Zillow Inc. has announced it has entered 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 a significant player in rentals for both consumers and professionals, offering a robust Web site and five mobile apps across iPhone, iPad and Android. Nearly 2.8 million unique users visited HotPads in October, primarily to shop for rentals. Nearly 70 percent 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, chief executive officer 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 Web 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."
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.