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5 Reasons CoStar Group, Inc. Trumps Trulia as Best Partner for Realtor.com


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I recently wrote a Motley Fool article Why Investors Who Like Zillow Should Love CoStar Group, for investors interested in the fast growing real estate technology space. It was syndicated a few days before rumors and reports began circulating regarding Trulia, acquiring Move, , operator of Realtor.com.

My article concluded with an observation that CoStar Group  -- rather than Trulia -- would be a great marriage. Here is a quick chart that shows at a glance why Move, looks like a bargain for the other major players in this space:

recently pointed out that Trulia did not have much dry powder left after a debt offering used at least partially to fund the recent acquisition of Market Leader. On June 9, 2014 CoStar completed a common share offering raising $529 million which can be used for future acquisitions.

Coincidently, MOVE has a current market cap of $587 million.
CoStar has 2,040 employees, approximately double the number of Zillow, Trulia, or MOVE. CoStar seems to have all the bases covered to comfortably make an acquisition of this size.

5. No bad blood
Realtor.com was the first mover in this space. High flying newcomers Zillow and Trulia seem to have garnered much more attention of late. There has also been a lot of finger pointing by the National Association of Realtors, or NAR, and MOVE regarding the accuracy of information, particularly listings, on the other two sites.

Realtor.com gets accurate and timely information updated within minutes after it is received from more than 800 local Realtor multiple listing services, or MLS. Recently, several high profile executives have migrated from MOVE to both Trulia, and more notably Zillow. Lawsuits were filed. Clearly there has been some bad blood.

Investor Takeaway
Any purchase of Move would have to be contingent upon receiving all of the required approvals from the NAR board and the Realtors it represents. NAR also owns a block of MOVE shares of stock.

It certainly would appear that CoStar has the credentials, the cash, the infrastructure, and perhaps the respect of both NAR officers and rank and file members. Even more important is the fact that CoStar is not tarred by the same brush as Zillow and Trulia in the eyes of many real estate agents.

It would be a fresh start, and perhaps an ideal way for Realtor.com to leap ahead of the competition. I also think it would be an excellent opportunity to increase long-term shareholder value for CoStar Group investors. This combination could also represent a credible threat to both Trulia and Zillow moving forward.

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The article 5 Reasons CoStar Group, Inc. Trumps Trulia as Best Partner for Realtor.com originally appeared on Fool.com.

Bill Stoller has no position in any stocks mentioned. The Motley Fool recommends CoStar Group and Zillow. The Motley Fool owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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