A MAJOR real estate marketplace company is facing a class-action lawsuit.
Zillow was hit with claims that the company allegedly “deceived” users with secret fees.
The lawsuit alleged the “secret fees” result in inflation home prices and commissions (stock photo).[/caption]
The suit, filed on September 19, alleges that potential buyers are tricked into signing up with a Zillow agent and is part of the company’s “Flex” program.
They claim this results in higher home prices and commissions.
The suit was filed by Alucard Taylor, a resident of Portland, Oregon, who purchased a home in July 2022 using a Zillow agent.
Taylor said he clicked the “Contact Agent” button on a house he was interested in thinking he was contacting the listing agent.
“He did not know that he would be routed to a Zillow agent,” the suit stated.
The suit said the listing agent is available further down on listings “in tiny print, barely visible to the average reader.”
Taylor believed he had no other option than to use the Zillow agent.
Zillow allegedly gets 40% of the agent’s commission, which is supposedly “undisclosed to all parties involved.”
Allegedly, sellers are stuck paying 6% commission or more because the Flex agent is receiving a “paltry sum.”
The suit also claims that if he had contacted the listing agent instead, the seller could have paid less commissions and the purchase price could have been lower.
FAULTY FEES
The lawsuit claims that after buyers connect with a Zillow-affiliated agent, they are directed to sign the company’s touring agreement.
Zillow’s Touring Agreement is an optional, non-exclusive agreement between an agent and potential buyer, according to its website.
The agreement is meant to give buyers and agents “a solution to get to their first tour with a signed agreement in place,” the website explained.
Zillow Rundown
Zillow was founded in 2004 with the intention to revolutionize the real estate industry.
Zillow was founded by Microsoft executive Rich Barton after he was frustrated with his home buying experience. He hoped to improve the process with more accessible listings and online home value estimates.
In the last three months of 2024, over 200 million people accessed the website.
Zillow’s app and website was visited 9.3 billion times throughout 2024 with more than 130 million U.S. homes listed in the database.
In 2024, over 400,000 customer transactions were completed with Zillow.
Source: Business of Apps
“We believe there should be a conversation about working together longer term – including compensation – after the buyer and agent have a chance to meet.”
The September filing says the agreement “promises the buyer that the agent’s services are ‘free,’ but this is deceptive and not true: if the sale goes through, the buyer’s agent still receives a commission.”
“In addition, if the Zillow-affiliated agent is a ‘Flex’ agent, he or she has to pay Zillow up to 40% of the agent’s commission. This cut of the commission, for no services rendered related to the real estate sale, is never disclosed to the buyer or the seller.”
The suit alleges that if buyers were instead directed to sellers’ agents, “they would be better positioned to negotiate a lower purchase price, because the seller would not have to pay commissions to the seller’s agent and the buyer’s agent.”
The filing alleged the buyer agent is inserting themselves into the transaction between buyers and listing agents so that they can “extract a buyer agent commission,” which can be around 3% of the property purchase price.
The suit is meant to represent U.S. consumers who bought a home on Zillow while being represented by a Zillow-affiliated agent from September 19, 2021 to the present.
