Investors in the nation’s leading home listings company have sued the company alleging that it failed to disclose that the Zillow Group experienced significant unpredictability when forecasting home prices.
Los Angeles attorney Lesley Portnoy accuses Zillow Offers of unpredictability as well as supply and labor shortages, which have allegedly caused a backlog of inventory, and that positive statements about the company’s business were misleading, according to a press release.
Portnoy did not immediately respond to requests for comment.
The class action complaint was filed shortly after a federal judge in Seattle allowed a lawsuit against Zillow and the National Association of Realtors (NAR) to proceed.
“It's possible that the Seattle case is a tester and might be used in California and other states because Zillow is nationwide,” said Albert Hughes III, an attorney in Orange County.
REX, a real estate brokerage, sued the NAR and Zillow alleging they illegally colluded to eliminate competitors.
“If REX secures a positive ruling in this matter, we might see a decrease in the number of commissions that agents are able to make and would ultimately lower the amount of the price for homes,” Hughes told the Southern California Record.
As previously reported in Housing Wire, federal judge Thomas Zilly is allowing the lawsuit to proceed because “brokerages, agents, and even customers have no choice but to comply with NAR’s so-called optional rules.”
The lawsuit was filed shortly after Zillow changed the way its website looks. “The secondary page where REX's homes are listed isn't the initial page that pops up and that you see when consumers look for a house in an area and they want their listings to be shared with the other listings so that it allows for competition,” Hughes said.” REX is going to have to show that Zillow viewership has a direct correlation to the number of sales.”
REX v. NAR and Zillow alleges violations of the Sherman Anti-Trust Act.
"The plaintiff doesn't necessarily have to show that Zillow and NAR have an express contract but rather that Zillow follows NAR’s optional rules,” Hughes added.
NAR has since filed a countersuit alleging that REX made false and misleading advertisements and statements about its services that deceived consumers, according to a statement online.