Document:

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                                                                    Exhibit 10.1

                               COSTAR GROUP, INC.
                            1998 STOCK INCENTIVE PLAN
                          (AS AMENDED ON JUNE 21, 2000)

PURPOSE             CoStar Group, Inc., a Delaware corporation "CoStar" or the
                    "Company"), wishes to recruit, reward, and retain employees
                    and outside directors. To further these objectives, the
                    Company hereby sets forth the CoStar Group, Inc. 1998 Stock
                    Incentive Plan (the "Plan") to provide options ("Options")
                    or direct grants ("Stock Grants" and, together with the
                    Options, "Awards") to employees and outside directors with
                    respect to shares of the Company's common stock (the "Common
                    Stock"). The Plan is effective as of the effective date (the
                    "Effective Date") of the Company's registration under
                    Section 12 of the Securities Exchange Act of 1934 (the
                    "Exchange Act") with respect to its initial public offering
                    ("IPO").

PARTICIPANTS        All Employees of CoStar and any Eligible Subsidiaries are
                    eligible for Options and Stock Grants under this Plan, as
                    are the directors of CoStar and the Eligible Subsidiaries
                    who are not employees ("Eligible Directors"). Eligible
                    employees and directors become "optionees" when the
                    Administrator grants them an option under this Plan or
                    "recipients" when they receive a direct grant of Common
                    Stock. (Optionees and recipients are referred to
                    collectively as "participants." The term participant also
                    includes, where appropriate, a person authorized to exercise
                    an Award in place of the original optionee.) The
                    Administrator may also grant Options or make Stock Grants to
                    certain other service providers.

                    Employee means any person employed as a common law employee
                    of the Company or an Eligible Subsidiary.

ADMINISTRATOR       The Administrator will be the Compensation Committee of the
                    Board of Directors of CoStar (the "Compensation Committee"),
                    unless the Board specifies another committee. The Board may
                    also act under the Plan as though it were the Compensation
                    Committee.

                    The Administrator is responsible for the general operation
                    and administration of the Plan and for carrying out its
                    provisions and has full discretion in interpreting and
                    administering the provisions of the Plan. Subject to the
                    express provisions of the Plan, the Administrator may
                    exercise such powers and authority of the Board as the
                    Administrator may find necessary or appropriate to carry out
                    its functions. The Administrator may delegate its

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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                    functions (other than those described in the GRANTING OF
                    AWARDS section) to officers or employees of CoStar.

                    The Administrator's powers will include, but not be limited
                    to, the power to amend, waive, or extend any provision or
                    limitation of any Award. The Administrator may act through
                    meetings of a majority of its members or by unanimous
                    consent.

GRANTING OF AWARDS  Subject to the terms of the Plan, the Administrator will,
                    in its sole discretion, determine

                         the participants who receive Awards,

                         the terms of such Awards,

                         the schedule for exercisability or nonforfeitability
                         (including any requirements that the participant or the
                         Company satisfy performance criteria),

                         the time and conditions for expiration of the Award,
                         and

                         the form of payment due upon exercise, if any.

                    The Administrator's determinations under the Plan need not
                    be uniform and need not consider whether possible
                    participants are similarly situated.

                    Options granted to employees may be nonqualified stock
                    options ("NQSOs") or "incentive stock options" ("ISOs")
                    within the meaning of Section 422 of the Internal Revenue
                    Code of 1986, as amended from time to time (the "Code"), or
                    the corresponding provision of any subsequently enacted tax
                    statute. Options granted to Eligible Directors must be
                    NQSOs. The Administrator will not grant ISOs unless the
                    stockholders have approved the Plan.

                    The Administrator may impose such conditions on or charge
                    such price for the Stock Grants as it deems appropriate.

SUBSTITUTIONS       The Administrator may also grant Awards in substitution for
                    options or other equity interests held by individuals (i) as
                    a result of their employment by or services to CoStar Group,
                    L.P. or (ii) who become Employees of the Company or of an
                    Eligible Subsidiary as a result of the Company's acquiring
                    or merging with the individual's employer or acquiring its
                    assets. If necessary to conform the Awards to the interests
                    for which they are substitutes, the Administrator may grant
                    substitute Awards under terms and conditions that vary from
                    those the Plan otherwise requires.

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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DIRECTOR            Each Eligible Director of the Company shall be entitled to
FORMULA             receive at the first meeting of the Board of Directors
OPTIONS             immediately following each of the Company's Annual Meeting
                    of Stockholders an Option to purchase 1,000 shares of the
                    Company's Common Stock at an exercise price equal to the
                    Fair Market Value (as defined below) on such date of grant.
                    Such Options shall vest in full on the first anniversary of
                    the date of grant, provided that such Director is still a
                    Director of the Company.

DATE OF GRANT       The Date of Grant will be the date as of which this Plan or
                    the Administrator grants an Award to a participant, as
                    specified in the Plan or in the Administrator's minutes.

EXERCISE PRICE      The Exercise Price is the value of the consideration that
                    a participant must provide in exchange for one share of
                    Common Stock.  The Administrator will determine the
                    Exercise Price under each Award and may set the Exercise
                    Price without regard to the Exercise Price of any other
                    Awards granted at the same or any other time.  The Company
                    may use the consideration it receives from the participant
                    for general corporate purposes.

