Were you tricked by Zillow?
Were you tricked by Zillow?
Zillow’s newest lawsuit.
A Seattle law firm specializing in large class-action litigation claims Zillow illegally tricks homebuyers into working with Zillow agents forced to split their commission with the real estate listings giant.
In a filing with the U.S. District Court for the Western District of Washington, a man who bought a home in Portland with a Zillow agent claims the Seattle-based company, which is a licensed brokerage in several states, aimed to defraud him and other homebuyers.
Buyers believe clicking “Contact agent” or “Request a tour” on a Zillow listing routes them to the home’s listing agent, the lawsuit claims. It actually sends their contact information to Zillow-affiliated buyer’s agents.
“Zillow buries the listing agent in tiny print, barely visible to the average reader,” attorneys Steve Berman and Jerrod Patterson, of the firm Hagens Berman, said in court papers.
Zillow agents on recorded introductory calls to buyers did not readily disclose that they are not the listing agent, the attorneys continued.
If the buyer’s agent is part of Zillow’s “Flex” program, Zillow receives up to 40% of the agent’s commission — a transaction undisclosed to homebuyers. Although Zillow’s webpage suggests the fees are paid out of escrow, they are actually paid by the buyer’s agent directly to Zillow, keeping buyers and sellers in the dark, Berman and Patterson said.
Real estate agents are sometimes willing to lower their commissions to make a deal happen. But since agents are making less after paying a large chunk of their commission to Zillow, they’re disincentivized to negotiate down their commission or negotiate prices down on behalf of the buyer, the lawsuit alleges.
Berman and Patterson also criticized Zillow for its new policy requiring agents upload listings to Zillow 24 hours after going public. As of June 30, Zillow will block an agent’s third noncompliant listing and any future noncompliant listings, according to Zillow’s new listing standards.
The attorneys claim Zillow generates the majority of its revenues by engaging in deceptive business practices.
“We believe Zillow is well aware of the potential for ill-gotten gains in this space and has sought to play fast and loose when real people’s basic need of housing is on the table,” Berman said in a news release.
Zillow did not immediately respond to requests for comment Friday.
The plaintiff, represented by Hagens Berman and the firm Cohen Milstein, is seeking class-action status for the lawsuit with financial compensation of up to $25,000 a person.
