ZipRealty: Built to Last, Positioned to Succeed2008 was one of the most challenging years on record. Some of the country’s biggest financial institutions and corporations received government bailouts, foreclosures skyrocketed, unemployment rose to the highest levels in two decades, the Dow Jones Industrial Average lost half of its value, and more.

Yet despite these fierce forces, ZipRealty grew revenues for the 10th straight year, continued to provide innovative leadership and expanded our agent force – all while maintaining a 96% client satisfaction rating! In a year in which the residential real estate industry nationally experienced a 13% decline in transaction volume and a double-digit decline in revenues, ZipRealty achieved both a 23% increase in transaction volume and another year of revenue growth!

ZipRealty’s solid foundation – dedication to providing excellent customer service, cutting-edge technology and significant savings – puts us in a great position to succeed during these difficult times. But a good position is only as strong as the people who are working to increase it, and in 2008, the unrelenting efforts of our ZipTeam – agents, corporate employees and district management – was what allowed us to achieve these results.

A Promising Future: ZipRealty in 2009 and BeyondWe plan to continue our growth streak by keeping our eye on the prize, so to speak: our customers’ wants and needs. The service our agents provide is second to none, and the online tools we offer customers are above and beyond the industry standard. We plan to keep it that way. We know that we have a 96% client satisfaction because of the exceptional service we provide, both online and in person. And because we not only listen to our clients – we respond.

Helping and keeping our agents significantly more productive than industry norms is critical to our success. To accomplish this we continue to focus on and invest in lead generation, quality of leads, our industry leading ZipAgent Platform, real time training, and tools to help our district managers focus on individual agent needs.

Our cutting-edge technology makes us an industry leader. In 2008 we were among the very first brokerages to add Walk Score™, street view overlays on our maps, multiple home price estimation tools, an offer evaluator, and agent ratings. Additionally, we added agent tools that help our agents to better connect with their clients at all stages of buying and selling. By the end of 2008, these efforts made us the #1 most visited brokerage site in the U.S., and we aim to keep it that way!

In 2009 we plan to continue these efforts and find fresh ways to provide our clients and agents with valuable tools, information and more, keeping us ahead of the pack and in the forefront of buyers’ and sellers’ minds.

In light of the current conditions (and because it’s just good management practice), we plan to continue to manage our expenses very tightly in 2009. In 2008, we lowered our G&A expenses to 12% from 15% of revenue, and we believe that there is still significant operating leverage in our model. As a sign of our focus, we did not pay bonuses in 2008, and have forgone salary increases for 2009. Additionally, we continue to leverage key alliances to bring our costs down.

Despite a tumultuous 2008 (and what appears to be a difficult 2009), we feel good about where we stand and what we accomplished in 2008. We have a strong cash position, no long-term debt, and are growing in terms of revenues, number of transactions, and market share. We believe that our dedication to providing our clients with exceptional service, innovative technology and more is what will push us forward in 2009 and in the years to come, just as it has during the last decade of our success.

GO ZIP!

Sincerely,

J. Patrick Lashinsky

President and CEO

Continued growth through client focus

Boosting agent productivity

Technology to take it to the next level

Staying cost-conscious

CFO Charles C. Baker andCEO J. Patrick Lashinsky

Stock Transfer Agent and RegistrarAmerican Stock Transfer & Trust Company 59 Maiden Lane Plaza Level New York, NY 10038 Phone: 800-937-5449

Corporate CounselOrrick, Herrington and Sutcliffe LLP San 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 2009 annual meeting of stockholders will be held at 9:30 am on Thursday, May 21, 2009, at:

Watergate Towers 2200 Powell St., Conference Room D Emeryville, CA 94608 Phone: (510) 594-3100

The Company’s complete filings with the Securities and Exchange Commission, 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 DirectorsDonald E. Wood Chairman of the Board of Directors Managing Director, Draper Fisher Jurvetson

J. Patrick Lashinsky Chief Executive Officer and President

Elisabeth H. DeMarse Chief Executive Officer and President, CreditCards.com

Robert C. Kagle General Partner, Benchmark Capital

Stanley M. Koonce, Jr. Executive Vice President and Chief Operating Officer, Big Brothers and Big Sisters of America

Gary A. Wetsel Independent Consultant

Executive Officers

J. Patrick Lashinsky Chief Executive Officer and President

Charles C. Baker Executive Vice President and Chief Financial Officer

William C. Sinclair Executive Vice President, Operations and Business Development

Genevieve C. Combes Senior Vice President, Technology and Operational Strategy

David A. Rector Senior Vice President, Controller and Chief Accounting Officer

Robert J. Yakominich Senior Vice President, Sales

Larry S. Bercovich Vice President, General Counsel and Secretary

Joan L. Burke Vice President, Human Resources

ZipRealty, Inc.

At right:

CEO J. Patrick Lashinsky and CFO Charles C. Baker make plans for a successful 2009.

2008 Top Revenue Producer C.M. Foo poses with his clients Ian and Liz Halifax, and their children John and Charlotte, on the steps of their new San Francisco home.

2008 Corporate Employees of the Year, Timmy King and Cindy O’Connor, were recognized for their outstanding contributions.

2008 Top Transactions Producer David Love and his client Kimberly Nausin share a laugh in her new Merced home.