                    The Exercise Price per share for NQSOs may not be less
                    than 100% of the Fair Market Value of a share on the Date
                    of Grant. If an Option is intended to be an ISO, the
                    Exercise Price per share may not be less than 100% of the
                    Fair Market Value (on the Date of Grant) of a share of
                    Common Stock covered by the Option; provided, however,
                    that if the Administrator decides to grant an ISO to
                    someone covered by Sections 422(b)(6) and 424(d) (as a
                    more-than-10%-stock-owner), the Exercise Price of the
                    Option must be at least 110% of the Fair Market Value (on
                    the Date of Grant).

                    The Administrator may satisfy any state law requirements
                    regarding adequate consideration for Stock Grants by (i)
                    issuing Common Stock held as treasury stock or (ii)
                    charging the recipients at least the par value for the
                    shares covered by the Stock Grant. The Administrator may
                    designate that a recipient may satisfy (ii) either by
                    direct payments or by the Administrator's withholding from
                    other payments due to the recipient.

    FAIR MARKET     Fair Market Value of a share of Common Stock for purposes
    VALUE           of the Plan will be determined as follows:

                         if the Common Stock is traded on a national securities
                         exchange, the closing sale price on that date;

                         if the Common Stock is not traded on any such
                         exchange, the closing sale price as reported by the
                         National Association of Securities Dealers, Inc.
                         Automated Quotation System ("Nasdaq") for such date;

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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                         if no such closing sale price information is
                         available, the average of the closing bid and asked
                         prices as reported by Nasdaq for such date; or

                         if there are no such closing bid and asked prices, the
                         average of the closing bid and asked prices as
                         reported by any other commercial service for such
                         date.

                     For any date that is not a trading day, the Fair Market
                     Value of a share of Common Stock for such date shall be
                     determined by using the closing sale price or the average
                     of the closing bid and asked prices, as appropriate, for
                     the immediately preceding trading day.

                     The Fair Market Value will be deemed equal to the IPO
                     price for any Options granted as of the date on which the
                     IPO's underwriters price the IPO.

EXERCISABILITY       The Administrator will determine the times and conditions
                     for exercise of or purchase under each Award but may not
                     extend the period for exercise beyond the tenth
                     anniversary of its Date of Grant (or five years for ISOs
                     granted to 10% owners covered by Code Sections 422(b)(6)
                     and 424(d)).

                     Awards will become exercisable at such times and in such
                     manner as the Administrator determines and the Award
                     Agreement, if any, indicates; provided, however, that the
                     Administrator may, on such terms and conditions as it
                     determines appropriate, accelerate the time at which the
                     participant may exercise any portion of an Award or at
                     which restrictions on Stock Grants lapse. For Stock
                     Grants, "exercise" refers to acceptance of the Award or
                     lapse of restrictions, as appropriate in context.

                     If the Administrator does not specify otherwise, Options
                     will become exercisable and restrictions on Stock Grants
                     (other than the Director Formula Grants) will lapse as to
                     one-third of the covered shares on each of the first,
                     second, and third anniversaries of the Date of Grant.

                     No portion of an Award that is unexercisable at a
                     participant's termination of employment will thereafter
                     become exercisable, unless the Award Agreement provides
                     otherwise, either initially or by amendment.

   CHANGE OF         Upon a Change of Control (as defined below), all Options
   CONTROL           held by current Employees and directors will become fully
                     exercisable and all restrictions on Stock Grants will
                     lapse. A Change of Control for this purpose means the
                     occurrence, after the Company's IPO, of any one or more of
                     the following events:

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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                        a person, entity, or group (other than the Company, any
                        Company subsidiary, any Company benefit plan, or any
                        underwriter temporarily holding securities for an
                        offering of such securities) acquires ownership of more
                        than 80% of the undiluted total voting power of the
                        Company's then-outstanding securities eligible to vote
                        to elect members of the Board ("Company Voting
                        Securities");

                        consummation of a merger or consolidation of the
                        Company into any other entity -- unless the holders of
                        the Company Voting Securities outstanding immediately
                        before such consummation, together with any trustee or
                        other fiduciary holding securities under a Company
                        benefit plan, hold securities that represent
                        immediately after such merger or consolidation at least
                        20% of the combined voting power of the then
                        outstanding voting securities of either the Company or
                        the other surviving entity or its parent; or

                        the stockholders of the Company approve (i) a plan of
                        complete liquidation or dissolution of the Company or
                        (ii) an agreement for the Company's sale or disposition
                        of all or substantially all the Company's assets, and
                        such liquidation, dissolution, sale, or disposition is
                        consummated.

                        Even if other tests are met, a Change of Control has
                        not occurred under any circumstance in which the
                        Company files for bankruptcy protection or is
                        reorganized following a bankruptcy filing.

                    The ADJUSTMENT UPON CHANGES IN CAPITAL STOCK provisions
                    will also apply if the Change of Control is a SUBSTANTIAL
                    CORPORATE CHANGE (as defined in those provisions).

LIMITATION ON       An Option granted to an employee will be an ISO only to the
ISOS                extent that the aggregate Fair Market Value (determined at
                    the Date of Grant) of the stock with respect to which ISOs
                    are exercisable for the first time by the optionee during
                    any calendar year (under the Plan and all other plans of
                    the Company and its subsidiary corporations, within the
                    meaning of Code Section 422(d)), does not exceed $100,000.
                    This limitation will be applied by taking Options into
                    account in the order in which such Options were granted.
                    If, by design or operation, the Option exceeds this limit,
                    the excess will be treated as an NQSO.

