HENDERSON (KTNV) — Zillow is being sued amidst claims the company has systems in place that is driving the cost of new homes even higher.
That's according to a new federal lawsuit that was filed in U.S. District Court in the State of Washington.
The lawsuit claims that Zillow does this in several ways:
- When a buyer clicks contact agent on the Zillow website, it doesn't take buyers to the listing agent for the property. It takes buyers to a Zillow-affiliate buyer's agent. If the Zillow-affiliated agent is also a Flex agent, the lawsuit states they have to pay Zillo up to 40% of the agent's commission.
- Zillow "compels Zillow Flex agents to steer home buyers to use Zillow Home Loans, even though — as Zillow and the agents know — ZHL offers less loan packages compared to competitors, its loans come with undisclosed and hidden fees, it has higher interest rates, and it does not offer common assistance packages available to first-time home buyers."
You can read the full filing below.
According to the lawsuit, Zillow loan officers "frequently misrepresent or omit important details about the borrowers' true costs at closing, which leads to buyers either paying excessive costs or losing the house" and "many Zillow Flex agents know virtually nothing about the real estate process or the neighborhoods in which they are showing homes, yet these same agents are falsely promoted as a 'Top Agent' on Zillow based solely on their participation in the Zillow Flex program."
GK Properties, a real estate firm based out of Henderson, was named as a defendant in the lawsuit and is facing claims they weren't honest with customers.
"According to its Zillow profile, the George Kypreos Team has sold a total of 7,050 properties, including 397 in the past 12 months, with an average sales price of $453,000. As a result, its approximate total sales are $3.2 billion, with $180 million in the last 12 months alone," the lawsuit reads. "Of the 32 real estate agents listed on the George Kypreos Team's Zillow profile, all of them have the 'Top Agent on Zillow' badge, despite the fact that three of the agents had zero sales in the past 12 months and another agent had only one sale."
The lawsuit claims the company "knew that potential buyers were being defrauded, yet they stayed silent to further the common purpose of the Zillow Fraudulent Business Enterprise."
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Two of the plaintiffs in the lawsuit bought homes here in the valley.
David Liao is from Northridge, California but bought a home in Las Vegas and used Zillow Home Loans to finance and close on the purchase.
Dale Kroger is from Henderson and bought a home there. The lawsuit states he used Zillow's website to look at homes and identified a house that interested him. He clicked on the "Contact Agent" button, believing he was contacting the seller's agent.
"Thereafter, he felt compelled to stay with that person as his agent," the lawsuit states. "Plaintiff Kroger believes that, because he was unable to contact the buyer's agent, he paid higher commissions because he had to pay his buyer's commission (as well as the seller agent's commission)."
Based on the lawsuit, attorneys claim those commission fees can be as high as $15,000 and the higher interest rates through Zillow's loan program could cost buyers up to $100,000.
"Zillow's steering practice can have long-lasting impacts on the housing market," the lawsuit states. "Experts warn this apparent efficiency is masking a system designed to steer homebuyers to the platforms' own mortgage lenders, squeezing out competition and discouraging buyers from finding cheaper options."
Channel 13 reached out to Zillow, GK Properties, Las Vegas Realtors and the Nevada Real Estate Division.
Zillow sent Channel 13 the following statement:
“The claims in this lawsuit are false and fundamentally mischaracterize how our business operates. Zillow is built around empowering consumers with information and choice, and our programs reflect that commitment. Through trusted local agents, clear accountability and tools, we work with partners to help buyers understand what they can afford and deliver strong outcomes for consumers while ensuring they remain in control at every step. We stand by our business model, and we will vigorously defend against the allegations in this case.”
Las Vegas Realtors declined to comment.
We have not heard back from GK Properties or the Nevada Real Estate Division.
The case is still working its way through the federal court system. No hearing dates have been set, as of Tuesday.
On Tuesday, a new report from the Las Vegas Realtors state local home prices in the valley have reached an all-time. high. The median price of single-family homes sold in Southern Nevada during November was $488,995, which is up 1.9% from November 2024 and tops the all-time high of $485,000, which was hit several times earlier this year.
