Annual Report 2006

2006 ANNUAL REPORT

Real Estate is

Real People,

Real Stories

&

Real Success

To our Stockholders, From the very beginning, the people at ZipRealty have focused on creating relationships with our customers. Our agents in the field and our corporate team worked together to welcome more than 12,600 new and returning customers into the ZipRealty family this year.

To us, real estate is about more than just buying and selling homes – it’s about the people inside those homes, and making their experiences easy (and even enjoyable)! From the firsttime home buyer who needs information, to the family who needs a bigger house with room to grow, to the retired couple who needs to downsize – and everyone else in between – we’ve made it our business to help each of our customers fulfill their individual needs and desires.

In short, real estate is more than just a business to us – it’s a process that includes working with our customers and agents, and a promise to make home buying or selling rewarding.

In 2006 we continued to break new ground for customers and agents. We opened up our website to allow customers to post comments about properties, and by the end of the year we had over 1.25 million active users, making us one of the 10 most popular real estate sites on the web. We also added new marketing and technical tools for our agents, enhancing their ability to provide customers with top-notch responsive and personalized service. We continued to set the standard for excellent service in the real estate industry with a 96% customer satisfaction rating, and we look forward to further exceeding customer expectations in 2007.

We faced a challenging real estate market in 2006. Despite the strong market headwinds, we’re happy to report that we held or grew our market share in nearly every metro area. In addition, we added more than 400 agents to our already stellar roster and increased our revenue from $93.4 to $95.4 million.

While we’re excited about what we accomplished in 2006, we’re even more excited about where these accomplishments, and the foundation they have created, will take us in 2007 and beyond. Our ability to grow in the midst of a difficult market solidifies ZipRealty as a serious competitor amongst the largest, most widely recognized real estate companies in the nation, and one designed for long-lasting success.

Sincerely,

Richard F. Sommer Chief Executive Officer

Stock Transfer Agent and Registrar American Stock Transfer & Trust Company 59 Maiden Lane Plaza Level New York, NY 10038 Phone: 800-937-5449 Corporate Counsel Heller Ehrman LLP San Francisco, CA Stock Listing ZipRealty, Inc. common stock is traded on The Nasdaq Global Market, listed under the symbol “ZIPR.” Independent Auditors PricewaterhouseCoopers LLP Annual Meeting The ZipRealty, Inc. 2007 annual meeting of stockholders will be held at 9:30 a.m. on Thursday, May 24, 2007, at: Palace Hotel 2 New Montgomery St. San Francisco, CA 94105 Phone: 415-512-1111 Fax: 415-243-8062 Investor Relations Contact Information ZipRealty, Inc. 2000 Powell Street, Suite 300 Emeryville, CA 94608 Email: irelations@ziprealty.com Phone: 866-947-4663 Fax: 510-735-2850 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 Directors Donald F. Wood Chairman of the Board of Directors Managing Director, Draper Fisher Jurvetson Richard F. Sommer Chief Executive Officer Ronald C. Brown President, Atrium Holdco LLC Marc C. Cellier Founding Managing Member, Pyramid Technology Ventures Elisabeth H. DeMarse Chief Executive Officer and President, Creditcards.com Robert C. Kagle General Partner, Benchmark Capital Management Stanley M. Koonce, Jr. Executive Vice President and Chief Operating Officer, Big Brothers Big Sisters of America Executive Officers Richard F. Sommer Chief Executive Officer J. Patrick Lashinsky President William C. Sinclair Executive Vice President, Operations and Business Development Genevieve C. Combes Senior Vice President, Planning and Operations David A. Rector Senior Vice President, Controller, Chief Accounting Officer and Interim Chief Financial Officer Thomas M. Perrault Vice President, Human Resources Karen B. Seto Vice President, General Counsel and Secretary

ZipRealty’s Real Success Stories Front cover from left: Martha Vargas, REALTOR®, Boston, with her clients Marcel and Jenn Belaval, two of the thousands of satisfied clients ZipRealty helped move this year.

Helen Ross, REALTOR®, DC Metro Area, surpassed 200 sales with ZipRealty to become the first member of the Century Club Platinum. Stephanie Bamberger, REALTOR®, Baltimore, earned one of ZipRealty’s Top Producer awards for 2006.

Janice Madere, Customer Service Manager, and her Client Care team quickly respond to thousands of ZipRealty client questions every month.

Bevin White, Associate Broker/REALTOR®, San Francisco Bay Area, celebrated his 7-year anniversary in 2006 with ZipRealty.

Back cover from left: Richard Davila, District Director, DC Metro Area, joined ZipRealty’s Boston team as an agent in 2004, was promoted to District Director for Boston – South and East, and then moved back to his hometown to lead the DC district this year.

ZipRealty’s Helpdesk Team, Archie Rodriguez, Nada Nakahara, Michael Reagan and Henry Chuong, are on call 7 days a week to assist ZipRealty agents.

Audrey Benassi, REALTOR®, Orlando, with her clients, Joyce Oloressimo Arpon and Edward Arpon, who relocated to Florida from New York and purchased their first home with ZipRealty.

Inside front cover: Pat Lashinsky, President, and Richard Sommer, CEO, congratulate ZipRealty Corporate Employees of the Year Michael Reagan, Helpdesk/Data Specialist, and Cindy Guldur, Senior Accountant.

©ZipRealty, Inc. 2007