METHOD OF           To exercise any exercisable portion of an Award, the
EXERCISE            participant must:

                        Deliver a written notice of exercise to the Secretary
                        of the Company (or to whomever the Administrator
                        designates), in a form complying with any rules the
                        Administrator may issue, signed by the participant, and

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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                        specifying the number of shares of Common Stock
                        underlying the portion of the Award the participant is
                        exercising;

                        Pay the full Exercise Price, if any, by cashier's or
                        certified check for the shares of Common Stock with
                        respect to which the Award is being exercised, unless
                        the Administrator consents to another form of payment
                        (which could include the use of Common Stock); and

                        Deliver to the Administrator such representations and
                        documents as the Administrator, in its sole discretion,
                        may consider necessary or advisable.

                    Payment in full of the Exercise Price need not accompany
                    the written notice of exercise provided the notice directs
                    that the stock certificates for the shares issued upon the
                    exercise be delivered to a licensed broker acceptable to
                    the Company as the agent for the individual exercising the
                    option and at the time of closing of the sale of the Common
                    Stock issued upon exercise of the Option, the broker will
                    tender to the Company cash or cash equivalents acceptable
                    to the Company and equal to the Exercise Price.

                    If the Administrator agrees to payment through the tender
                    to the Company of shares of Common Stock, the individual
                    must have held the stock being tendered for at least six
                    months at the time of surrender. Shares of stock offered as
                    payment will be valued, for purposes of determining the
                    extent to which the participant has paid the Exercise
                    Price, at their Fair Market Value on the date of exercise.
                    The Administrator may also, in its discretion, accept
                    attestation of ownership of Common Stock and issue a net
                    number of shares upon Option exercise.

AWARD               No one may exercise an Award more than ten years after its
EXPIRATION          Date of Grant (or five years, for an ISO granted to a
                    more-than-10% shareholder). Unless the Award Agreement
                    provides otherwise, either initially or by amendment, no
                    one may exercise an Award after the first to occur of:

   EMPLOYMENT           The 90th day after the date of termination of
   TERMINATION          employment (other than for death or Disability), where
                        termination of employment means the time when the
                        employer-employee or other service-providing
                        relationship between the employee and the Company ends
                        for any reason, including retirement.  Unless the Award
                        Agreement provides otherwise, termination of employment
                        does not include instances in which the Company
                        immediately rehires a common law employee as an
                        independent contractor.  The Administrator, in its sole
                        discretion, will determine all questions of whether
                        particular terminations or leaves of absence are
                        terminations of employment;

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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   DISABILITY          For disability, the earlier of (i) the first anniversary
                       of the participant's termination of employment for
                       disability and (ii) thirty (30) days after the
                       participant no longer has a disability, where
                       "disability" means the inability to engage in any
                       substantial gainful activity by reason of any medically
                       determinable physical or mental impairment that can be
                       expected to result in death or that has lasted or can be
                       expected to last for a continuous period of not less
                       than twelve months; or

   DEATH               The date twelve months after the participant's death.

                    If exercise is permitted after termination of employment,
                    the Award will nevertheless expire as of the date that the
                    former service provider violates any covenant not to
                    compete in effect between the Company and the former
                    employee. In addition, an optionee who exercises an Option
                    more than 90 days after termination of employment with the
                    Company and/or the Eligible Subsidiaries will only receive
                    ISO treatment to the extent permitted by law, and becoming
                    or remaining an employee of another related company (that
                    is not an Eligible Subsidiary) or an independent contractor
                    to the Company will not prevent loss of ISO status as a
                    result of the formal termination of employment.

                    Nothing in this Plan extends the term of an Award beyond
                    the tenth anniversary of its Date of Grant, nor does
                    anything in this AWARD EXPIRATION section make an Award
                    exercisable that has not otherwise become exercisable.

AWARD               Option Agreements will set forth the terms of each Option
AGREEMENT           and will include such terms and conditions, consistent with
                    the Plan, as the Administrator may determine are necessary
                    or advisable. To the extent the agreement is inconsistent
                    with the Plan, the Plan will govern. The Option Agreements
                    may contain special rules. The Administrator may, but is
                    not required to, issue agreements for Stock Grants.

STOCK SUBJECT       Except as adjusted below under CORPORATE CHANGES, the
TO PLAN             aggregate number of shares of Common Stock that may be
                    issued under the Awards (whether ISOs, NQSOs, or Stock
                    Grants) may not exceed 3,000,000 shares and the maximum
                    number of shares that may be granted under Awards for a
                    single individual in a calendar year may not exceed 400,000
                    shares.  (The individual maximum applies only to Awards
                    first made under this Plan and not to Awards made in
                    substitution of a prior employer's options or other
                    incentives, except as Code Section 162(m) otherwise
                    requires.) The Common Stock will come from either
                    authorized but unissued shares or from previously issued
                    shares that the Company reacquires, including shares it
                    purchases on the open market.  If any Award expires, is
                    canceled, or terminates for any other reason, the shares of
                    Common Stock available under that Award will

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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                    again be available for the granting of new Awards (but will
                    be counted against that calendar year's limit for a given
                    individual).

                    No adjustment will be made for a dividend or other right
                    for which the record date precedes the date of exercise.

                    The participant will have no rights of a stockholder with
                    respect to the shares of stock subject to an Award except
                    to the extent that the Company has issued certificates for,
                    or otherwise confirmed ownership of, such shares upon the
                    exercise of the Award.

                    The Company will not issue fractional shares pursuant to
                    the exercise of an Award, but the Administrator may, in its
                    discretion, direct the Company to make a cash payment in
                    lieu of fractional shares.

