has run a number one and a number two, so he knows exactly what the gap between them costs. European portals run on the same model Homes.com has been selling here since 2024, promote the property and route the inquiry to the listing agent (“Dein Objekt, dein Kontakt!”). Florance went and found the guy who has actually won this exact fight.

But he’s going to find that organized real estate hits different in the US.

He’s also inheriting a smaller sandbox than the headlines suggest. Residential segment revenue was $444 million last quarter. Homes.com was $28.5 million of it, and the profit everybody cheered came from what CFO Chris Lown called “actions to reduce personnel costs.” The upside is real, though. After the cuts, Homes.com is finally a business nobody has to defend every ninety days.

Number two(?) at a profit is a fine business. but Andy just told everybody that isn’t the job.

RPR-RVM-BPP-CHA-CHA-CHA

RPR® and Broker Public Portal Collaborate to Bring RVM® Valuations to Participating Cribio Markets

“The integration brings together two industry-aligned platforms with a shared commitment to accurate data, transparency and consumer trust. BPP, owned by brokers and MLSs, was created to deliver a national consumer home search experience powered by real-time MLS data and guided by Fair Display Guidelines. RPR, a wholly owned subsidiary of the National Association of REALTORS®, provides REALTORS® with parcel-centric property data, valuation tools, market insights and client-ready reports.

Through this collaboration, participating MLSs and associations that have partnered with BPP, may authorize the display of RVM® values within their local Cribio-powered consumer experience. RVM®permissions will be controlled by each MLS and enablement will require the appropriate authorization and permissions process between the MLS, BPP and RPR.”

I hadn’t checked out Cribio.com in a while. I have to say they’ve done a nice job with the site. Comparing their respective Listing Detail Pages (LDP) side to side with Zillow, it’s amazing to see how many pixels Zillow dedicates to their “Request a tour” button and ad for “Home Loans” product.

Without the ad space, Cribio is able to show a map of the area and a lot more information on the property.

Right now on Cribio you can search any off-market property and on the upper left of the right column you get a Zestimate button that goes to Zillow. The RVM, I’m told, will be displayed on the page (no clicking). I’ve also heard they might keep the Zestimate as is, and maybe add a third AVM — I believe Homes.com has four.

One other thing I appreciate about Cribio’s LDP is that the right column is scrollable, while the left column of property photos is static. It’s a subjective design choice, but I like it.

Will this RVM integration move the needle on consumer adoption? Probably not. But I do like to see the industry collaboration and some of the cool stuff Dan’s team is working on.

Homes.com new AI voice search is legit!

COSTAR GROUP LAUNCHES TRANSFORMATIVE AI EXPERIENCE ON HOMES.COM, REDEFINING THE FUTURE OF HOME SHOPPING

“For the first time on a major real estate portal, consumers can engage in natural, real-time, two-way conversations – by voice or text – to search, refine, and explore homes in an interactive experience that feels less like navigating a website and more like being guided by a deeply knowledgeable, trusted real estate advisor. Homes AI draws from Homes.com’s unmatched depth of property data, Matterport 3D digital twin technology, images, proprietary school data, neighborhood insights, and market intelligence to deliver bespoke guidance that empowers shoppers with the resources and confidence they need to find the perfect home.”

Growing up I remember watching Star Trek. I was always fascinated by the way Captain Kirk and others crew members of the starship Enterprise would talk so effortlessly to computers.

“Computer, activate shields!”
“Computer, make me a sandwich.”

Many AI tools I use have that capability now but I’m still a little too self conscious to use AI that way. I suspect that will change soon enough. When I read about Homes.com new AI search interface that had voice integration I had to try it out. I had previously been impressed by MetroList’s implementation of voice and seen stories about other real estate portals/apps.

After giving the homes.com permission for my location and use of my computer’s microphone I was up and running. A few things stood out. Number one is that it was so seamless. I didn’t have to click any buttons to start or end recording my voice commands. Number two was the quality of the AI voice, it sounded natural…human. Number three was the speed. There was almost no latency in giving my commands and the site responding.

But what really impressed me is the way it understood and could act on my questions/commands.

“Show me homes in the 92646 zip code”
“Can you sort the houses from highest to lowest price?”
“Can I see the one on ‘Vacation Lane’?”
“Can you make the photos bigger?”
“Can you show me the next photo?”
“Next. Next. Next.”
“Can you go back to the search results page?”
“Let me see the home on ‘Pollack Drive”
“How many days has this been on the market?”

All of these commands the site understood perfectly. Don’t believe me? Check out this video I recorded.

