Las Vegas brokerage named in class-action lawsuit against Zillow

A class-action lawsuit, which names one of the top brokerages in the Las Vegas Valley as a defendant, alleges Zillow’s “anticompetitive” tactics towards homebuyers and sellers has driven up home prices across the country.

The suit, filed in U.S. District Court in Seattle on Nov. 19, alleges online real estate giant Zillow employs “predatory practices” in helping potential homebuyers find properties, including hidden fees, “tricking” them into signing with a Zillow agent and monetizing every step of the home buying process.

A Henderson resident and a California resident who recently purchased a house in Las Vegas are among the plantiffs in the case. They allege Zillow steers potential homebuyers through a process that starts on its website and pushes them towards Zillow flex agents. What the buyer or seller also doesn’t know, the lawsuit alleges, is 40 percent of that agent’s commission goes to Zillow through a backend deal.

A Zillow spokesperson offered a “no comment” response when contacted by the Las Vegas Review-Journal to speak about the lawsuit.

Seattle-based law firm Hagens Berman filed the lawsuit which asks for a jury trial. The firm was the first to get involved with a landmark Missouri class-action case which returned a massive $418 million settlement with the National Association of Realtors regarding broker tactics in buying and selling homes for clients.

One of the brokerages named in lawsuit against Zillow is GK Properties, which recently merged with Signature Real Estate Group and includes Las Vegas Realtors President George Kypreos, who is also a Zillow flex agent. Kypreos declined to comment to the Review-Journal through a spokesperson.

Steve Berman, a managing partner with Hagens Berman, said in an email statement to the Las Vegas Review-Journal the lawsuit now includes a dozen current and former loan officers who corroborated the company’s alleged “deceptive” policies and practices, details of Zillow’s “burn and churn” mentality with clients and claims of anticompetitive practices in collusion with brokerages they allege violate the RICO (Racketeer Influenced and Corrupt Organizations) Act.

“Our lawsuit on behalf of homebuyers has expanded significantly to include claims that Zillow and other players, including Nevada’s GK Properties have illegally worked together to the detriment of their clients shopping for houses,” he said. “Based on our investigation and the confirmation from witnesses inside the real estate industry, we believe we’ve uncovered a systematic illegal process that Zillow enforces through its own policies. In this scheme, agents are made to carry out illegal tactics to deceive their clients, and homebuyers are steered toward Zillow’s own funding arm, Zillow Home Loans.”

The lawsuit alleges that these practices, known commonly within the industry as “steering,” essentially drive up the price of homes and keep both buyers and sellers in the dark about the whole process.

“The effect of Zillow’s policies and conduct is to increase the purchase price of homes for the buyers,” reads the lawsuit. “If buyers were directed to sellers’ agents, they would be better positioned to negotiate a lower purchase price, because the seller would not have to pay commission to the seller’s agent and the buyer’s agent. It also incentivizes Zillow Flex agents to prioritize receiving his/her full commission at all costs, even if the buyer loses the bidding process.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.