PERSON WHO          During the participant's lifetime, only the participant or
MAY EXERCISE        his duly appointed guardian or personal representative may
                    exercise the Awards.  After his death, his personal
                    representative or any other person authorized under a will
                    or under the laws of descent and distribution may exercise
                    any then exercisable portion of an Award.  If someone other
                    than the original recipient seeks to exercise any portion
                    of an Award, the Administrator may request such proof as it
                    may consider necessary or appropriate of the person's right
                    to exercise the Award.

ADJUSTMENTS         Subject to any required action by the Company (which it
UPON CHANGES        shall promptly take) or its stockholders, and subject to
IN CAPITAL STOCK    the provisions of applicable corporate law, if, after the
                    Date of Grant of an Award,

                       the outstanding shares of Common Stock increase or
                       decrease or change into or are exchanged for a different
                       number or kind of security by reason of any
                       recapitalization, reclassification, stock split, reverse
                       stock split, combination of shares, exchange of shares,
                       stock dividend, or other distribution payable in capital
                       stock, or

                       some other increase or decrease in such Common Stock
                       occurs without the Company's receiving consideration,

                    the Administrator may make a proportionate and appropriate
                    adjustment in the number of shares of Common Stock
                    underlying each Award, so that the proportionate interest
                    of the participant immediately following such event will,
                    to the extent practicable, be the same as immediately
                    before such event. (This adjustment does not apply to
                    Common Stock that the optionee has already purchased nor to
                    Stock Grants that are already nonforfeitable, except to the
                    extent of similar treatment for all stockholders.) Unless
                    the Administrator determines another method would be
                    appropriate, any such

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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                    adjustment to an Award will not change the total price with
                    respect to shares of Common Stock underlying the
                    unexercised portion of the Award but will include a
                    corresponding proportionate adjustment in the Award's
                    Exercise Price.

                    The Administrator will make a commensurate change to the
                    maximum number and kind of shares provided in the STOCK
                    SUBJECT TO PLAN section.

                    Any issue by the Company of any class of preferred stock,
                    or securities convertible into shares of common or
                    preferred stock of any class, will not affect, and no
                    adjustment by reason thereof will be made with respect to,
                    the number of shares of Common Stock subject to any Award
                    or the Exercise Price except as this ADJUSTMENTS section
                    specifically provides. The grant of an Award under the Plan
                    will not affect in any way the right or power of the
                    Company to make adjustments, reclassifications,
                    reorganizations or changes of its capital or business
                    structure, or to merge or to consolidate, or to dissolve,
                    liquidate, sell, or transfer all or any part of its
                    business or assets.

   SUBSTANTIAL      Upon a Substantial Corporate Change, the Plan and any
   CORPORATE        unexercised Awards will terminate unless provision is made
   CHANGE           in writing in connection with such transaction for

                         the assumption or continuation of outstanding Awards,
                         or

                         the substitution for such options or grants of any
                         options or grants covering the stock or securities of
                         a successor employer corporation, or a parent or
                         subsidiary of such successor, with appropriate
                         adjustments as to the number and kind of shares of
                         stock and prices, in which event the Awards will
                         continue in the manner and under the terms so
                         provided.

                    Unless the Board determines otherwise, if an Award would
                    otherwise terminate pursuant to the preceding sentence,
                    participants who are then Employees or directors of the
                    Company will have the right, at such time before the
                    consummation of the transaction causing such termination as
                    the Board reasonably designates, to exercise any
                    unexercised portions of the Award, whether or not they had
                    previously become exercisable. However, unless the Board
                    determines otherwise, the acceleration will not occur if it
                    would render unavailable "pooling of interest" accounting
                    for any reorganization, merger, or consolidation of the
                    Company.

                    A Substantial Corporate Change means the

                         dissolution or liquidation of the Company,

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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                         merger, consolidation, or reorganization of the
                         Company with one or more corporations in which the
                         Company is not the surviving corporation,

                         the sale of substantially all of the assets of the
                         Company to another corporation, or

                         any transaction (including a merger or reorganization
                         in which the Company survives) approved by the Board
                         that results in any person or entity (other than any
                         affiliate of the Company as defined in Rule 144(a)(1)
                         under the Securities Act) owning 100% of the combined
                         voting power of all classes of stock of the Company.

SUBSIDIARY          Employees of Company Subsidiaries will be entitled to
EMPLOYEES           participate in the Plan, except as otherwise designated by
                    the Board of Directors or the Committee.

                    Eligible Subsidiary means each of the Company's
                    Subsidiaries, except as the Board otherwise specifies. For
                    ISO grants, Subsidiary means any corporation (other than
                    the Company) in an unbroken chain of corporations beginning
                    with the Company if, at the time an ISO is granted to a
                    Participant under the Plan, each of the corporations (other
                    than the last corporation in the unbroken chain) owns stock
                    possessing 50% or more of the total combined voting power
                    of all classes of stock in one of the other corporations in
                    such chain. For NQSOs, the Board or the Committee can use a
                    different definition of Subsidiary in its discretion.

LEGAL               The Company will not issue any shares of Common Stock under
COMPLIANCE          an Award until all applicable requirements imposed by
                    Federal and state securities and other laws, rules, and
                    regulations, and by any applicable regulatory agencies or
                    stock exchanges, have been fully met. To that end, the
                    Company may require the participant to take any reasonable
                    action to comply with such requirements before issuing such
                    shares. No provision in the Plan or action taken under it
                    authorizes any action that is otherwise prohibited by
                    Federal or state laws.

