Andrew Florance, CEO of CoStar Group (CoStar, Homes.com)
CoStar Group is edging further into the world of residential real estate with its latest acquisition.
The data giant announced Wednesday it had reached an agreement to buy residential listing platform Homes.com for $156 million in cash. Homes.com platform claims to have more than 1.8 million listings with feeds from 90 percent of the Multiple Listing Services across the country.
Pending a regulatory review, the transaction is expected to close by the end of June and bring CoStar up to $10 million in additional revenue in the second half of the year, according to a release.
It’s the second purchase CoStar has made in the residential sector since buying Homesnap for $250 million last year, though that’s not for a lack of trying.
CoStar reached an agreement to buy RentPath for $585 million, but the deal fell apart after the U.S. Federal Trade Commission opposed it. Separately, CoStar was bidding for consumer real estate data firm CoreLogic but pulled its $7.35 billion offer last month citing rising interest rates, while CoreLogic indicated it was seeking another deal with a larger portion of cash.
CoStar has said it’s looking to expand into residential real estate data because of the sector’s opportunity. In November CEO Andy Florance said that the estimated value of residential property was $27 trillion, compared to commercial assets’ $16 trillion.
CoStar’s plans to use Homes.com in tandem with Homesnap’s agent tools and marketing solutions to create a service that will help agents sell homes faster at higher prices.
“Our plan in bringing Homesnap and Homes.com together is to help agents market their listings in support of the ‘your listing, your lead’ philosophy – which stands in contrast to most players in the industry,” Florance said in the release.
He also took a swipe at rival Zillow Group, noting that “current residential listing sites do not serve the interests of homeowners or their agents as they focus on selling advertisements on top of agent listings and increasingly offer competing brokerage services.”
Florance said CoStar would not use similar advertising programs, which have generated fierce backlash from the agent community.
Homes.com was founded in 1997 and has raised $38.5 million to date, according to Crunchbase.
