Real Brokerage has been pulled into a widening legal battle against the real estate listings giant Zillow, with an amended complaint naming the firm as a defendant in a class action lawsuit alleging Real Estate Settlement Procedures Act (RESPA) violations and consumer steering.
The filing, submitted Dec. 29 in the U.S. District Court for the Western District of Washington, adds Real Brokerage to the Taylor v. Zillow case. The lawsuit accuses Zillow of operating an enterprise that incentivizes agents to steer homebuyers toward Zillow Home Loans in exchange for leads, a move that allegedly violates RESPA.
RESPA is a federal law that applies to most residential mortgage loans, protecting consumers from unnecessarily high settlement charges and prohibiting certain referral fees among providers of settlement services, including lenders.
According to the amended complaint, the allegations center on a coordinated scheme to inflate commission fees and direct mortgage business to Zillow’s lending arm. The plaintiffs argue that Zillow’s business practices trick buyers into working with Zillow-affiliated agents, who are then pressured to prioritize Zillow Home Loans over other potential lenders.
The legal pressure on Zillow intensified in December when the Taylor case was consolidated with Armstrong v. Zillow. That lawsuit, initially filed in early November, levied similar accusations regarding Zillow’s Premier Agent structure. It alleged that the portal rewarded real estate agents with additional or higher-quality leads if they successfully funneled clients to Zillow’s mortgage division.
Real Brokerage is the latest industry player to be drawn into the litigation, which began in September. The Dec. 29 filing represents the most significant expansion of the defendant list since November, when three other companies — Oregon-based Works Industries LLC, Nevada-based GK Properties and Florida-based Frano Team — were added to the suit.
The amended 100-page complaint is the first filing submitted since the two cases were merged. The document includes accounts from several confidential sources who the plaintiffs claim substantiate the allegations of racketeering and steering.
Zillow has consistently denied the allegations raised in both the Taylor and Armstrong matters in responses to media inquiries. The company maintains that its lead generation and mortgage programs are fully compliant with RESPA guidelines and state laws.
