Seattle-based Zillow (NASDAQ:ZG) shares plunged nearly 5% in Tuesday trading, following the company's announcement Monday that it has priced a follow-on offering of 5 million common shares at $82 apiece.

The amount of $82 is nearly $3 below where Zillow shares had been trading prior to Zillow's pricing announcement. It is, however, more than $1 above what the shares cost at close of trading Tuesday ($80.71).

Of the shares being sold, 2.5 million are currently owned by "certain existing shareholders" -- current and former Zillow employees for the most part, including Executive Chairman Richard Barton, and Chief Executive Officer Spencer Rascoff.

There are 2.5 million more shares being issued and sold by the company itself, and Zillow expects to reap the proceeds of the sale of these latter shares (approximately $205 million), plus a potential additional $62 million, in the event the share offering's underwriters opt to buy an "overallotment" of extra shares from the company.