                    The Plan is intended to conform to the extent necessary
                    with all provisions of the Securities Act of 1933
                    ("Securities Act") and the Exchange Act and all regulations
                    and rules the Securities and Exchange Commission issues
                    under those laws. Notwithstanding anything in the Plan to
                    the contrary, the Administrator must administer the Plan,
                    and Awards may be granted and exercised, only in a way that
                    conforms to such laws, rules, and regulations. To the
                    extent permitted by applicable law, the Plan and any Awards
                    will be deemed amended to the extent necessary to conform
                    to such laws, rules, and regulations.

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                                                       1998 Stock Incentive Plan

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PURCHASE FOR        Unless a registration statement under the Securities Act
INVESTMENT          covers the shares of Common Stock a participant receives
AND OTHER           upon exercise of his Award, the Administrator may require,
RESTRICTIONS        at the time of such exercise or receipt of a grant, that
                    the participant agree in writing to acquire such shares for
                    investment and not for public resale or distribution,
                    unless and until the shares subject to the Award are
                    registered under the Securities Act. Unless the shares are
                    registered under the Securities Act, the participant must
                    acknowledge:

                         that the shares purchased on exercise of the Award are
                         not so registered,

                         that the participant may not sell or otherwise
                         transfer the shares unless

                               the shares have been registered under the
                               Securities Act in connection with the sale or
                               transfer thereof, or

                               counsel satisfactory to the Company has issued
                               an opinion satisfactory to the Company that the
                               sale or other transfer of such shares is exempt
                               from registration under the Securities Act, and

                               such sale or transfer complies with all other
                               applicable laws, rules, and regulations,
                               including all applicable Federal and state
                               securities laws, rules, and regulations.

                     Additionally, the Common Stock, when issued upon the
                     exercise of an Award, will be subject to any other
                     transfer restrictions, rights of first refusal, and rights
                     of repurchase set forth in or incorporated by reference
                     into other applicable documents, including the Company's
                     articles or certificate of incorporation, by-laws, or
                     generally applicable stockholders' agreements.

                     The Administrator may, in its sole discretion, take
                     whatever additional actions it deems appropriate to comply
                     with such restrictions and applicable laws, including
                     placing legends on certificates and issuing stop-transfer
                     orders to transfer agents and registrars.

TAX WITHHOLDING      The participant must satisfy all applicable Federal,
                     state, and local income and employment tax withholding
                     requirements before the Company will deliver stock
                     certificates upon the exercise of an Award.  The Company
                     may decide to satisfy the withholding obligations through
                     additional withholding on salary or wages.  If the Company
                     does not or cannot withhold from other compensation, the
                     participant must pay the Company, with a cashier's check
                     or certified check, the full amounts required by
                     withholding.  Payment of withholding obligations is due
                     before the Company issues shares with respect to the

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan

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                     Award. If the Committee so determines, the participant may
                     instead satisfy the withholding obligations by directing
                     the Company to retain shares from the Award exercise, by
                     tendering previously owned shares, or by attesting to his
                     ownership of shares (with the distribution of net shares).

TRANSFERS,           Unless the Administrator otherwise approves in advance in
ASSIGNMENTS,         writing, an Award may not be assigned, pledged, or
AND PLEDGES          otherwise transferred in any way, whether by operation of
                     law or otherwise or through any legal or equitable
                     proceedings (including bankruptcy), by the participant to
                     any person, except by will or by operation of applicable
                     laws of descent and distribution.  If Rule 16b-3 then
                     applies to an Award, the participant may not transfer or
                     pledge shares of Common Stock acquired under a Stock Grant
                     or upon exercise of an Option until at least six (6)
                     months have elapsed from (but excluding) the Date of
                     Grant, unless the Administrator approves otherwise in
                     advance in writing.

AMENDMENT OR         The Board may amend, suspend, or terminate the Plan at any
TERMINATION          time, without the consent of the participants or their
OF PLAN AND          beneficiaries; provided, however, that no amendment will
OPTIONS              deprive any participant or beneficiary of any previously
                     declared Award.  Except as required by law or by the
                     CORPORATE CHANGES section, the Administrator may not,
                     without the participant's or beneficiary's consent, modify
                     the terms and conditions of an Award so as to adversely
                     affect the participant.  No amendment, suspension, or
                     termination of the Plan will, without the participant's or
                     beneficiary's consent, terminate or adversely affect any
                     right or obligations under any outstanding Awards.

PRIVILEGES OF        No participant and no beneficiary or other person claiming
STOCK OWNERSHIP      under or through such participant will have any right,
                     title, or interest in or to any shares of Common Stock
                     allocated or reserved under the Plan or subject to any
                     Award except as to such shares of Common Stock, if any,
                     that have been issued to such participant.

EFFECT ON            Whether exercising or receiving an Award causes the
OTHER PLANS          participant to accrue or receive additional benefits under
                     any pension or other plan is governed solely by the terms
                     of such other plan.

LIMITATIONS ON       Notwithstanding any other provisions of the Plan, no
LIABILITY            individual acting as a director, employee, or agent of the
                     Company shall be liable to any participant, former
                     participant, spouse, beneficiary, or any other person for
                     any claim, loss, liability, or expense incurred in
                     connection with the Plan, nor shall such individual be
                     personally liable because of any contract or other
                     instrument he executes in such other capacity.  The
                     Company will indemnify and hold harmless each director,
                     employee, or agent of the Company to whom any duty or
                     power relating to the administration or interpretation of
                     the Plan

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                                                       1998 Stock Incentive Plan

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                     has been or will be delegated, against any cost or expense
                     (including attorneys' fees) or liability (including any
                     sum paid in settlement of a claim with the Board's
                     approval) arising out of any act or omission to act
                     concerning this Plan unless arising out of such person's
                     own fraud or bad faith.

