Zillow, Inc. has further delved into the rental market by entering into a definitive agreement to buy San Francisco-based HotPads, a map-based rental and real estate search site for $16 million in cash.
This is Zillow's first acquisition of a primarily consumer-facing company. The transaction is subject to satisfaction of customary closing conditions and is expected to close in the fourth quarter of 2012.
HotPads™ is an established and significant player in rentals for both consumers and professionals, offering a robust website and five mobile apps across iPhone®, iPad® and Android™. Nearly 2.8 million unique users visited HotPads in Octoberi, primarily to shop for rentals. Nearly 70 percentii of all listings viewed during the month were homes or apartments for rent. The addition of HotPads will allow Zillow® to expand the size of its growing rental audience and extend the reach of its marketing tools and productivity solutions for rental professionals.
"This acquisition represents a significant step-change for Zillow Rentals, allowing us to dramatically increase the number of leads we send to landlords. HotPads has a younger, complementary and rental-focused audience. Now Zillow will become even more relevant to consumers at the beginning of their real estate life cycle," said Spencer Rascoff, CEO of Zillow. "In addition, by acquiring an amazing engineering team, with a deep understanding of how people search for rentals and become tenants, we expect to accelerate our innovation and monetization of our rental marketplace."
Zillow is in the midst of growing its rental offering for consumers and professionals. In October 2012, the company launched a free marketplace and suite of tools for rental professionals, which includes listing distribution across the Zillow Rental Network, the largest rental network on the Webiii that also includes Yahoo!® Homes. Upon closing, Zillow expects HotPads to join the Zillow Rental Network.
"At HotPads, we're passionate about empowering people with tools and information to help them find the right place to live, and we have always admired Zillow's similar vision," said Matt Corgan, co-founder and CEO of HotPads. "Combining Zillow's toolkit for owners and managers with an unmatched community of new tenants—across Zillow, Yahoo! and HotPads— we believe will enable the first true marketplace at scale for rentals."
On their blog, HotPads stated: “Today, HotPads is excited to announce that it has entered into an agreement to be acquired by Zillow.
We want to thank all current and former employees for making HotPads what it is today and for continuing to work towards our vision for what HotPads can be.”
Founded in 2005, HotPads has 19 employees, and will continue to operate from San Francisco.
HotPads will be the sixth acquisition by Zillow in less than two years. The company recently announced its intent to acquire Mortech, Inc., a mortgage technology company that provides essential software tools to the mortgage industry. In October, Zillow acquired Buyfolio™, an online and mobile collaborative shopping platform where home shoppers can search, track, organize and discuss for-sale listings with their real estate agent and others in their personal network. In June 2012, Zillow acquired RentJuice®, the foundation of Zillow Rentals. In 2011, the company acquired Diverse Solutions®, which helps real estate agents market their businesses and improve their personal websites, and Postlets®, a leading online real estate listing creation and distribution platform. Each of these companies also provide valuable services that support Zillow's strategic expansion beyond a traditional media model to offer a suite of marketing and business services to local professionals.
i Source: Google Analytics, October 2012
ii Source: Google Analytics, October 2012
iii Source: comScore Media Metrix Real Estate Category Ranking by Unique Visitors, June 2012, US Data.