Broker Public Portal’s Response To The CoStar Acquisition of Homesnap
Homesnap recently announced that it was being acquired for $250 million by CoStar Group, a publicly traded company that is the leading provider of commercial real estate information and marketing. Because the Broker Public Portal (“BPP”) is in a joint venture with Homesnap, many industry colleagues have reached out to the BPP with questions about what the acquisition means for the future of the BPP. We are providing this FAQ in the hope that it helps answer some of those questions.
Executive Summary
To summarize the most important points discussed below:
• BPP is in a joint venture with Homesnap to promote Homesnap as the “Broker Public Portal” — an industry-friendly consumer search platform committed to “Fair Display Guidelines.”
• As part of that joint venture, BPP and Homesnap agreed to a series of contractual provisions that ensures that Homesnap remains committed to Fair Display Guidelines and other industry-friendly practices, and those contracts remain binding on Homesnap and CoStar after the acquisition.
• Accordingly, the CoStar acquisition does not change anything about the relationship between BPP and Homesnap, and will not impact the joint venture between the Broker Public Portal and Homesnap, or the agreements between Homesnap and the MLS customers it serves.
• Finally, we are optimistic about the future path for Homesnap. We have had a constructive and successful relationship with Homesnap throughout our joint venture, and we are hopeful that CoStar’s resources and expertise will help us continue to fulfill the mission of the Broker Public Portal.
Frequently Asked Questions
Part #1: About The BPP & Homesnap
Q: What is the Broker Public Portal (“BPP”)?
A: The Broker Public Portal (BPP) is a consortium of brokers and MLSs that was founded in 2014 with the mission of empowering the real estate industry with a better search experience adhering to “Fair Display Guidelines.” The BPP is managed by a board consisting of leading MLS executives and brokers, and has never wavered from its mission of empowering brokers, agents, and MLSs to improve the consumer real estate experience, including a search experience free from advertising.
Q: Who owns the BPP?
A: The Broker Public Portal is a corporate entity owned by hundreds of brokers and MLSs, who each founded the company with a $5,000 contribution for a share of the corporation. Although the BPP is not technically a “nonprofit” corporation, the BPP owners do not receive dividends and cannot redeem their shares. Rather, ownership in the BPP entitles the shareholder to vote for material changes to its governance and volunteer for the Board of Managers. A list of the current unit holders of the BPP can be found here.
Q: What is Homesnap?
A: Homesnap is the #1 rated real estate search app in both the App Store and Google Play Store, designed as an advertising-free search experience for consumers. Homesnap also offers a suite of productivity tools for real estate brokers and agents through its Homesnap Pro and Homesnap Pro+ products. The BPP has expanded nationwide by contracting exclusively with individual MLSs to offer the Homesnap app to consumers and the Homesnap Pro to agents and brokers, and now displays data from over 240 MLS systems servicing over a million agents. Homesnap is also the enabling technology and platform of the BPP, as well as its public-facing brand. Homesnap.com has become the largest MLS consumer facing website in America.
Q: What is BPP’s relationship with Homesnap?
A: The BPP originally intended to build the “broker public portal” itself, but in 2017 started a collaborative joint venture with Homesnap, which had built a leading industry-friendly consumer search portal that already followed Fair Display Guidelines and was committed to maintaining a business model that would not allow competing advertising on listings. That joint venture is called the “National Broker Portal,” or “NBP”, and is operated by BPP and Homesnap, with a board consisting of three representatives from the BPP Board, three from Homesnap, and one who is chosen by BPP and approved by Homesnap. The NBP is the operational arm of the BPP, represented by Executive Director Joe Rand, with the mission of helping Homesnap continue to expand throughout the entire country as the “broker public portal.” The National Broker Portal Board of Directors, which is made up of leading brokers, MLSs, broker advisors and Homesnap executives, ensures that Homesnap continues to adhere to Fair Display Guidelines and industry-friendly practices.
Q: What is CoStar?