NO EMPLOYMENT        Nothing contained in this Plan constitutes an employment
CONTRACT             contract between the Company and the participants. The
                     Plan does not give any participant any right to be
                     retained in the Company's employ, nor does it enlarge or
                     diminish the Company's right to terminate the
                     participant's employment.

APPLICABLE LAW       The laws of the State of Delaware (other than its
                     choice of law provisions) govern this Plan and its
                     interpretation.

DURATION OF PLAN     Unless the Board extends the Plan's term, the
                     Administrator may not grant Awards after May 8, 2008. The
                     Plan will then terminate but will continue to govern
                     unexercised and unexpired Awards.

                                                              CoStar Group, Inc.
                                                       1998 Stock Incentive Plan<PAGE>   1
                                                                    Exhibit 10.2

                              EMPLOYMENT AGREEMENT

      This AGREEMENT (the "Agreement") dated this 1st day of May, 2000 (the
"Effective Date") is by and between CoStar Realty Information, Inc., a Delaware
corporation (the "Company"), and John Place (the "Executive").

      The Company desires to employ the Executive to devote his full time and
best efforts to the business of the Company, and the Executive desires to be so
employed on the terms and conditions outlined below.

      The parties agree as follows:

      1. Employment. The Company agrees to employ Executive at the Company's
offices in the Greater Washington D.C. metropolitan area, and Executive agrees
to be so employed in the capacity of Executive Vice President. Executive shall
perform such functions and undertake such responsibilities as are assigned from
time to time by the President of the Company. Executive agrees that he shall
spend no less than four (4) Business Days (as defined below) per week in the
Company's principal executive offices in the Greater Washington D.C.
metropolitan area, other than when Executive is traveling on Company business or
on vacation. "Business Day" means any day other than a Saturday, Sunday or a day
that is designated as a holiday pursuant to the Company's written policies.

      2. Term. The term of Executive's employment under this Agreement shall
commence on the date of this Agreement and shall continue for the initial term
of two (2) years (the "Initial Term"), and for automatic and successive renewal
terms of one (1) year each (each, a "Renewal Term" and collectively, the
"Renewal Terms"), unless either the Company or Executive elects not to extend
the term beyond the Initial Term or any Renewal Term (herein, the Initial Term
or a Renewal Term is sometimes referred to as the "Current Term") and gives to
the other party hereto written notice of termination at least three (3) months
prior to the end of the Initial Term or the Renewal Term.

      3. Full time and efforts. Executive shall diligently and conscientiously
devote substantially his full time and exclusive attention and best efforts to
his duties under this Agreement.

      4. Compensation.

            (a) Commencing as of the Effective Date of this Agreement, the
Company shall pay Executive base compensation for his services in the amount of
$280,000 per year (the "Base Compensation"). The President of the Company in
consultation with the Compensation Committee of the Board of Directors of the
Company will review Executive's performance and determine any appropriate
increases annually thereafter. Base Compensation shall be payable in biweekly or
such other installments as shall be consistent with the Company's payroll
procedures for its senior executives.
<PAGE>   2

            (b) In addition, Executive shall be eligible to be granted an annual
performance bonus (the "Annual Bonus") of between 25% and 85% of Base
Compensation. The first annual bonus paid will be calculated pro rata based on
Base Compensation for the period from the Effective Date of the Agreement
through December 31, 2000. Thereafter, the annual bonus will be based on Base
Compensation during each calendar year. The minimum annual bonus will be 25% of
Base Compensation, and additional amounts up to an aggregate amount of 85% of
Base Compensation will be determined based on performance related to criteria
established by the President of the Company and the Board of Directors.

            (c) In addition, Executive will be awarded 60,000 stock options in
CoStar Group, Inc. ("CoStar") (the "Initial Options"), the Company's parent,
vesting 25% on the grant date (the Effective Date of employment), 25% after the
first year, 25% after the second year, and 25% after three years. The exercise
price for the Initial Options shall be the Fair Market Value (as defined in
CoStar's 1998 Incentive Stock Plan) of the CoStar common stock on the Effective
Date.

            (d) In addition, Executive shall be awarded an initial bonus of
$75,000 (the "Initial Bonus"), with $25,000 to be paid within 30 days of the
Effective Date, $25,000 to be paid within 60 days of the Effective Date, and
$25,000 to be paid within 90 days of the Effective Date; provided, however, that
if Executive is terminated with cause (as defined in Section 8) or if Executive
terminates his employment with the Company (or has given notice to the Company
to terminate his employment with the Company) within twelve (12) months of the
Effective Date, then Executive shall pay to the Company within ten (10) days of
his termination date with the Company the full amount of the Initial Bonus.

      5. Benefits. Executive shall be entitled to participate in, and receive
benefits from any insurance, medical, disability, vacation or pension plan of
the Company for which Executive satisfies the generally applicable criteria for
eligibility, and to other perquisites which may be in effect at any time during
the term hereof that are generally available to executive officers of the
Company.

