Zillow to Acquire Trulia

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In major news for the real estate industry, Zillow announced that it will acquire Trulia in a $3.5 billion stock-for-stock transaction. As a sign that it’s a force to be reckoned with in real estate and the growing importance of online home sales, Zillow’s market value now surpasses that of Realogy Corp., owner of renowned brokerage brands from Coldwell Banker to Century 21.

Making sense of the story:

  • Zillow, the biggest U.S. real estate website, has seen its market value jump to about $5.83 billion from $4.99 billion.
  • For comparison, Realogy, the largest residential brokerage operator, has a market value of about $5.47 billion.
  • The shift underscores the growing role of the Web in U.S. home sales as more buyers start their hunt for homes and mortgages online.
  • While Zillow is unlikely to compete directly with brokers, whose ad dollars are its top revenue source, buying Trulia gives it more command over marketing fees.
  • The market’s valuation of Zillow reflects its outlook for growth and the migration of searches online, said Steve Murray, president of Real Trends Inc.
  • Real estate agents and brokers spent 71 percent of their $11.9 billion advertising budgets last year on online media, the highest of any industry in the U.S., according to Borrell Associates. On average, industries spend about 30 percent of advertising budgets on the Web.
  • While Zillow and Trulia integrate their cultures, rival Realtor.com intends to focus on an “Accuracy Matters” message—a dig at the listing quality of the other portals. CEO Steve Berkowitz commented, “REALTORS® are your trusted adviser, we have a human being behind our brand, not a computer program.”

Source: California Association of Realtors

Category : Blog

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