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CoStar defends track record after open letter from OnTheMarket critic

CoStar has defended its operations after a third open letter from OnTheMarket critic Brett Stone attempted to derail the US property giant’s takeover the portal.

Stone issued an open letter yesterday that highlighted old articles about the working environment at CoStar and suggested agents would see their fees raised as a result of the proposed takeover.

He urged agents to vote against the deal, claiming agents aren’t getting a fair price for their shares and that “no deal is better than a bad deal.”


Estate Agent Today received the contents of the letter at the same time as other trade titles but decided against publishing it yesterday so that all parties mentioned could receive a right of reply.

A spokesperson for CoStar told Estate Agent Today: “CoStar has a positive and inclusive working environment evidenced by our strong hiring and retention figures and employee engagement scores. In the first half of the year, we made 600 new hires and have a target of 1,300 new positions in 2023.  

“CoStar’s average monthly employee retention rate grew to 99.1% during the first six months of 2023, up from 98.4% last year and average tenure at CoStar Group is currently 4.4 years compared with 3.7 years in the rest of the private sector. 

“This is supported by investment in development of CoStar employee’s personal and professional skillsets, and we offer over 450 internal development courses and more than 8,000 via LinkedIn Learning. We also have strong internal mobility with 526 employees, equating to nearly 10% of the workforce, having been promoted in the first half of the year, contributing to our great culture.

“CoStar has been placed on Forbes’ 100 Most Innovative Growth Companies in the World, Forbes’ Fast Tech 25 and Fortune’s 100 Fastest Growing Companies.”

The statement adds that its founder and chief executive Andy Florance has been recognised as an industry leader and was recently named as Globee Visionary Leader of the Year and Globee CEO of the Year.

OTM also rejected Stone’s claims that the deal undervalues the portal and that it is it is likely to result in significantly higher total portal costs for UK estate agents.

A spokesperson for OTM said the offer price is at a 93.7% premium to  the average market price in the three months prior to deal announcement.

The spokesperson said: “Partnering with CoStar will significantly accelerate our strategy with the clear target of delivering what agents want – the ability to have a real choice on which portal to list with. Furthermore, CoStar has committed to fair and sustainable pricing and intends to continue charging agents a small proportion of Rightmove’s current charges. 

“CoStar will bring industry-leading global expertise and significant financial firepower to invest in OnTheMarket, allowing us to accelerate our transformation of the sector. We have strong shared values in our commitment to agents who we believe will benefit from unparalleled value and greater opportunities to enhance their businesses."

Stone, founder of Trunkstone, a new long-term holding company focused on the property commerce category and the managing partner of private investment partnership Edengen, has previously issued open letters questioning OTM’s management.

His suggestions include capping member listing fees in perpuity, investing in new products and raising staff wages by 10% while retaining chief executive Jason Tebb and Christopher Bell as non-executive chairman.

He said he would join OTM’s management team full-time, in a strategy and business development role, after completion of an investment. 

A spokesperson for Stone was unable to comment when asked what financial backing he had.

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    This situation is not about me Brett Stone and what I want or don’t want. Agent shareholders have a choice to make, do they want CoStar yes or no.

    I would recommend agents take a few minutes to read my letter and read the press about CoStar over the last three years then make up their own minds.

    A featured article on my (Brett Stone) LinkedIn page contains a useful summary of letters, articles and a court case against CoStar to help agents get all the facts and inform their decision-making process. I would give you the link to make your life easier, but EAT does not allow it.

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    The last three paragraphs of Marc’s story are not representative of the facts. In October 2022 I sent a proposal to OnTheMarket for a new entity under my direction to underwrite a capital raise. Here is an accurate summary:

    *OnTheMarket to receive between £74 million and £108 million in cash

    *Subject to mutual due diligence, and board, Panel, shareholder and possibly customer approval

    *An irrevocable and indefinite cap on agents listing fees

    *No agent forced to sell their shares or miss out on future value created

    *A commitment to invest in product development to benefit agents and consumers

    *An offer to buy back shares after the capital raise to provide liquidity to those that want

    *OnTheMarket remaining listed on the London Stock Exchange serving UK customers

    *A 10% pay raise for all employees to help with the cost of inflation

    OnTheMarket’s response was they were doing a great job, didn’t need more capital and “place great value on OnTheMarket’s majority agent owned shareholder structure”.

