Zillow and Trulia are reportedly near merger agreement

Some house hunters use the Zillow app to search for a home. Zillow is reportedly in talks to buy rival real estate website Trulia in a deal worth as much as $2 billion.
(Brian Corn, Wichita Eagle / MCT)

The nation’s two biggest real estate websites could soon become one.

Zillow Inc. is in talks to buy its largest rival, Trulia Inc., in a deal worth as much as $2 billion, Bloomberg reported Thursday, citing sources familiar with the negotiations. Although the talks could fall through, the sources said a deal could be announced as soon as next week.

Spokespeople for both companies declined to comment on the report, which no other news organization independently confirmed. Investors, though, jumped at the news, with share prices soaring shortly after it broke around midday. Trulia’s stock finished the day up 32%, and Zillow’s rose 15%.

The two sites are by far the largest in the burgeoning online real estate industry and combined for 84.6 million unique visitors in May, according to a report by Clareity Consulting. That’s three times as many as their closest competitor, National Assn. of Realtors-affiliated Move Inc.


With their troves of searchable, mappable real estate listings and robust mobile apps, sites such as Zillow and Trulia have transformed the way many people shop for homes. They’ve also sparked grumbling from some real estate agents, who say their data are too-often inaccurate or incomplete, and that they give home buyers and sellers false expectations about the market.

A merger of the firms — Zillow is based in Seattle and Trulia in San Francisco — has been rumored for some time. Although they compete fiercely for listings and eyeballs, a handful of investors own large stakes in both and could push a deal, according to a recent note by analyst Michael Graham of Canaccord Genuity. And the union could have a big payoff, some analysts note.

Combined, Zillow and Trulia are on track to spend $110 million this year, said Chris Merwin, an analyst with Barclay’s Capital. Buying Trulia would allow Zillow to drive down those costs, and save money on technology and other common expenses, Merwin wrote in a research note. Joining forces would also strengthen Zillow’s hand with agents and brokers who pay a monthly fee to list their properties, and with multiple listing services, someday potentially making the site a “defacto MLS.”

But other analysts warn that that strategy could backfire. Many real estate agents don’t believe mass-market websites help them close deals, said Brad Safalow, president of PAA Research in New York, and if a new, larger Zillow uses its dominant market share to push higher prices, big brokerage firms could choose to stop using the site altogether.

“That’s where I think one of the major flaws in this supposed acquisition would be,” he said. “If these two combined, [brokers] could pursue the nuclear option” and pull their listings off.

Twitter: @bytimlogan