As was to be expected, Trulia closed on its $355 million acquisition of Kirkland-based Market Leader, giving the company a beachhead in Zillow’s own backyard. Meanwhile, Zillow, which is also expanding in Trulia’s hometown of San Francisco, headed to the East Coast with the $50 million purchase of New York’s StreetEasy.
The two deals signal just how hot the online real estate arena is getting, as both jockey for the pole position. To date, Zillow has been out in the lead — outpacing Trulia on most key metrics (from traffic to revenues to market cap to cash on hand).
But Trulia is hoping that the Market Leader deal provides an accelerant, especially as it relates to selling online tools to real estate agents.
“We are now well positioned to be the leader in our sector, with a combined premium subscriber base of approximately 50,000 professionals,” Trulia CEO Pete Flint said in a press release. “We plan to further penetrate the enormous market opportunity that lies before us and drive incremental opportunities to grow revenues.” Market Leader, which has been around for 14 years and is led by Ian Morris, saw its revenues jump to $13.6 million during the previous quarter.
Zillow too has been betting big in that arena, looking to diversify its revenue base as it continues its quest to cozy up with real estate agents, some of whom have viewed Zillow with a wary eye since it was founded in 2005.
In an interview with Bloomberg this week following the StreetEasy deal, Zillow CEO Spencer Rascoff stressed several times that they are a “friend” to real estate agents.
“It is not dissimilar to investment banking fees on IPOs, for example,” he said. “When you go and take your company public, it is life-changing event, and you typically pay investment banking fees, whatever they are asking, because you don’t want to screw it up. For most people, when you buy or sell a home: I’s infrequent. It’s expensive. It’s highly emotional. It’s confusing. And, so they use a Realtor, and I don’t think that is ever going to change.”
So, the battle is on right now as Trulia — in part through its acquisition of Market Leader — and Zillow — through a series of acquisitions — look to fight for the hearts and minds of real estate agents.
As of today, Market Leader’s stock will be suspended from trading on the Nasdaq. Trulia is now trading at about $40 per share, with a market value of $1.4 billion. Zillow, which has lost nearly 13 percent of its value this week after a stock sale by execs and the company, is trading around $82 per share. It has a market value just shy of $3 billion.
Here’s a look at the shares of both Trulia (in blue) and Zillow (in red) so far this year. Stocks of both companies are up more than 150 percent.
Even though Trulia is thrilled with the Market Leader purchase, it will have some legal headaches to deal with right off the bat. Inman reports that Market Leader has been slapped with the patent infringement suit by Greensboro, North Carolina Listingbook related to its customer relationship management tools.
“We have invested substantial resources in our patented technology, and we filed this suit against Market Leader to protect that investment,” said Listingbrook CEO Randall Kaplan said in a press release this week.