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Zillow Bought Trulia. Is This the new Major Player in Online Real Estate?

Together, the number one and number two online destinations for real estate listings may finally turn a profit.

Searching for a new home or apartment can strike fear in the heart of the most peripatetic nester. Online sites have made the experience easier, with intuitive interfaces that allow for at-a-glance information on pricing, mortgage calculators, and photos. The latter is especially important for late-night scouring, with the added bonus of coming from “verified” sellers and not some dodgy user on Craigslist. Trulia and Zillow have squared off for nearly a decade in this competitive landscape. But now these two mid-market companies are coming together.

In a deal announced Monday, Zillow will acquire Trulia for $3.5 billion in a stock-for-stock transaction. These terms have Zillow paying 0.444 of one of its shares for each share in Trulia. At the close of the market on Friday, that prices Trulia shares at $70.53 a piece, or at about a 25 percent premium.

Though the two are joining forces, Zillow says the new company will operate under both the Zillow and Trulia consumer brands. Buyers, sellers, homeowners, and renters will continue to have access to real estate listings for free, and the company will maintain its advertising and software tools for real estate professionals –both of which provide revenue. Trulia CEO Pete Flint will remain as CEO of Trulia reporting to Zillow CEO, Spencer Rascoff.

The shift to house and apartment hunting on the web has grown alongside a rebounding real estate market. Home prices jumped 26 percent from their lowest back in March 2012, according to the S&P/Case-Shiller index of 20 cities. Existing-home sales climbed in June to an eight-month high as listings increased, the National Association of Realtors reported this week.

Zillow maintained top rank among online real estate sites, thanks to its “Zestimates” feature which calculates how much a property is worth. Home owners relied on this tool in heavy numbers, boosting Zillow’s traffic to 83 million users last month on both web and mobile, according to Google Analytics. Trulia has typically drawn home sellers to its site, which Omniture reported had 54 million viewers last month. Taken together, the two will have over half (61%) of the online real estate audience.

That said, Bloomberg reported that neither company is profitable on an annual basis, nor have they captured much of the real estate advertising market share which is estimated at $12 billion a year. Zillow’s revenue is expected to reach about $311 million this year while Trulia’s is expected to be about $253 million, which combined represent about a 4 percent market share.

Though the deal is not closed yet, the two technically remain competitors. According to comScore, there is limited consumer overlap between the two companies – approximately half of Trulia.com’s monthly visitors do not visit Zillow.com, and approximately two-thirds of Zillow.com’s monthly visitors across all devices do not use Trulia.com

Zillow’s aiming to keep its pole position thanks to a shopping spree this past year, in which it acquired StreetEasy (aimed at the New York market) and HotPads (for apartment listing). For its part, Trulia bought Market Leader last spring for $310 million.

According to Zillow’s statement, the companies expect to share real estate market data, housing trend analysis, and forecasts to make more free data available. But that won’t be until the ink dries on this deal, sometime next year.

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