    After my 31 July 2023 open letter calling them out, rather than run a process to get the best for agents, they entered into a confidentiality agreement with CoStar one month later.

    Then agreed in secret with non-agent recent shareholders to support the deal.

    110p is 33% below IPO issue price (revenue has more than doubled since) and 2.9x last 12 month revenue. Portal transactions often happen at a multiple of around 10x with examples of much higher.

    OnTheMarket needs a proper board that cares about agents, not the CoStar deal.

    Read my letter, read the press about CoStar on my LinkedIn page, then make up your own mind up based on what is best for you, your businesses, and your families.

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    Furthermore, Jason has been paid more than £700,000 in cash, taken options over 2,985,412 shares and lost 1,831 agents. He is now trying to sell out the agents' portal to please a small group of non-agent shareholders.

    The reality is the majority of agents today advertise on all three portals. 10,414 on OnTheMarket, an unknown number at Zoopla, and 16,093 on Rightmove according to the last reported numbers. It is probable that this will continue due to: i) agents fear of missing out on leads; and/or ii) fear of losing instructions to a competitor who offers to advertise a seller’s property on three portals instead of two or one.

    One of the most probable outcomes if shareholders vote for the CoStar transaction in my opinion, is that once CoStar have bought consumer traffic share and increased their power, they will increase fees to agents, especially to small business agents which make up the majority of the market. This doesn’t prevent Rightmove from also continuing to increasing its prices. Resulting in most agents total spend on portals increasing, reducing their profitability and creating systemic risk in the nationally important property commerce category.

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    Do not take my word for it. CoStar’s CEO sums it up best in a letter he wrote in February 2021 to a USA company (CoreLogic), which CoStar were trying to acquire:

    “CoStar Group has a well-established track record of acquiring slow growth companies constrained with single digit organic growth rates and managing them to become fast growth companies, with double digit organic growth rates. In the three years prior to CoStar Group acquiring LoopNet, revenues on average were -2.3% a year. In the past two years, LoopNet has grown almost 20% a year. Already we have grown LoopNet’s revenues more than four-fold. In the three years prior to acquiring Apartments, revenue grew at 7.7% a year on average. In the past three years Apartments has grown almost 30% a year on average. Already we have grown Apartments revenue more than 6.5x. ”

    I think the message is clear, if you want a significant increase in your expenses (CoStar’s revenue) and you are an OnTheMarket shareholder vote for CoStar. In the case of CoreLogic they opted to be acquired by two private equity firms (Stone Point and Insight Partners) rather than CoStar.

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    Finally, I believe it is important to note that I and entities under my direction, own no OnTheMarket, CoStar or Rightmove shares at present, and will not profit if OnTheMarket (or Rightmove or CoStar) share prices rise or fall.

    My interest is the long-term development of the UK property commerce category for the benefit of agents and all its stakeholders, not securities trading or speculation.

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    If this is how you conduct your business Mr Stone, by firing off insults at everyone you don't agree with, I am surprised you have a business at all.


    Thanks for your comment. What do you find insulting and I will change it? Trying to get the facts out there to help agents make an informed decision.

  • Andrew Stanton PROPTECH-PR A Consultancy for Proptech Founders

    I have posted over 11,000 comments since 2017 on EAT, but never in all that time have I seen a person post six times on one article. It does seem sadly desperate and scream me, me, me a little, and for that reason alone given the choice of Jason Tebb or 'Me Me' Brett Stone as a person who is looking after my interests I know who I would back.

  • icon

    Its quite funny seeing Andrew “me, me, ME” Stanton complain about reading some else “scream me, me, me”.

  • icon

    actually....no one really cares.....


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