Zillow Hit With Class-Action Suit Over Flex Program

The law firms that first went after the NAR and cracked open the traditional commission model are going after Zillow.

In a class-action complaint filed in federal court in Washington, Hagens Berman and Cohen Milstein claim Zillow’s Flex program funnels buyers to agents who pay the company up to 40 percent of their commission. The cut, which allegedly brought in more than $2 billion for Zillow last year, is never disclosed to consumers, the suit says, leaving both buyers and sellers in the dark about a financial relationship that shapes how deals are steered.

The lawsuit was first reported by Real Estate News.

The filing also targets Zillow’s listing policies, which require most homes to hit the site within 24 hours of being marketed elsewhere. Plaintiffs argue that the rule effectively forces sellers and their agents to feed Zillow’s platform.

That policy led to a lawsuit from Compass, which alleged anticompetitive behavior on the part of the listings platform and that Zillow’s rules ran afoul of Compass’ long-held marketing strategy. Zillow hit back, claiming Compass has continued to use its marketing strategy and has enacted a new policy to share listings with others, excluding platforms such as Zillow.

Lead plaintiff Alucard Taylor, an Oregon resident, said he was funneled to a Flex agent in 2022 and didn’t think he had another option. The complaint alleges that when buyers press “Contact Agent” on a Zillow listing, they often assume they’re reaching the listing broker, not a Zillow-affiliated buyer’s agent. By cutting that direct line to the seller’s rep, the lawsuit claims, Flex agents protect a commission structure that keeps fees high and, in turn, home prices elevated.

Zillow flatly rejected the allegations. “This complaint fundamentally misrepresents how Zillow operates,” a spokesperson said, adding that the company would “vigorously” fight the claims.

If certified, the case could cover any U.S. buyer who used a Zillow-referred agent over the past four years. It seeks damages under federal antitrust law and Washington state’s consumer protection statute, but doesn’t specify a dollar figure.

The move marks the next chapter for the team that filed the antitrust case against National Association of Realtors, Keller Williams, Anywhere, HomeServices of America and RE/MAX. Their earlier suit, known as Moehrl, forced NAR and several large brokerages into more than $1 billion in settlements and helped rewrite the rules around buyer-broker agreements.

— Holden Walter-Warner