In a class-action lawsuit focused on Zillow’s mortgage referral and fee structures, plaintiffs just added a bevy of new accusations, citing a handful of “confidential witnesses”—current and former loan officers and agents who worked with the company—who claim Zillow sought to hide the fact it was funneling customers to its mortgage business.
Alleging violations of the Racketeer Influenced and Corrupt Organizations (RICO) act, as well as the Real Estate Settlement Procedures Act (RESPA), the plaintiffs are seeking “up to” $25,000 per class member.
The lawsuit was filed by Hagens Berman, one of the firms behind the original commission lawsuits that resulted in over $1 billion in settlements paid by the National Association of Realtors® and big brokerages, in the Western District of Washington, earlier this month.
Zillow did not immediately respond to emailed questions from RISMedia regarding the new lawsuit.
The updated filing cites ten real estate agents and two loan officers who claim among other things, that Zillow told them not to share publicly that they were being told to push clients toward the company’s mortgage business, Zillow Home Loans, which plaintiffs allege regularly charged higher rates than competitors.
“According to (one of the confidential agents), although Zillow does not put it in writing, Zillow’s representatives tell agents in the Zillow Flex and Premier programs that they have to steer clients to Zillow Home Loans, and that the more clients agents steer to Zillow Home Loans, the better their leads will be,” the lawsuit claims. “Zillow also has certain minimum quotas that the agents must meet, or they are kicked out of the program.”
In the bigger picture, plaintiffs seek to paint Zillow as a monopoly that is using market power to steer more people to its agents and products. The lawsuit briefly cites the company’s “Listing Access Standards,” which restrict certain listings that appeared on private networks from appearing on Zillow, as “abuse of its dominant position.”
Zillow is currently facing a high-profile lawsuit with Compass over those rules. The company has strongly denied allegations of monopolistic practices, pointing out that it continues to advocate for shared listings and faces real competition from platforms like Realtor.com®, Homes.com and Redfin.
However, the recent class-action lawsuit, known as Taylor, alleges that “behind the scenes” Zillow uses hidden fees and exerts pressure on real estate professionals to “steer” consumers to its mortgage business. The lawsuit also highlights the company’s lead-selling model, where consumers who try to contact an agent or schedule a tour from a listing page are directed to agents who pay Zillow, rather than someone with a connection to the property (like the listing agent), calling it “deceptive.”
Around 2022 or 2023, the company began setting quotas for Flex agents and teams for referrals to Zillow Home Loans. Agents cited by the lawsuit allegedly said they were uncomfortable with this from the start as it became “a central performance metric,” and claimed there were “consistent threats” of being dropped from the program if quotas were not met. According to the filing, Zillow also “cherry-picks” buyers who will easily qualify for loans and drops those that require more work, according to one agent cited in the lawsuit. According to the amended complaint, confidential witnesses also claim that Zillow’s requirement for Flex Agents to use its inhouse CRM Follow-Up Boss “allows Zillow to eavesdrop on communications between the agent and the buyer, violating the agent’s duty of confidentiality,” and enables Zillow to “’catch’ Flex agents who may recommend other loan providers to their clients, in order to censure them appropriately.”
According to the amended complaint, confidential witnesses also claim that Zillow’s requirement for Flex Agents to use its inhouse CRM Follow-Up Boss “allows Zillow to eavesdrop on communications between the agent and the buyer, violating the agent’s duty of confidentiality,” and enables Zillow to “’catch’ Flex agents who may recommend other loan providers to their clients, in order to censure them appropriately.”
Besides the 12 “confidential witnesses,” the updated lawsuit relies largely on public info and media reports—with five and a half pages dedicated to podcasts, including one that was recorded seemingly as a reaction to the initial filing of the lawsuit itself.
One of the claims in the lawsuit did not appear to be supported by the document it cited. Linking to a July 2024 blog post on Zillow, the plaintiffs claimed that “(l)isting agents have recently observed that approximately 80% of the prospective buyers they communicate with about their listings have already spoken with a Zillow Agent who was using a Touring Agreement.”
But the blog post only says that 78% of buyers “use Zillow as part of their home-buying journey,” and does not connect that stat with listing agents, touring agreements or conversations with Zillow agents.
A spokesperson for Hagens Berman could not immediately provide comment or clarification on this citation.
More broadly, the lawsuit alleges that Zillow’s practice of diverting buyers to agents who have a relationship with Zillow lacks disclosure and harms consumers, who do not understand that they are being directed to an agent who likely has no connection to the property.
“Ironically, Zillow promotes ‘independent representation’ of buyers and sellers, while engineering a relationship such that the agents are entirely dependent on—and compromised by—Zillow,” the lawsuit says.
Without specifying the overall damages or estimated class size, the lawsuit claims that Zillow was “able to extract hundreds of millions if not billions of dollars from Plaintiffs and Class Members.”
Plaintiffs are seeking to certify a nationwide class, and requesting a jury trial.
