Zillow files motion to dismiss in Taylor class action suit, citing insufficient claims

Zillow and the three Preferred agent partners also named as co-defendants have asked a federal court to dismiss a consolidated class-action lawsuit challenging the company's agent referral and mortgage tools. In a motion filed February 20 in the U.S. District Court for the Western District of Washington, Zillow argues that, despite the plaintiffs' latest 100-page complaint, their claims lack substance and fall short of the legal standards required to move forward.

This is the Plaintiffs' fourth iteration of their complaint. Zillow's motion argues that, even after all of plaintiffs' rewrites to amend and refine their claims, they still do not sufficiently plead a single claim against Zillow.

At the center of the lawsuit are two long-standing features of Zillow's platform, both of which exist to bring transparency and simplicity to what has historically been a complex and opaque transaction process. These two features are:

• Tools that allow buyers to connect with a local buyer's agent to represent their interests. Helping buyers connect with their own advocate from the start reduces conflicts and ensures aligned representation. Buyers are always free to choose who they work with.
• Optional pre-approval letters from Zillow Home Loans, designed to help buyers understand what they can afford and strengthen their offers. Obtaining a pre-approval does not require a buyer to use Zillow Home Loans for financing, and consumers remain free to work with any lender of their choosing.

The motion emphasizes what Zillow has always made clear: both tools are free and completely optional for consumers, who remain in control of which agent they work with to buy or sell a home and which lender they use for financing, including non-Zillow lenders. In fact, as the motion points out, one of the named plaintiffs who alleges he received a Zillow Home Loans pre-approval, also alleges he chose to finance his home with a different lender. Every person who receives a Zillow Home Loans pre-approval letter can make the same choice.

More than 220 million unique users turn to Zillow's apps and sites every month to search for homes, connect with agents and better understand affordability before making one of the biggest financial decisions of their lives. This lawsuit misrepresents the tools developed based on user preference and research, which are designed to expand consumer choice - not limit it.

• Buyers deserve choice in agent representation. Zillow firmly believes buyers and sellers should choose an agent who will represent their unique and individualized interests in a real estate transaction. This is best done when a buyer has their own representation and that's why Zillow connects buyers on the platform to agents who will work for them. However, buyers are never required to work with the agent they are connected with and remain free to choose any agent they prefer. If the agent Zillow connects them to doesn't work out, Zillow will connect them with a different option and the buyer is under no obligation at any point in the process.
• Buyers have choice in their financing options. Claims that Zillow steers consumers to Zillow Home Loans are simply incorrect for many reasons. For example, Zillow does not require buyers to use any particular lender. Consumers are free to work with any lender of their choosing. Zillow provides open access to affordability and pre-approval tools which are mischaracterized in the complaint. These helpful tools are optional resources designed to help buyers understand what they can afford - especially in today's challenging housing market.

Notably, "the Plaintiffs' own allegations and public documents show that they were free to work with any agent or lender they preferred," the motion states.

The bottom line: Zillow's model is designed to protect consumers and help them through the transaction

• A buyer's agent remains a buyer's best bet. When buyers click "Contact agent" or "Request a tour," on Zillow they are connected with a real estate agent who will represent their interests. Independent representation reduces conflicts and aligns with long-standing real estate principles recognizing that a listing agent's duty is to the seller. By helping buyers connect with their own agent from the start, Zillow supports clear, aligned representation.
• Zillow's tools allow buyers to shop with more confidence. The optional pre-approval tool is a great way for potential buyers to understand what they can afford and shop with more confidence, knowing their options early in the process. As Zillow argues in its motion, the plaintiffs do not plead a single fact to support their claims that using Zillow's connection tools or obtaining a free pre-approval letter actually increased a home's sale price or the cost of the buyer's loan, or where a better alternative was available and not offered.

"The claims in this lawsuit are false and fundamentally mischaracterize how our business operates," said a Zillow spokesperson. "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 these meritless allegations."

Zillow has strong reason to believe the lawsuit is being driven by competitors who want to deflect from their own challenges. The company remains confident in its position, and will continue to invest in providing more transparency for consumers, rather than resorting to litigation to generate unfounded headlines.

Zillow plans to vigorously defend against lawsuits that mischaracterize its business and long-standing industry practices and says it is grateful for the opportunity to have its day in court and defend itself against plaintiffs' unfounded claims.