The World’s largest provider of commercial real estate information and analytics, CoStar Group, Inc., took its first significant step into the residential data business by purchasing Homesnap Inc. in an all-cash deal of $250 million. The purchase price worked out to be six times Homesnap’s projected revenue of $40 million in 2020.
Founded in 2012, Homesnap is a fast-growing company that serves 240 multiple-listing services nationwide. It currently has 1.3 million active listings on its platform, which is free. And it claims 300,000 agents use it regularly, including 50,000 who pay extra for a “pro” version.
Headquartered in Washington, D.C., CoStar is the leading real estate technology platform that works in conjunction with commercial real estate brokers. It serves their needs for data, analytics, and advertising exposure for their property listings. This 33-year-old company is no less than a powerhouse of commercial property data and is listed on NASDAQ: CSGP.
CoStar had $1.4 billion of revenue last year. It expects to extend its property coverage through the acquisition, particularly in the residential segment, increasing its total listings from nearly 1.4 million to more than 2.6 million.
As CoStar CEO Andy Florance put it:
“With the new addition of clients and information … we are almost tripling the size of our addressable markets.”
The deal left little doubt that CoStar was going after its competitor Zillow, which is also known for building its business through a series of acquisitions.
CoStar has been circling the residential space over the last six years. In 2014, it acquired Apartments.com, followed by ApartmentFinder in 2015, ForRent in 2017, and Cozy Services in 2018. In February 2020, it agreed to buy RentPath, the parent company of ApartmentGuide.com, Rentals.com, and Rent.com, for $588 million. Later in December, RentPath canceled its agreement to be acquired by CoStar Group after the Federal Trade Commission sued to block the sale.
The real estate tech space has received much attention from corporate venturers. The sector started recovering to pre-pandemic levels in late 2020. The all-time-low interest rates are expected to continue shortly, and perhaps that sparks a new real estate boom!