Zillow to Buy Trulia for 3.5 Billion

If you've bought a home in the past decade, you're probably familiar with Zillow and Trulia. Both are residential real estate online databases founded in 2005 that list information on homes available for sale and rent. While this information is free to the public, real estate agents must pay to advertise their listings, and have the option of paying more in order for their listings to show up toward the top of search results. This is made evident by Zillow's "Premiere Agent" program.

The two sites currently account for 48% of listings web traffic (excluding local sites), and have the potential to control over 70% of online real estate searches. Both sites are already industry leaders. In June,  Zillow and Truila together had 68.4 million unique users. ComScore reports that Zillow-Trulia traffic is 3.5 times greater than Realtor.com traffic. However, Realtor.com is known for more accurate prices than both Zillow and Truilia, because it is run by the National Association of Realtors (NAR) and thus can access the multiple listing service (MLS).

The deal was announced Monday, July 28th and is set to close next year. Zillow's cheif executive officer, Spencer Rascoff, maintains that both sites will retain their separate brands and web presences. Investors are happy and consumers are not yet drastically impacted; however, agents have another story.

While many agents accept these online sites, others do not support them. For example, some agents disagree with Zillow's "Zestimates," claiming that they inaccurately portray home values. However, the merger leaves little bargaining power for disgruntled agents. Bradley Safalow, Founder of PAA Research in New York, warns against Zillow increasing agent advertising costs, noting that some brokers may take their listings off of third party sites all together in an attempt to increase traffic to their own webpages and reduce advertising expenses. Indeed, gaining a larger advertising share is the primary motive behind this acquisition--Los Angeles Times cites that $12 billion is spent on real estate advertising each year. Sissy Lappin, founder of ListingDoor.com, claims that Zillow seeks only to buy out its competition, not improve information accuracy. While neither Zillow nor Truila is profitable yet, Zillow hopes to save $100 million annually by cutting repetitive costs. It will be interesting for all parties involved to see how this deal changes the real estate playing field.