Controversy as CoStar Accused of Using Agents Names for Homes.com Traffic Push

April 3, 2023
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American real estate giant CoStar has been accused of using agents' names and profiles without their knowledge or consent to gain traffic for its residential real estate portal Homes.com.

According to agent publication Nowbam.com, the controversy arose when eXp agent Kristina Smallhorn found an advert on Youtube carrying her name. On clicking through, Smallhorn discovered that instead of leading to her own website, the ad led to CoStar's Homes.com portal.

Smallhorn, who is a minor celebrity in the agency world with a Youtube subscriber count of nearly a quarter of a million, was not happy that the placement of the ad made it appear that she had personally endorsed Homes.com nor that CoStar was using her name to collect user data.

On posting a description of what was happening in a group with other agent Youtubers, Smallhorn found out that the issue was widespread with many agents also unhappy at having their names used to generate traffic for a portal that makes its money by selling leads back to agents.

CoStar's initial response to the agents' complaints was to point out that the ads were shown "as a result of you having a channel that is centered around real estate". A further complaint elicited a suggestion that Smallhorn delete her Homes.com account, a decision which would also mean deleting her Homesnap account.

Eventually on March the 29th a CoStar spokesperson told Ray Ellen (the author of the Nowbam article) that it has stopped using agent profiles on Google's ad network:

"CoStar Group employs Dynamic Search Ads (DSA) through Google. For these ads, agent names were not specifically targeted, but ads were generated by the Google DSA platform using agent names based on the content of the Homes.com website. As of March 28th, we have blocked all agent profiles on Homes.com from being used in DSAs."

 

Context: why this matters

CoStar is entering the residential portal game and is coming for a slice of the pie currently enjoyed by the likes of Zillow and Realtor.com. The public-facing side of CoStar's entrance into residential real estate is Homes.com, the portal it acquired in 2021 for $156 million.

CoStar and its outspoken CEO Andy Florance, have been attempting to charm agents ahead of a big marketing spend to increase awareness of Homes.com among U.S. house hunters. Agents have been repeatedly told that Homes.com will never use Zillow's controversial tactic of allowing non-listing agents to advertise on someone else's listing and that CoStar will never take a share of the commission as Zillow and Realtor.com currently do in some markets.

Having recently backed away from a deal to acquire #2 portal player Realtor.com, CoStar has doubled down on its backing of Homes.com and has trumpeted the portal's recent traffic growth.

Realtor.com suffered a significant drop in traffic in 2022 while Homes.com has been gaining momentum, traffic and market share. If, however, it turns out that the traffic gains have come at the expense of traffic to agents' own domains, the company's PR efforts may fall on deaf ears.

April 3, 2023
Since March 2020 Edmund's job has been to read about, write about, collect data on, analyse and generally know about real estate marketplaces and the companies that run them. Before that he worked at the aggregator Mitula Group (which became Lifull Connect) for five years.

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