Real estate portal Zillow is said to be in talks to purchase rival Trulia, Bloomberg reports. Combined, the two firms account for 75 percent of web traffic to real estate sites, according to web tracking firm ComScore. The rumored deal, which is still being negotiated, could value Trulia at as much as $2 billion.
A merger of the two real estate portals could cause a profound shake-up in the real estate industry. Traffic to both Zillow and Trulia has been growing by leaps and bounds in recent months, with both sites reporting new records in the number of visitors last month. Zillow is by far the larger of the pair, reporting approximately 44.2 million visitors to its site, compared to 26.4 million for Trulia and 22.2 million for third-ranking Realtor.com.
Neither site immediately responded to calls for comment. Share prices of both firms surged on the news, with Zillow’s jumping 15.2 percent to $145.74, giving it an estimated market cap of $5.8 billion as of 4:15 this afternoon, while Trulia’s surged 32.4 percent to $53.74, giving it a market cap of approximately $2 billion.
A merger between the two portals would create a real estate behemoth, potentially cementing a permanent shift in power away from the long-established organized real estate industry. Already, the two independent portals had been steadily outpacing third-ranking Realtor.com, which licenses the Realtor name from the National Association of Realtors but is independently operated by Move, Inc.
The rivalry between the portals has heated up in the past year, with Zillow poaching two top execs from Move, prompting Move to sue for breach of contract. (A temporary injunction was issued in Move’s favor by an Oregon judge earlier this month.)
The potential move comes at a time when skepticism toward the two portals had seemed to be giving way to begrudging acceptance. In previous years some in the industry had called for brokers and agents to stop providing data to the portals, though with a few notable exceptions, including Minnesota’s Edina Realty, few brokers had taken this step.
In the last year, however, both Zillow and Trulia had pushed heavily to improve their relationship with brokers, hiring industry relations specialists and sweetening the terms of their data licensing deals in order to entice brokers to provide them listing directly. Earlier this month, Zillow announced it had struck deals to receive listing directly from over 2,000 brokers, while Trulia reported that it is receiving direct listing feeds from 12,000 brokers through its broker and MLS partnerships.
A white paper produced by well-known real estate consultancy Clarity consulting earlier this month declared that “Realtor.com has lost both its leadership position in traffic and its status as ‘the industry’s site,’ or the online champion for Realtors. There is no longer one clear industry-friendly site…Zillow and Trulia have considerably improved their listing agent, broker, and MLS attribution and other value propositions, to the point where many Realtor and MLSs feel they now offer more ‘friendly’ terms than Realtor.com does.”
A merger between the two portals would only further consolidate their power, creating a situation where many brokers and agents could feel they had no choice but to share data and/or pay for advertising on the sites in order to make sure they have access to the leads garnered by their immense traffic.
Many real estate agents reacted with dismay to the news of a potential merger, with a snap poll by Inman news finding more than half of respondents thought a Zillow-Trulia merger would be bad news for the industry.
Agent Paul Arvay of Keller Williams in Colombia, S.C. seemed to succinctly sum up the views of many agents on a Facebook group page devoted to discussing industry best practices: “”Aw H*** no!” he wrote, commenting on the proposed merger.
