CoStar CEO Andrew Florance on Tuesday escalated his company’s growing rivalry with Zillow, saying the company’s New York City subsidiary StreetEasy is unpopular among agents.
“Blackmail is too strong a word for it,” Florance said, quipping that instead it could be called “Zillow-mail.”
Florance made the comment during an earnings call Tuesday where he discussed his company’s recent financial performance. The company overall posted strong earnings results, but later in the call questions drifted to Citysnap, a New York City portal CoStar is preparing to launch in partnership with the Real Estate Board of New York (REBNY). CoStar announced the portal earlier this month, and the project will place the company in direct competition with Zillow’s New York portal StreetEasy.
During Tuesday’s call, Florance offered a handful of details about Citysnap. The new portal will, for instance, be free for agents to use while also including a paid option that will give listings more exposure. Florance also said that “Citysnap is Homesnap” — a reference to portal-maker Homesnap, which CoStar acquired last year — meaning his company can sell interested agents a variety of services on a monthly basis.
However, it was Florance’s comments about Zillow that were the most eyebrow-raising.
In the past Florance has seemingly gone to great pains to avoid amplifying the apparent growing rivalry between his company and Zillow. At an Inman Connect Now in January, for example, Florance framed his company as an ally of real estate agents, and said agents are rivals to Zillow. That framing seemed to suggest Zillow and CoStar are also rivals, though Florance explicitly said at the time that “we are not Zillow’s competitor.”
During Tuesday’s call, Florance seemed to go a step further. His point about blackmail came when discussing StreetEasy’s practice of charging agents, how the platform displays agent names on listings, and “the functionality where they’re using other people’s listings to try to get brokers fees or agents fees.” The idea is that agents have to pay to work with Zillow or risk missing out leads and potential clients, and Florance called such practices “unpopular” among the agent community.
By contrast, CoStar plans to work more directly with agents. Florance said the site will operate on a “your listing, your lead” philosophy that directs consumers to the agents representing a property. And he believes Citysnap can be successful while working with industry professionals.
“We believe we can build a profitable, successful business with out disintermediating our clients,” he said.
Citysnap isn’t set to launch until the middle of 2022. And Florance acknowledged that building an audience is not easy, though he added that his company has a track record of success. But in the end, he ultimately framed Citysnap as a rival and alternative to StreetEasy.
“We don’t really have to do anything like what StreetEasy is doing, which is so unpopular,” Florance said, “in order to be financially successful.”