A class action lawsuit against Zillow claims the listing giant deceives homebuyers to increase commissions and home prices.
A homeowner in Portland, OR, filed the nationwide class-action last week in U.S. District Court for the Western District of Washington, with Hagens Berman and co-counsel Cohen Milstein representing the plaintiff, Alucard Taylor.
Taylor bought a Portland home in 2022 and claims Zillow’s website misled him into paying unjust fees. When he used the “Contact Agent” button to talk to someone about the home, he thought it would be the seller’s agent. Instead, he was routed to a Zillow buyer’s agent, whom Taylor believed he had no choice but to work with in order to buy the home.
That agent turned out to be part of Zillow’s Flex program. Flex agents get leads from Zillow with no upfront payments, but pay out fees later once they successfully close.
“The Flex program requires Flex agents to pay Zillow up to 40% of the commissions the agents earn on a sale… Zillow Flex agents are also required to steer buyers to Zillow Home Loans; if the agents fail to meet certain quotas, they are dropped from the program,” the complaint states.
Hagens Berman says Zillow “tricks” consumers into signing on with its agents, violating consumer-protection laws and illegally increasing the total purchase price for buyers.
“Zillow’s scheme has the intent and the effect of unlawfully maintaining high and inflexible commissions that drive up the prices that buyers must pay,” according to the suit.
Zillow’s controversial Listing Access Standards are also under fire in the suit, which alleges that its rules inflate commissions by making the parties involved in a home sale dependent on Zillow’s listing platform.
Earlier this year, Zillow banned home listings that appear on any other site for more than 24 hours before being displayed on its own website. The company has defended the move, saying it helps ensure that home shoppers have equal access to listings.
But the move threw the listing space into uproar. Compass sued Zillow over the policy earlier this year.
“Imagine if Amazon banned every seller that offered a product on their own website first. That’s what Zillow is doing in real estate. Only a monopoly would think they can get away with banning anyone,” Compass CEO Robert Reffkin wrote on LinkedIn.
U.S. consumers represented by a Zillow agent who bought a home listed on Zillow between September 19, 2021, and today are being encouraged to reach out to Hagens Berman.
