1 FILED PURSUANT TO RULE 424(b)(3) REGISTRATION STATEMENT NO. 333-39490 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED AUGUST 10, 2000) COSTAR GROUP, INC. Common Stock This supplement amends and supplements certain information contained in the prospectus, dated August 10, 2000, relating to the potential sale from time to time of up to 1,123,855 shares of our common stock. This supplement is not complete without, and may not be delivered or utilized except in connection with, the prospectus, including any amendment or supplements to the prospectus. The matters addressed in this supplement supersede any contrary statements contained in the prospectus. The following selling stockholders sold shares of our common stock in an underwritten offering in the amounts and at the price set forth in the tables below. In connection with this underwritten offering, CoStar Group, Inc. and the selling stockholders have agreed to indemnify Donaldson, Lufkin & Jenrette Securities Corporation against certain liabilities that may arise in connection with the offering and sale of the shares under the Securities Act of 1933. SHARES REMAINING BENEFICIALLY SHARES SOLD IN REGISTERED OWNED AFTER PERCENTAGE SELLING STOCKHOLDER THIS OFFERING SHARES THIS OFFERING(1) OF CLASS ------------------- -------------- ---------- ---------------- ---------- Andrew C. Florance 19,279 721 533,733 3.4% Blue Chip Capital Fund Ltd. Partnership 304,843 11,395 11,395 * Henry D. Jamison IV 212,954 32,961 46,751 * Heitzman Business Trust 168,215 6,288 6,288 * Leslie L. Jamison 143,938 5,381 5,381 * Benkert Business Trust 64,082 2,395 2,395 * Church of the Apostles of Atlanta 43,189 1,614 1,614 * ------- Total 956,500 - --------------- (1) Includes shares issuable under options exercisable within 60 days of August 1, 2000. * Less than 1% - -------------------------------------------------------------------------------- PER SHARE TOTAL - ------------------------------------------------------------------------------------- Public offering price $28.00 $26,782,000 Underwriting discount 1.25 1,195,625 Proceeds to selling stockholders 26.75 25,586,375 - -------------------------------------------------------------------------------- The selling stockholders have granted the underwriters the right to purchase up to an additional 35,755 shares of common stock to cover any over-allotments. The underwriters can exercise this right at any time on or before August 15, 2000. - -------------------------------------------------------------------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. - -------------------------------------------------------------------------------- The shares will be ready for delivery on or about August 15, 2000. DONALDSON, LUFKIN & JENRETTE The date of this prospectus supplement is August 10, 2000.