A: CoStar Group is a publicly-traded company that recently announced that it is acquiring Homesnap, a venture-backed company with several leading investors including Steve Case’s Revolution Ventures. CoStar Group was founded in 1998 by CEO Andrew C. Florance, and has a current market cap of $35B. Most residential real estate professionals know of CoStar Group through its flagship namesake product, which is the leading provider of commercial real estate information, analytics, and online marketplaces in the country. But CoStar also owns an array of other real estate companies, including Apartments.com, Ten-X, and LoopNet. Collectively, CoStar entities currently attract almost 69 million visitors every month.
Part #2: The Acquisition
Q: Why did CoStar buy Homesnap?
A: We are obviously not privy to CoStar’s decision-making in this acquisition. Still, we note that Homesnap is a profitable company that has been expanding rapidly and has the backing of BPP in validating its industry-friendly model of real estate search. Moreover, CoStar and Homesnap take similar approaches to their businesses, both of which involve working cooperatively with hundreds of thousands of real estate agents to provide data, analytics, and advertising tools. Essentially, both companies are in the business of empowering agents and brokers with sophisticated tools to market properties to consumers and provide exposure for their subscribers’ listings, all without allowing competing advertising on property listings. So from a cultural and business model perspective, CoStar has stated that Homesnap was a good fit. Moreover, CoStar has publicly stated that certain Homesnap technologies, such as Homesnap’s seamless digital listing marketing, will be brought to CoStar’s offerings to commercial and rental companies.
Q: Why did Homesnap sell?
A: Again, Homesnap is better positioned to explain its own decision-making on the acquisition. For our part, BPP always anticipated and prepared for the possibility that Homesnap, like most venture-backed firms, would ultimately be acquired, which is why we were extremely careful to craft contractual terms that protected the BPP and the joint venture mission even in the event of a sale.
Q: Will the BPP benefit financially from the CoStar acquisition of Homesnap?
A: No. BPP has no ownership interest in Homesnap. The NPB, the joint venture between BPP and Homesnap, generates revenue based on Homesnap’s subscription proceeds from MLSs. That revenue funds BPPs operations and supports the mission of expanding Homesnap’s nationwide network and improving the real estate experience for consumers and agents using Homesnap. But neither BPP nor the NBP joint venture owns any equity in Homesnap and will not benefit financially from the acquisition.
Q: What are CoStar’s intentions for Homesnap?
A: While we are not privy to CoStar’s decision-making directly, we note that CoStar and its CEO have publicly stated their intentions to keep Homesnap operating as an industry-friendly portal populated through relationships with MLSs, brokers, and agents. For example, in an interview with Inman News, CoStar’s CEO Andrew Florance said that he sees a path towards growing Homesnap’s profitable business without any need to change course. And Homesnap’s leadership has also stated that it is committed to maintaining the industry-friendly vision, pointing out that CoStar could have entered the residential space through other types of acquisitions that would not have required adherence to Fair Display Guidelines. In other words, both Homesnap and CoStar have publicly stated that being industry-friendly makes good business sense.
Q: Is Homesnap going to continue to function as Homesnap, or will it be absorbed into CoStar?
A: CoStar has stated that it intends to maintain Homesnap as a division within CoStar, maintaining the Homesnap brand and retaining the same leadership that built Homesnap from its founding. This is what they did, for example, after they acquired Apartments.com in 2014. We expect that some back-office operations will be merged, but from a consumer, agent, broker, and MLS standpoint, we believe that Homesnap will continue to be a trusted partner to the BPP.
Part #3: Homesnap, CoStar, BPP & The Future
Q: Will the CoStar acquisition change Homesnap’s commitment to the BPP?
A: No. The BPP is in the same strong position it was in before the change in ownership as a result of the joint venture partnership. The BPP has a set of binding contracts with Homesnap that safeguard Homesnap’s commitment to Fair Display Guidelines and other industry-friendly practices. Furthermore, those contracts anticipated a possible change of control over Homesnap and remain effective after the acquisition by CoStar. It’s the equivalent of having a lease with a landlord that is binding on successors and assigns – if the landlord sells the building, the new owner takes the property subject to the existing lease.
Q: What exactly are the “Fair Display Guidelines” that Homesnap committed to in its agreement with the BPP?
A: The Service Agreement between BPP and Homesnap specifically identifies eight “Fair Display Guidelines” as follows:
1) Homesnap will provide all Brokers with an opt-out of displaying their listings.
2) Homesnap will provide an unbiased display of all listings.
