CoStar CEO on Matterport deal: Virtual tours, real advantage
Andy Florance discusses the “transformative technology” and his plans to rapidly expand the company while rolling out generative AI features later this year.
Key points:
- Florance spoke to Real Estate News about why CoStar acquired “digital twin” platform Matterport, and his plans for it.
- “Genesis,” a generative AI feature that allows consumers to virtually redesign a space, will be introduced by the third quarter.
- Matterport “has seen everything” in terms of property types, but Florance still plans to hire thousands of photographers to scan even more properties each month.
CoStar CEO Andy Florance says photos alone are no longer good enough for real estate listings. He envisions a future where buyers or renters will put on a 3D headset and take a virtual walk through a "digital twin" of a house or apartment — something made possible by Matterport, an early innovator and market leader in 3D virtual home touring.
CoStar's acquisition of Matterport, announced in April, will make the real estate giant a leader in 3D virtual touring and give CoStar ownership of Matterport's massive data library.
Shortly after the announcement, Florance took the stage at the T3 Leadership Summit in Scottsdale, Arizona, where he discussed his plans for Matterport and Homes.com, and talked about the benefits of the technology for both agents and consumers.
Florance sat down with Real Estate News after his session to discuss the acquisition and what it means for CoStar and the industry. This interview has been edited for length and clarity.
What value do you see in Matterport?
We started using it in Apartments.com, and people have leased literally millions of apartments where the renters just looked at an apartment in a 3D virtual simulation. Then we moved into the commercial world and it was effective there. As we move into the residential world, and we're looking for differentiation, we're looking for transformative technology that gives you scale advantage, and Matterport is definitely it.
Once the acquisition is finalized, will Matterport tours be available only on CoStar sites?
No. We have an interest in getting the biggest training model possible — the bigger your model is, the more intelligent it is, so we want to open it up to the whole world. Zillow has their own digital twin technology, Redfin uses Matterport, and Realtor.com probably has 30 different technologies. But in a world where we drive more digital twins, we will get a solid share of that.
What I really care about is giving our member agents an advantage in listing their home, and I care about consumers preferring our site over other sites. If we're spending north of $500 million a year on marketing, compare that to spending $40-$50 million annually on driving up the number of 3D digital twins. That's better than marketing, because it improves the consumer experience and the homeseller experience.
You talked about how 'digital twins' of spaces increase engagement time on listings, leading to more leasings or home sales. Could you share more?
It's the new open house. There was a time where you would market a house without a picture. Now that's considered absurd. There's a huge lead-flow advantage for listings using digital twin technology, compared with those that don't. In larger apartment buildings, it's a 50% lead-flow advantage.
In all cases, it's an engagement time doubler, and I think it's going to go up dramatically. Nothing is more impactful to help sell the house than allowing the potential buyer to tour it 24/7, whenever they want.
What role will generative AI play in Matterport's future?
AI is going to have a big impact on real estate. When I go into a house, say I want to see it with more modern furniture; generative AI will be able to do that.
Matterport is developing a tool called "Genesis," and that comes out in the third quarter. It allows you to remove furniture, it allows you to add furniture. You'll be shaping the designs in generative AI. So, you can go into a house and say, I'd like to remodel the kitchen. What would it look like? What if I remove this wall? What would it look like?
How will Matterport be able to do this?
Matterport has 12 million models and it has seen everything — every configuration of office space, every retail store, every industrial building, every home type.
Similar to OpenAI, which is consuming extreme quantities of information, real estate or spatial data needs the same thing. Whether you have 100 million models or you have 200 million models, that large data set will allow you to do amazing things.
How could Matterport help builders and new construction buyers?
A cool thing we're doing is Matterporting multiple times during the construction of a new home. So then clients can see the finished home the way it is, or they can slide it back in time and see the electrical and plumbing and see behind the walls.
You will also be able to wear a headset and simulate walking through the house. It will be like being there. It's not entirely there, but it will get there.
You mentioned hiring thousands of photographers to perform potentially hundreds of thousands of scans per month. What's the ROI on that venture?
We will cover the cost through the [Homes.com] membership fees. Member listings soar to the top, so say the consumer comes to Homes.com and they're looking at some neighborhood in Washington, D.C., and the first five pages all have floor plans and Matterports — the experience for the consumer is really good. I'm confident that as we start to make this the norm, other folks will adopt it more.
Matterport has the best technology by far, but it hasn't gotten into the hands of real estate photographers because of the cost. A Matterport camera costs $6,000. We can equip a photographer with a piece of equipment and then they're going to do thousands of Matterports, so the cost of the camera goes to nothing.