I’m sure all of this will be commonplace shortly. And I don’t think I even scratched the surface of what this feature of Homes.com can do.

Big kudos to the engineers and designers at Homes.com. Well done!

The Participation Award

Third Point Sends Letter to Board of Directors of CoStar Group

We thought then, as we do now, that the Company’s anemic performance can be ascribed entirely to the misallocation of billions of dollars into Homes.com, overseen by a feckless board of directors that has failed to protect shareholders from Mr. Florance’s quixotic quest while rewarding him with exorbitant pay packages. Like an elementary school child who wins a prize even for finishing last, Mr. Florance’s bonuses are perhaps the costliest “Participation Award” our firm has witnessed.

This guy, Dan Loeb, doesn’t do subtle.

I don’t know all the players but it looks like Third Point ( I’m guessing a hedge fund) is a huge investor and there was some sort of “standstill agreement” with CoStar that expired at midnight. And these guys at the hedge fund came out swinging this morning with a letter that reads like a controlled demolition. Loeb is nominating a slate of directors to replace the majority of the board, which he describes as “feckless” and “supine enablers” of Andy Florance’s Homes.com obsession( a.k.a. ZDS –Zillow Derangement Syndrome).

More from the letter:

The Company’s plan to build a dominant online classifieds business in the U.S. RRE industry was deeply flawed, with structural problems affecting both sides of management’s proposed two-sided marketplace. First, customer demand was dominated by deeply entrenched competitors with strong brands and ample resources. Second, and even more damaging, the Company lacked meaningful differentiation in its supply of properties due to the presence of MLS’s freely syndicated listings. While these problems were immediately obvious to any informed observer, management and the board either ignored or failed to understand them.

Ouch, that’s going to leave a mark. He’s basically saying, we liked the monopoly we owned before. We don’t believe nor did we ever believe you could establish a monopoly in residential real estate.

So CoStar has sunk roughly $3 billion into U.S. residential real estate over five years. The return? About $60 million in revenue last year. Meanwhile, Florance received $37 million in compensation despite the stock dropping 27% over five years while the S&P 500 returned 94%. No bueno according the Mr. Loeb.

Loeb’s description of Florance’s bonus as the “costliest Participation Award” his firm has ever witnessed is the kind of line that ends up in business school case studies — which, he helpfully notes, is exactly where CoStar’s residential strategy belongs.

But I’m not so sure. I keep thinking of that conversation attributed to Masayoshi Son (CEO of SoftBank) when he was talking to Adam Neumann of WeWork.

Masayoshi Son: In a fight, who wins — the smart guy or the crazy guy?

Adam Neumann: The crazy guy of course.

Masayoshi Son: Correct, but you are not crazy enough.

I’m not sure I would ever bet against Andy Florance. Isn’t “quixotic” just another word for crazy?

But it sounds like Third Point wants CoStar out of the residential real estate (RRE) business. So let’s pull on that thread a little bit.

Who do they sell it to?

Yup, you guessed it…Compass. And Reffkin is for sure crazy enough!

Don’t bring a knife to a gun fight.

Homes.com will ‘boost’ listings that are banned on Zillow: Florance

“Homes.com is going to support any agent who gets blackballed or blacklisted on Zillow, and boost their listing,” he told Inman exclusively on Thursday, adding that access will be free to those impacted by Zillow. “We don’t think it’s right to ban people’s listings for your economic interest.”

But what about the economic interest of the seller or the buyer?

There’s a lot I think Homes.com does well, but every now and then (like now), Mr. Florance seems to be driven by a personal vendetta against Zillow. And look, I’m not always the biggest fan of Zillow either (for example, I don’t think Homes.com ever sued their own clients).

But in the end, this feels like a hollow threat.

To put a finer point on it, I updated the graphic that accompanied the Inman article today.

A new home search portal swoops in to the mix

Flyhomes Launches World’s First AI-Powered Home Search Portal

“Developed over the last two years, ‘Flyhomes AI,’ is a proprietary technology which brings the first conversational real estate search and research to the market, dramatically expanding the amount of information home shoppers can find online.”

Flyhomes

The company has some legit pedigree too.

“The technology integration was overseen by ZeroDown co-founders, Laks Srini and Abhijeet Dwivedi, who joined Flyhomes as chief technology officer (CTO) and chief growth officer (CGO), respectively. Srini and Dwivedi previously served as Co-founder/CTO and as COO at SaaS HR platform, Zenefits.”