3) Homesnap will provide a consistent display of all listings.
4) Homesnap will not allow ads for other brokerages or agents displayed on or with a brokerage’s listing.
5) Homesnap will distribute all leads off listings to the listing brokerage firm or the agent, and all listings will display the brokerage name and logo, and contact information of the broker.
6) Homesnap will make complete reports on any traceable activities to the broker.
7) Homesnap will ensure that brokers maintain control of all their data.
8) If the public facing website does include any advertising, Homesnap will work together with MLSs and brokerages to make decisions about what types of ads are allowed, and how revenue from those ads are shared.
Most importantly, these guidelines ensure that Homesnap cannot allow competing broker advertising on a listing, the practice that the BPP was created in part to prevent.
Again, any changes to those guidelines by Homesnap or CoStar could only be made with BPP’s consent — and the consent of each MLS that has entered into a data license agreement and product license agreement with the Broker Public Portal.
Q: Has Homesnap always abided by these Fair Display Guidelines since its joint venture with BPP?
A: Yes. In fact, Homesnap has enthusiastically followed the spirit, not just the letter, of the Fair Display Guidelines in building and expanding the services and tools provided by the Homesnap app and Homesnap Pro. For example, the Guidelines do not govern buyer agent relationships with clients. Still, Homesnap has followed that same fair play ethos in building tools allowing agents to register or invite their clients into the app, and then protecting and respecting those agent-client relationships. Homesnap does more to respect a buyer agent’s relationship with a client than any portal on the market, even though buyer agency relationships are not technically part of the Fair Display Guidelines.
Q: Does CoStar want to change Homesnap’s commitment to “your listing, your lead” and other principles in the Fair Display Guidelines?
A: We see no reason to doubt CoStar’s commitment to fair practices like prohibiting competing advertising and following the “your listing, your lead” principle. CoStar was fully aware of Homesnap’s contractual obligations to the BPP when it agreed to the acquisition. And CoStar’s CEO Andrew Florance has publicly stated he agrees with the industry-friendly mission of the BPP, which he has cited as one of the reasons that he was interested in acquiring Homesnap. Moreover, the Homesnap ethos is aligned with CoStar’s commercial business, which follows these same principles for its commercial listings.
Q: But what if CoStar did want to unilaterally change Homesnap’s commitment to Fair Display Guidelines? Could they do so under the agreement with BPP?
A: No. The binding agreement between BPP and Homesnap that established Homesnap as the “broker public portal” specifically requires Homesnap to adhere to the Fair Display Guidelines. If Homesnap or CoStar unilaterally violated the Guidelines, they would be in breach of the agreement and subject to termination with significant penalties. If CoStar or Homesnap wanted to change that commitment, they’d have to negotiate those changes with the BPP.
Q: What does the CoStar acquisition mean for all the data retained by Homesnap?
A: CoStar is under the same contractual restrictions that Homesnap was under through its individual agreements with MLS and its joint venture agreements with BPP. This means that all listing data contributed under license by the participating MLS’s cannot be used in any way that is not permitted by the licenses. Brokers, MLS executives, and attorneys made certain at the very outset of the BPP and when establishing its joint venture with Homesnap that the broker owns the listing data. That is a bedrock principle of the BPP to which Homesnap — and now CoStar — is legally bound to adhere. The data provided to the Joint Venture that powers Homesnap is a limited license that allows Homesnap to deliver the service. The data may not be repurposed or sublicensed except with the specific consent of the MLS.
Q: How long does the BPP agreement with Homesnap run for?
A: The agreement has at least another seven years in the term. At the conclusion of that initial term, BPP will have the obligation and responsibility to evaluate the state of the partnership. Upon review, we will have the opportunity to extend, modify, or end our relationship.
Q: Will CoStar start using Homesnap tools or data to compete more with MLSs?
A: While we have no special access or insight into CoStar’s future plans, we did ask CoStar’s leadership for a specific statement about this and received the following: “CoStar Group is combining forces with Homesnap to achieve a deeper connection, collaboration, and partnership with MLSs nationwide. Together, we will continue to build tools that reinforce and support the industry. We are not interested in becoming a national MLS.” Moreover, the contracts between BPP and Homesnap (which will be binding on CoStar) do not allow CoStar to use data from BPP for any purpose other than to service the broker public portal. Also, we would point out that CoStar does not act as a traditional MLS even in the commercial space. While it does build and maintain a database of properties for sale or lease (just like Homesnap, Realtor.com, Zillow, and others), it does not provide the other core services that MLSs offer, such as facilitating cooperating broker commission offers, promoting the industry, or providing industry advocacy.
