This Monday, online real estate listing company Zillow announced that it will acquire its biggest competitor, Trulia, in a stock-for-stock purchase transaction. The acquisition has already raised the stock values of both companies.
According to a press release by Zillow’s chief executive, Spencer Rascoff, the companies intend to maintain their independence. The press release stated that the acquisition is intended to consolidate and reduce the companies’ expenses and facilitate faster innovation and increased access to the sites. Commentators expect, however, that the ultimate merger of the two companies is inevitable. Although the companies have different geographic strengths and Zillow caters towards sellers, while Trulia focuses upon buyers, for all intents and purposes, until now, they have been direct competitors.
Online real estate listing forums like Zillow and Trulia are gradually beginning to occupy the role traditionally played by brokers. The past decade has seen travel agencies largely driven out of business by websites like Priceline and Expedia (founded by the same entrepreneur as Zillow), which begs the question of whether real estate agencies may ultimately suffer the same fate. Given the financial magnitude of real estate purchase transactions, live brokers are likely to always play some role, particularly given consumer concerns with the timeliness and accuracy of online listing information.
Neither Zillow nor Trulia has access to the multiple listing service data available to members of the National Association of Realtors, and as a result, both sites have been known to occasionally promulgate unreliable or obsolete information. While increased reliability was not cited as one of the goals of the acquisition, that seems to be the logical next step in these sites’ continued quest for technological progress in the real estate market.
Click here to read the acquisition announcement on Zillow’s blog.