ZipRealty announces net loss, growth in agents
Company projects up to $10.4 million net loss in 2008
By Inman News, Thursday, August 7, 2008.ZipRealty, a real estate brokerage company that offers service discounts to sellers and rebates to buyers, on Thursday reported a net loss of $1.7 million, or 8 cents per share, in the second quarter ended June 30, 2008. That compares to a net loss of $1 million, or 5 cents per share, in the same quarter last year.
The company continues to grow its pool of agents, and agent count increased by 274 from March 31 to June 30, the company reported. Agent count also grew from 2,070 agents at the end of second-quarter 2007 to 2,559 agents at the close of second-quarter 2008.
Net revenues fell 2.7 percent, from $31.3 million in second-quarter 2007 to $30.4 million in second-quarter 2008. The total value of real estate transactions that the company closed fell from $1.41 billion in second-quarter 2007 to $1.32 billion in second-quarter 2008. The total number of transactions closed grew 17.4 percent year-over-year in the second quarter to 4,681, while average net revenue per real estate transactions closed fell 16.6 percent to $6,381.
ZipRealty expects revenues for the full year from $114 million to $118 million. And the company reported that it expects a full-year net loss between $8.9 million to $10.4 million in 2008, according to the earnings report. For the six-month period ended June 30, ZipRealty reported a net loss of $8.9 million, compared to a net loss of $4.1 million for the same period in the prior year.
Pat Lashinsky, ZipRealty president and CEO, said that although the company is "still facing industry headwinds," managers are pleased at the company's increase in transaction volume and the traffic to its Web site.
ZipRealty reported that the company extended its operations to Long Island, N.Y., in the first quarter and opened shop in Hartford, Conn., in July. ZipRealty has operations in 35 market areas in 20 states and in Washington, D.C.
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Submitted by Stephen Graham on August 8, 2008 - 5:26am.
Zip Realty seems to be experiencing good agent growth during this down market. Perhaps, the growth is attributed to the high cost of advertising for individual agents; or alternatively, the cash back rebates get agents’ attention.
What’s most concerning, however, is the loss of income. Will this trend continue? Or will the market stabilize at some point?
Submitted by Mott Marvin Kornicki on August 8, 2008 - 5:27pm.
ZipRealty is following in the same path of many real estate businesses. This market is extremely competitive and sluggish to boot.
There is light at the end of the tunnel; but who wait it out?
Mott Marvin Kornicki, Broker
www.WaterwayRealty.com
305.935.3533 Main Line
Submitted by Ki Gray on August 10, 2008 - 12:06am.
While the market is tough I think Zip has other problems. Too many discount companies came in at the same time. Also I think they are in denial about the fact that a lot of people simply are not interested in discounted service.
Site Austin Tx real estate.
Search Austin MLS
Submitted by Michael Reilly on August 11, 2008 - 8:40am.
Maybe my company is too small for me to understand but how do you LOSE that much money running a real estate brokerage business? Are the agents for this company on a salary? In my experience, independent agents are only paid on completed transactions so there is not much money going out the door. The only reasons I could come up with were high rents on their retail offices, and high advertising costs. What am I missting?
Michael Reilly, REALTOR
Great Austin Properties, LLC
Website Great Austin Properties
Search Austin Homes For Sale
Submitted by realtor agent on August 20, 2008 - 12:37pm.
Zip Realty is a coropration that treats it's agents as hybrid employees/independent contractors. They provide health benefits, 401k, company stock,monthly stipend, advertising, and leads in exchange for a large piece of the agent's commission. They require mandatory meetings and a certain performance level to be met in order to recieve the best or most leads.
This is a large operation with a ton of overhead, CEO, managers, assistants, advertising, employee benefit costs, trainers, office space, website, accquisitions, etc. As a publicly traded company they are held more accountable for their bottom line than a mom and pop brokerage.