EMERYVILLE, Calif.--(BUSINESS WIRE)--Oct. 11, 2007--ZipRealty, Inc. (Nasdaq: ZIPR) announced today that, due to ongoing challenges in the residential real estate and related home mortgage markets, the Company has taken steps to reduce its cost structure to align it to current market conditions. Specifically, management expects it can lower its current operating expense structure by approximately $4 million annually. The majority of these reductions come from the elimination of positions in the corporate headquarters and the field offices, and the remainder is expected to come from improvements in operating efficiencies. As a result of this plan, the Company expects to incur one-time, employee termination costs of less than $250,000 in the fourth quarter of 2007.

Management noted that this cost rationalization plan will not affect its previously announced decision to expand into new markets in 2007, nor will it affect ZipRealty's ability to support its agents as they continue to deliver value to home buyers and sellers in all markets.

Pat Lashinsky, CEO and President of ZipRealty, commented, "Given the uncertainty of today's current residential real estate and home mortgage markets, we felt it was prudent to adjust our cost structure and better align to market conditions. Although we will realize a small portion of these cost savings in 2007, the net impact of our plan will be far more evident in 2008. We are also revising our revenue guidance for the full fiscal year 2007 to a range of $97.5 to $102.5 million from previous guidance of $105 to $110 million. In combination with the development and maturity of our existing markets, we believe today's actions will facilitate greater efficiencies as we execute our plan."

Management will further discuss the expected impact of the decisions announced today on the Company's 2007 and the full year 2008 financial results in greater detail on its upcoming third quarter earnings call which will be held on November 7, 2007. A separate announcement with specifics of the call will be issued in the coming weeks.

About ZipRealty, Inc.

ZipRealty is a full-service residential real estate brokerage firm. The Company uses the Internet, proprietary technology and efficient business processes to provide home buyers and sellers with high-quality service and value. Founded in 1999, the Company currently operates in 32 major metropolitan areas in 18 states and the District of Columbia. The Company's client-centric business strategy utilizes a sophisticated Web site, which enables home buyers and sellers to access comprehensive local Multiple Listing Services home listings data and other relevant information. The Company also utilizes a proprietary business management technology platform, which reduces costs and allows the Company to pass on significant financial savings to consumers. This Internet-enabled, technology-driven, employee-based model provides the Company with a distinct competitive advantage, allowing ZipRealty to consistently deliver outstanding service to clients. From January to March 2007, www.ziprealty.com was ranked as the ninth most trafficked Web site by Hitwise in the United States Real Estate category. For more information on ZipRealty, visit www.ziprealty.com or call 1-800-CALL-ZIP (1-800-225-5947).

Cautionary Language

This release contains forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws, including, without limitation, statements regarding expected cost and operating expense reductions, one-time employee termination costs, revised revenue guidance for fiscal 2007, and management's plan to expand into new markets, to support agents, and facilitate greater efficiencies as we execute our business plan. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The risks and uncertainties include but are not limited to a continuing decline in the residential real estate market, including a decline in the number and/or sales prices of homes, the Company's limited operating history and limited profitability, the Company's access to MLS listings and leads from third parties that it does not control, economic events or trends in housing prices, interest rates, the newness and scalability of the Company's business model, the Company's ability to hire, retain and train qualified agents and key personnel, including the ability to revise and/or re-engineer the way business and support functions are conducted to account for the reduction in workforce, the Company's ability to manage growth in terms of personnel, expansion into new markets, information and control systems and legal restrictions, the Company's ability to comply with often complex federal and state laws and regulations concerning real estate brokerage, other core services such as mortgage and insurance, internet content, privacy and other matters as well as rules of real estate industry organizations, competition, seasonality, geographic concentration, use by Internet service providers and personal computer users of more restrictive email filters, and other risk factors set forth in the Company's filings with the SEC, including but not limited to its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2007. The forward-looking statements included in this release are made as of today's date and, except as otherwise required by law, ZipRealty does not intend to update these forward-looking statements to reflect events or circumstances after the date hereof.

    CONTACT: For ZipRealty, Inc.
             Investor Relations:
             Tom Ryan/Raphael Gross
             866-947-4663
             or
             Media:
             Marcus Gamo/Aimee Grove
             415-277-4925
             pr@ziprealty.com

    SOURCE: ZipRealty, Inc.