      6. Expense reimbursement. The Company shall reimburse Executive for all
categories of expenses incurred in carrying out his duties under this Agreement
that the Company's policies regard as reasonable and necessary. Executive shall
present to the Company from time to time an itemized account of, and supporting
documentation for, such expenses in any form generally required by the Company.
The Company hereby agrees to reimburse Executive for Executive's reasonable
relocation expenses to the Greater Washington D.C. area in accordance with the
Company's relocation policy in effect from time to time. For the period between
the Effective Date and December 31, 2000, the Company agrees to provide an
apartment in the greater Bethesda, Maryland area for the Executive's use.

      7. Termination without cause.

            (a) By the Company. The Company may terminate this Agreement without
cause (and regardless of the time periods and provisions in Section 2 hereof)
upon sixty (60)
<PAGE>   3

days written notice. In such an event (other than a termination as provided for
in Section 2 of this Agreement): (i) any remaining Initial Options due to vest
within twelve (12) months of the date of such written notice shall vest
immediately; and (ii) Executive will, as severance and liquidated damages and in
consideration of his execution of a complete and absolute release of the Company
and its affiliates and their respective directors and officers from any and all
further claims, receive on a monthly basis, as if he had not been terminated,
all payments (other than bonus) he would have received for the lessor of (x) the
term remaining under the Agreement had he not been terminated from the date of
such written notice, or (y) twelve months from the date of such written notice.

            (b) Termination after merger or acquisition. In the event of the
merger of the Company or CoStar, or the acquisition, directly or indirectly, of
all or substantially all of the Company's or CoStar's assets or a controlling
interest in the voting shares of the Company or CoStar by an unaffiliated party
(a "Change of Control"), Executive may elect to treat that event as a
termination by the Company without cause unless the new party: (a) extends to
him a reasonable offer to (i) be retained by the Company in an executive
position of responsibility, authority and compensation comparable in material
respects (including location) to the position of Executive immediately prior to
the Change of Control, (ii) retain all rights accorded under this Agreement and
(iii) be afforded all privileges accorded to other executives of the Company;
and (b) in fact retains Executive in such capacity for at least twelve (12)
months after the Change of Control.

            (c) By Executive. Executive may without cause terminate this
Agreement, by giving one hundred eighty (180) days written notice during the
Initial Term, or ninety (90) days written notice during any Renewal Term, to the
Company. In such event, at the sole discretion of the Company, Executive shall
continue to render all services through the date of termination. Executive shall
be paid the base compensation, accrued Annual Bonus, if any, and vested options
as provided by Section 4 up to the date of termination, but shall not receive
any salary or bonus payment thereafter nor shall any stock option that is not
otherwise vested or nonforfeitable on the date of termination become vested or
nonforfeitable on such date or thereafter.

      8. Termination for cause. The Company may terminate this Agreement (a) for
cause at any time by notifying Executive in writing of such termination and the
cause thereof or (b) in the event of Executive's death or prolonged disability;
provided, however, that the only grounds constituting "cause" shall be: (i)
Executive's negligence in the performance of his duties hereunder, intentional
nonperformance or mis-performance of such duties, or refusal to abide by or
comply with the reasonable, directives of the Board of Directors of the Company
or the President of the Company, or the Company's material policies and
procedures (including without limitation the provisions of Section 9 hereof),
which actions continue uncured for a period of at least ten (10) days after
receipt by Executive of written notice of the need to cure or cease; (ii)
Executive's willful dishonesty, fraud, or misconduct with respect to the
business or affairs of the Company; (iii) Executive's indictment for, conviction
of, or guilty or nolo contendere plea to, a felony; and (iv) Executive's abuse
of alcohol or drugs (legal or illegal), other than legal drugs taken under the
directions of a physician, that, in the Company's reasonable judgment,
materially impairs Executive's ability to perform his duties hereunder. In any
such event, Executive will forfeit all unvested options and all claims to
bonuses not yet awarded, and will be paid salary,
<PAGE>   4

excluding bonus, through the date of the termination; provided, however, that in
the event of termination for death or prolonged disability, all unvested options
shall immediately vest.

      9. Confidentiality, Invention and Non-Compete Agreement.

            (a) During the term of this Agreement, and thereafter for the
duration of the period, if any, that Executive continues to be employed by the
Company and/or any other entity owned by or affiliated with the Company or on an
"at will" basis, and thereafter for the Non-Competition Period (defined below),
Executive shall not, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, company, partnership, corporation, business,
group, or other entity (each, a "Person"):

                  (i) engage, as an officer, director, shareholder, owner,
partner, member, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant, advisor, or sales representative,
in any business selling any products or services in direct competition with the
Company in the United States, Canada, the United Kingdom, or other nations in
which the Company is conducting or in which he was aware the Company had plans
to conduct business within the eighteen (18) months following his termination
(the "Territory"); provided, however, that the foregoing covenant shall not be
deemed to prohibit Executive from acquiring as an investment not more than one
percent (1%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or over-the-counter;

                  (ii) call upon any Person who is, at that time, within the
Territory, an employee of the Company for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company;

                  (iii) call upon any Person who or that is, at that time, or
has been, within one year prior to that time, a customer of the Company within
the Territory for the purpose of soliciting or selling products or services in
direct competition with the Company within the Territory; or

                  (iv) on Executive's own behalf or on behalf of any competitor,
call upon any Person as a prospective acquisition candidate for an entity other
than the Company or its affiliates who or that, during Executive's employment by
the Company was, to Executive's knowledge, either called upon by the Company as
a prospective acquisition candidate or was the subject of an acquisition
analysis conducted by the Company. Executive, to the extent lacking the
knowledge described in the preceding sentence, shall immediately cease all
contact with any prospective acquisition candidate upon being informed that the
Company had called upon such candidate or made an acquisition analysis thereof.