Q: If I’m an agent, broker, or MLS executive, how do I know I can trust BPP to make sure that Homesnap maintains its commitment to fair practices?
A: The reason you can trust BPP to ensure Homesnap’s commitment to fair practices is that the BPP is actually you! The BPP is owned by people in the industry — big brokers, small brokers, and MLSs — who originally funded the BPP because they believed in the mission of a “broker public portal” committed to Fair Display Guidelines. And those owners have appointed a capable board that is entrusted with that mission, dedicated to the mission, and had the vision to forge agreements with Homesnap to protect that mission even after an acquisition.
Here is the current list of the Board of Managers officers:
• Alon Chaver, most recently the Chief Information Officer at HomeServices of America (Chair)
• Craig McClelland, Vice-President & COO at Better Homes and Gardens Real Estate | Metro Brokers in Georgia. (Secretary)
• Chad Gilbert, President and Owner of Re/Max Suburban in Illinois (Treasurer).
Here is the current list of Managers in alphabetical order by last name:
• Craig Cheatham, President and Chief Executive Officer of the Realty Alliance, based in Colorado.
• Joan Docktor, President of Berkshire Hathaway Home Services Fox & Roach, REALTORS, based out of Pennsylvania.
• Tom Hosack, Chief Executive Officer and President of Berkshire Hathaway HomeServices The Preferred Realty in Pennsylvania, and BHHS Northwood Realty Services in northeast Ohio.
• Rebecca Jensen, President and Chief Executive Officer of Midwest Real Estate Data (MRED).
• Donna Kreps, President of Residential Real Estate for F.C. Tucker Company in Indiana.
• Stan Martin, Chief Operating Officer of the Austin Board of REALTORS (ABoR).
• Bill Miller, Chief Executive officer of MetroList Services, Inc., of Northern California.
• Christina Pappas, Vice-President at the Keyes Family of Companies in Florida.
• Gurtej Sodhi, Chief Information and Operations Officer of the Crye-Leike Group of Companies, with offices throughout the country.
• Pat Shea, President and Chief Executive Officer of Lyon Real Estate in Northern California.
• Dan Riley, Executive Vice-President of Administration, Howard Hanna Company.
You can find out more about the BPP Board of Managers here.
Further, the board of the National Broker Portal (“NBP”), the joint venture between BPP and Homesnap, has seven members, including Alon Chaver, Craig McClelland, Rebecca Jensen, and Dan Riley from the BPP Board, and Gayle Weiswasser, John Mazur, and Steve Barnes from Homesnap.
Part #4: Conclusion
Q: Ultimately, does BPP support CoStar’s acquisition of Homesnap?
A: We should be clear that we have no approval rights over the acquisition, and we have no exclusive insight into CoStar or Homesnap’s future intentions. It’s not up to us to “support” or “not support” the acquisition. But we will say this: our experience with Homesnap has been extremely constructive from the very beginning, and we have found Homesnap to be a mission-driven and trustworthy partner. Our joint venture with Homesnap has been enormously successful, bringing the concept of the “broker public portal” to life across the country in the form of a highly-rated consumer app and highly regarded brokerage and agent tools. As we have said, we have contracts in place that protect the mission of the BPP, now and after the acquisition. But in our experience, we have not needed to rely on those contracts to ensure Homesnap’s compliance with fair practices, because they have always supported the same mission that we do. Indeed, in many cases Homesnap has gone far beyond the “letter of the law” in expanding its commitment to fair practices, such as Homesnap’s protection of buyer-and-client relationships.
In other words, Homesnap has been a good partner to BPP and a good friend to the industry. And while we do not know CoStar, we know Homesnap, and we are hopeful that with CoStar’s backing and resources, Homesnap and the BPP will continue to grow the footprint of the BPP and increase the value delivered to brokers, agents, and MLSs.