TO COVER NEW YORK, ZILLOW BUYS A RIVAL SITE
c.2013 New York Times News Service
NEW YORK — It is the parlor game that has long been played in Manhattan’s upper social circles: guessing how much so-and-so paid for their apartment, and how nice it is.
That information, once closely guarded by real estate brokers, has become much easier to find in recent years, thanks largely to StreetEasy.com.
On Monday, the 7-year-old startup is expected to announce that it has sold itself to Zillow, the giant of online real estate information, for $50 million in cash.
Though tiny, the acquisition will give Zillow a huge lead in one of the nation’s most desirable markets as it battles rivals like Trulia and Redfin amid a resurgence in real estate sales.
Both Zillow and Trulia have turned to acquisitions to help gain an edge. Trulia paid about $310 million in cash and stock this spring to buy another rival, Market Leader, in one of the biggest deals by far in the industry.
The StreetEasy deal is much smaller. But the site, which counts nearly 1.2 million unique users, is widely regarded as the commanding leader in the New York market. (It also offers listings and information for a number of other areas, including Washington, Philadelphia and the Hamptons.)
Even before it went public in the summer of 2011, Zillow became the most prominent player in online real estate information with its widely quoted “Zestimates” of how much a property is worth or how high its rent is. That dominance has helped propel its stock price up some 166 percent since going public, and as of Friday it carried a market value of $3.2 billion. Zillow says it has 61 million unique users.
StreetEasy, which was founded six years ago and now has 34 employees, fills what Zillow’s chief executive, Spencer Rascoff, called a “glaring hole” for the larger company. The company offers both sale and rental listings and has struck partnerships with the city’s major brokerage firms. Both sites make money primarily by ads.
“New York is the biggest real estate market in the country,” Rascoff said. Calling himself jealous of his smaller rival’s success, he added, “It’s just a much better product in New York.”
StreetEasy’s strength led Zillow to hold more than three years of talks with its smaller rival. StreetEasy will be run as a separate unit within Zillow and will maintain its brand. Zillow plans to help its new acquisition expand its mobile operations, including by introducing apps.
Much of the company’s rise has been rooted in its more tech-minded and transparent approach to listings. The site notes how many days an apartment has been on the market, what it previously sold for and how much other apartments in the building have gone for. It also hosts a big and active community of forum commenters who dissect listings and share good experiences and horror stories alike.