Real Estate

With CoStar In The Game, A New Real Estate Chessboard Emerges

People who have done deals with CoStar, or had a catbird seat in CEO Andy Florance’s business dealings, say he’s cunning, ruthless and plays to win. Sounds like Zillow, right?

Two years ago, CoStar founder Andy Florance traveled to Zillow headquarters on Second Avenue in downtown Seattle to meet with the management team. He did not come to pay homage.

He brought a slide deck to the meeting and stunned his audience with a sermon on how wrong-headed the Zillow business model was. The hubris crystallized Zillow’s worst fear — CoStar getting into residential real estate — which happened last week.

Imagine your sister coming to your house for Thanksgiving dinner and complaining out loud that the turkey is too dry. It only hurts if she’s right.

Florance hammered away at Zillow’s practice of putting other agents’ ads on the selling agents’ listings. Like dry turkey, that piece of the Zillow business model has never gone down very well. 

Expect the CoStar drumbeat on this issue to be loud and unforgiving. Along with Florance’s other key charges: “We don’t hire agents and we don’t buy houses and flip them.”

A new chapter in digital real estate

A ferocious level of competition is coming to the real estate game table.

People who have done deals with CoStar, or had a catbird seat in Florance’s business dealings, all say the same thing: cunning and ruthless, he plays to win. Sounds like Zillow, right?

“CoStar is the only competitor that we feared. It cleaned our clock on rentals,” said one former Zillow insider. “Florance poured money into marketing, we hesitated and he won.” CoStar owns In a recent earnings call, Florance boasted about his quirky and popular advertising campaign with actor Jeff Goldblum.

Zillow on its heels! Could you ever imagine? With its burgeoning $25 billion stock valuation, it seems inconceivable that Zillow might feel threatened. 

Florance, 56, has lots of cash and an even larger $35 billion market cap. With a take-no-prisoner reputation, CoStar often sharply hikes prices once it owns a market. When I interviewed Florence, he occasionally flashed a smirk like a cat with a dead bird in his mouth.

Zillow is also a source of derision, but it has been a master at real estate industry relations. None of the big company executives ever found the courage to publicly challenge Zillow as it usurped their brands. “All it took was a seat on an advisory group or a call from one of the top Zillow executives, and we all fell into place,” said one franchise executive. “Looking back, shame on us.” 

Here come the ad wars

An engineer who loves to spend big bucks on marketing, Florance plans to spend hundreds of millions of dollars on advertising around Homesnap.

That may spell some bad news for Zillow in the short term. It backed off from much of its ad spend earlier this year during COVID, which contributed to its improved financial picture and better margins. 

Florence’s acquisition strategy is to buy up smaller, weaker companies and invest aggressively in marketing until he threatens bigger competitors.

It is impossible to imagine Zillow suffering any significant damage. This is the company that rolled over Rupert Murdoch’s, snapped up Trulia, helped unleash the regulatory dogs on NAR, co-opted the MLSs and built a monster consumer portal, the real estate brand of habit. With 160 million unique users per month, expect return fire from the bow of the Seattle warship: it must be loading some cannon balls. 

Acquisition news from Zillow seems likely.

We suddenly have two giant contenders, not just one.

Last week, Florance saved some of his fire for, beating on its business model and expressing puzzlement as to why Murdoch did not export the classified ad model from his online Australian real estate company REA.

Will CoStar acquire at some point? I suspect Florence has the portal in his sights. wakes up

Is it possible that CoStar’s emergence might also result in becoming a more formidable competitor? has never had a better management team than it does now with David Doctorow as CEO. His savvy chief revenue officer is Ben Rubenstein, who joined the team when he sold his startup Opcity to 

The company was gripped by scandal then inaction for 20 years. Today, it’s a new game at, tougher and more aggressive with better clarity on its strategy moving forward.

If CoStar impairs Zillow even a little, that could be good news for Let the two big cats tussle as the underdog rises up.

And well-funded upstarts are also entering the picture, like the jazzed-up gang at OJO Labs. With a pile of cash, it’s making moves to build a portal with 20 million unique visitors already.

When Zillow acquired Trulia six years ago, I wrote an essay that declared “checkmate” for online real estate, with Zillow the winner.  

That was true until last Monday. Then Andy Florance set up his side of the chessboard.

Email Brad Inman

What's your reaction?

In Love
Not Sure

You may also like

More in:Real Estate

Leave a reply

Your email address will not be published. Required fields are marked *