Flyhomes

One of ZeroDown’s major investors is Sam Altman, CEO of OpenAI, the creators of ChatGPT.

The new portal will be live in 28 states and Washington D.C., which they claim covers 75% of the listings (I think that sounds right). I got an early sneak peak at the site and it’s pretty rad. Along with the typical portal things you can also ask it questions like

“Show me homes in Los Angeles that have recently dropped in price”
“Provide me an overview of recent t sales in 90210”
“Show me homes in 92648 that are having an open house this weekend.”

To me this could be what a future MLS system interface could look like.

I’m hoping to have someone from Flyhomes on my podcast, I’ve got a ton of questions about their business model, and how they plan to expand coverage.

But my biggest take away is just when we thought that there was no innovation left in the listing portal space, a new competitor enters the ring. Congrats flyhomes! Can’t wait to see more!

David Mele leaves Homes.com

Homes.com president out

“Mele took the president role at Homes.com nearly 10 years ago after a run in local news publishing with The Virginian-Pilot. During his tenure with Homes.com, Mele oversaw the company’s acquisition by CoStar in 2021 and its rise as a major player in the home search space.

CoStar CEO Andy Florance confirmed Mele’s departure to Real Estate News, adding that the company is “grateful to David Mele for his contributions to Homes.com” and that the team “wishes him the best” in his future endeavor”

AJ LaTrace, Real Estate News

Sounds like he left on his own terms. Good for him. Having been there from the beginning (starting at Dominion Enterprises) on through the acquisition by CoStar, changing the entire business model, heading HomeSnap and then Super Bowl ads. You gotta believe he has some great stories to tell.

Ziltorfin just peed in its pants

“Over $1B invested” 👀

Homes.com was #2 portal in September

CoStar’s Homes.com beats Redfin, Realtor.com to become No. 2 portal

“In a monumental sign of the real estate listing portal’s growing influence, CoStar Group’s Homes.com hit over 100 million unique visitors in September, besting Realtor.com and Redfin in monthly unique visitor traffic for the first time since acquiring the portal nearly three years ago, the company announced Monday.

That level of traffic made Homes.com the No. 2 most visited listing portal during the month of September, second only to listing giant Zillow. Realtor.com reported 74 million monthly unique visitors and Redfin reported 52 million unique visitors for the month.

CoStar founder and CEO Andy Florance told Inman that the company’s achievement was no accident since a lot of time and energy went into getting the Homes.com portal to where it is today.

“I know we’ve surprised everybody,” Florance said.

Lillian Dickerson, Inman News

I’m not too surprised, I see Homes.com ads everywhere online, but I will say I’m very surprised how quickly this happen. Congrats to the entire team at CoStar!

Homes.com responds…

Remember that article, Homes.com Using Your Name to Steal Your Leads?

Well, Homes.com responded to the article. And not just anyone but Homes.com CEO David Mele.

THE HOMES.COM RESPONSE WILL SURPRISE YOU

Ray: “One of the questions I was asked by agents, does Homes.com have the right to use an agent’s Name, Image, or Likeness to advertise or market the Homes.com website?”

Mele: “Homes.com has not specifically selected and used agent names, images or likenesses to advertise the Homes.com website. But we have utilized Google’s DSA system, which generated ads based on content that was listed Homes.com, which included both property listings and agent profiles.”

It’s precisely what I pointed out before. Agents using a platform like Google (which is free) means they (the agents) are the product. Homes.com is doing nothing wrong here.

The Q&A goes on to address “selling leads” and what happens to the inquiries made on the website.

Ray: “You stated in your email that “Homes.com doesn’t sell leads or trick users. … Click on our ads and submit leads, and see where they go.” One of the agent’s spouses did this. They went to YouTube, searched for the agent (their spouse) by name and saw the Homes.com ad using that agent’s name. They clicked on the ad that took them to the agent’s profile page. Then they searched for a house, clicked on a house and submitted a request. That inquiry did not go through to the agent whose name they had searched on YouTube. Can you help me understand anecdotes like this that we received?”

Mele: “If they had submitted an inquiry from the agent’s profile page, that inquiry would have gone directly to the agent they landed on.  But if they then searched for a house listed by another agent, then the inquiry would have gone directly to the listing agent for that house.  Since we employ a “Your Listing, Your Lead” model, all inquiries from listing detail pages go to the listing agent and the listing agent only. And these leads are not sold to the listing agent.  They are provided for free.”

It’s pretty funny that agents can’t grasp the “your listing, your lead” concept. Big kudos to David Mele for addressing these concerns head-on.

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