            (b) Executive acknowledges that during the course of his employment,
he may develop and obtain access to trade secrets, proprietary software and
other "confidential business information" of the Company, such as its software
systems, sources of data, databases and other competitively sensitive
information kept in confidence by the Company such as selling and pricing
information and procedures, research methodologies, customer lists, business and
<PAGE>   5

marketing plans, and internal financial statements. Executive agrees to not use
or disclose any trade secrets, proprietary software or confidential business
information to which he is exposed or has access in the course of his employment
with the Company, even if elements of any of them may belong to third parties,
during his employment and for so long afterwards as the Company seeks to
maintain as confidential the proprietary software, trade secrets or confidential
business information, whether or not the software, trade secrets and
confidential business information are in written or tangible form, except as
required and authorized during the performance of Executive's duties for and
with the Company. Executive agrees that, given the nature of the Company's
business and business plans there will never come a time when disclosure of the
Company's proprietary software, trade secrets or confidential information would
not be seriously injurious to the Company.

            (c) Executive acknowledges that he has been employed by the Company
during its critical developmental and roll-out stages and that leaving the
employ of the Company to join any business competitor would seriously hamper the
business of the Company. Accordingly, Executive agrees that the Company shall be
entitled to injunctive relief to prevent him from violating this Section 9, in
addition to all remedies permitted by law, to enforce the provisions of this
Agreement. Executive further acknowledges that his training, experience and
technical skills are of such breadth that they can be employed to Executive's
advantage in other areas which are not in direct competition with the business
of the Company on the date of termination of Executive's employment and
consequently the foregoing obligations will not unreasonably impair Executive's
ability to engage in business activity after the termination of Executive's
employment.

            (d) For purposes of Section 8 and Section 9 of this Agreement, the
term "Company" shall mean the Company, its parent, and each of its parent's
direct or indirect subsidiaries, and each of these entities' predecessors in
interest and successors; and the term "Non-Competition Period" shall mean the
period commencing on the Effective Date to and including the second anniversary
of the date on which Executive ceases to be employed by the Company (provided,
however, that the Non-Competition Period, during which the agreements and
covenants of Executive made in this Section 9 shall be effective, shall be
computed by excluding from such computation any time during which Executive is
in violation of any provision of this Section 9).

            (e) The covenants in this Section 9 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. If any provision of this Section 9 relating to the time
period or geographic area of the restrictive covenants shall be declared by a
court of competent jurisdiction to exceed the maximum time period or geographic
area, as applicable, that such court deems reasonable and enforceable, said time
period or geographic area shall be deemed to be, and thereafter shall become,
the maximum time period or largest geographic area that such court deems
reasonable and enforceable and this Agreement shall automatically be considered
to have been amended and revised to reflect such determination. Upon termination
of this Agreement for any reason, the covenants specified in this Section 9
shall survive for the term specified herein.
<PAGE>   6

            (f) All of the covenants in this Section 9 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Executive against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants.

      10. Notices. All notices required or permitted to be given under this
Agreement shall be given by certified mail, return receipt requested, to the
parties at the following addresses or to such other addresses as either may
designate in writing to the other party.

            (a)   If to the Company:

                  Andrew C. Florance
                  President
                  CoStar Realty Information, Inc.
                  7475 Wisconsin Avenue
                  Sixth Floor
                  Bethesda, Maryland 20814
                  Telefax: 301-718-2444

            (b) If to Executive, to the address indicated below Executive's name
on the signature page.

      11. Arbitration. The parties agree that any dispute between the parties
relating to this Agreement shall not be resolved in litigation, but instead
shall be resolved in final, binding arbitration by a single arbitrator under the
auspices of the American Arbitration Association ("AAA") in Washington, D.C. Any
such arbitration shall be conducted in accordance to the AAA's Employment
Dispute Resolution Procedures.

      12. Waiver of Breach. The waiver by either party of a breach of any
provisions of this Agreement by the other shall not operate or be construed as a
waiver of any subsequent breach. A delay or failure by either party to exercise
a right under this Agreement, or a partial or single exercise of that right,
shall not constitute a waiver of that or any other right.

      13. Governing Law. The Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.

      14. Binding Effect. This Agreement shall be binding upon and share inure
to the benefit of the Company and its respective successors and assigns but the
rights and obligations of Executive are personal and may not be assigned or
delegated without the Company's prior written consent.

      15. Counterparts. This Agreement, for the convenience of the parties, may
be executed in any number of counterparts, all of which when taken together
shall constitute one and the same Agreement.
<PAGE>   7

      16. Entire Agreement Concerning Employment; Supremacy of Employment
Agreement. This Agreement and any related stock option agreement constitute the
entire agreement between the parties as to Executive's employment and
compensation therefor and supersede and replace any and all agreements, written
or oral, as to such matters. This Agreement may not be modified or amended
orally, but only by an agreement in writing, signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought. If there is any conflict with respect to Executive between the
provisions of this Agreement and the provisions of the Stock Option Plan, the
provisions of this Agreement shall govern.

      17. Amendments. This Agreement may be amended only in writing, signed by
both parties.

      In witness whereof, the parties have executed this Agreement effective as
of the date set forth above.

COSTAR REALTY INFORMATION, INC.                 EXECUTIVE

By:    /s/                                By:       /s/
  --------------------------------          ----------------------------------
   Name:  Andrew C. Florance              Name: John Place
   Title: President

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