2007 ANNUAL REPORT

Facing Headwinds Head-onAs investors know, the real estate industry faced severe headwinds in 2007 – “The Struggling Housing Market” seemed to be a daily headline. And for good reason – record inventories of unsold homes sat on the market as median home prices and sales volumes fell to 2002 levels. To add to the changing tide, a severe credit crunch made it harder for those buyers ready to purchase a home to get the loan they needed, and a ris-ing number of foreclosures made the market much more diffi cult for most buyers and sellers to understand.

Despite the turbulence, the ZipRealty team faced these tough conditions head-on. Our agents, management and corporate employees worked hard to fi nd creative ways to effectively handle and overcome market con-ditions. It wasn’t easy, but we persevered, and our dedicated crew continues to navigate through the storm and outperform the markets in which we compete.

We’re proud to report that in this diffi cult year, while most of our competitors fell behind, we continued to push ahead and ZipRealty continued to grow – in revenue, in market share and in innovative ideas.

New HorizonsWe opened 10 new markets in 2007, expanding our total number of open markets by nearly 50% and bring-ing our exceptional services to millions of potential new clients across the U.S. And we expanded without lowering the superior level of client service that we provide to our buyers and sellers on a day-to-day basis.

Pulling AheadNaturally, we gained market share in each of our 16 markets opened in 2006 and 2007, but more impressively, we gained in all of our existing markets as well. In addition, we went from being ranked as one of the top 40 brokerages in the country to one of the top 25. Our website traffi c continues to be ranked in the top 10 nationwide, and our customer satisfaction is a stunning 96%. We also initiated new training programs for our agents that focus on “client conversion,” and they’ve proven to be very successful.

Keeping Our Competitive EdgeWe continued to innovate throughout the year, adding signifi cant consumer and agent benefi ts. We’ve started to make the kind of critical market information available to sellers that we have long done for buyers – information that other real estate companies have historically held close to the vest. We have home valuation tools from multiple sources. Our selling plans provide the fi rst insight for our sellers into what other listings pay to buyers’ agents, and allow sellers to transparently negotiate the commission they want to pay. Our Seller Dashboard allows our clients to see the activity on their listing versus other listings in their area. And buyers love our new Offer Evaluator – a tool that indicates how their offer will stand up based on actual sales in the neighborhood.

What really made a difference in 2007 – and what we believe will continue to push and sustain us as market leaders – was our core belief in the importance of connecting with our clients, listening to their needs, and delivering the solutions and local expertise that will make their home buying or selling experience great.

I’d like to thank all of our agents and corporate employees for their hard work and resilience in 2007. We could not have achieved the results we did without all of your efforts. I am very proud to be leading this team.

We are in the race for the long haul, and in it to win!

Sincerely,

J. Patrick Lashinksy

President and CEO

Stock Transfer Agentand RegistrarAmerican Stock Transfer &Trust Company59 Maiden LanePlaza LevelNew York, NY 10038Phone: 800-937-5449

Corporate CounselHeller Ehrman LLPSan Francisco, CA

Stock ListingZipRealty, Inc. common stock is traded on The NASDAQ Stock Market listed under the symbol “ZIPR”

Independent AuditorsPricewaterhouseCoopers LLP

Annual MeetingThe ZipRealty, Inc 2008 annual meeting of stockholders will be held at 9:30 am on Wednesday, May 21, 2008, at:Four Seasons Hotel757 Market StreetSan Francisco, CA 94103Phone: (415) 633-3000

The Company’s complete fi lings with the Securities and Exchange Comission, including the Form 10-K included in this report and all exhibits, are available without charge on the Company’s website at www.ziprealty.com under “Investor Relations – SEC Filings” as well as on the Commission’s website at www.sec.gov.

Board of Directors

Donald E. WoodChairman of the Board of DirectorsManaging Director,Draper Fisher Jurvetson

J. Patrick LashinksyChief Executive Offi cer and President

Elisabeth H. DeMarseChief Executive Offi cer and President, CreditCards.com

Robert C. KagleGeneral Partner,Benchmark Capital

Stanley M. Koonce, Jr.Executive Vice Presidentand Chief Operating Offi cer,Big Brothers and Big Sisters of America

Richard F. SommerFormer Chief Executive Offi cer

Gary A. WetselIndependent Consultant

Executive Offi cers

J. Patrick LashinskyChief Executive Offi cer and President

David A. RectorSenior Vice President andChief Financial Offi cer

William C. SinclairExecutive Vice President,Operations and Business Development

Genevieve C. CombesSenior Vice President,Planning and Operations

Robert J. YakominichSenior Vice President, Sales

Larry S. BercovichVice President,General Counsel and Secretary