Real estate technology company Zillow is facing a new class-action lawsuit accusing it of steering homebuyers toward its mortgage arm, Zillow Home Loans, through undisclosed incentives offered to affiliated agents. Filed in the U.S. District Court for the Western District of Washington, the complaint alleges that an Alaska homebuyer was misled into believing a Zillow mortgage was her only financing option.
Attorneys from Tousley Brain Stephens claim Zillow-affiliated agents have, since 2022, directed clients toward Zillow Home Loans in exchange for valuable customer leads through the company’s referral program, Zillow Flex. The lawsuit argues that this practice violates the Real Estate Settlement Procedures Act and the Washington Consumer Protection Act. The attorneys stated, “Zillow is fundamentally cheating a carefully regulated system in order to win more of the mortgage financing market.”
The complaint seeks class-action status, financial compensation, and the forfeiture of any profits tied to the alleged scheme. Zillow did not respond to requests for comment. According to a recent shareholder letter, the company’s mortgage revenue grew 36% year over year to $53 million in the third quarter of 2025, driven by more buyers choosing Zillow financing. The firm also aims to increase the number of buyers working with Zillow-referred agents from one-third to 75%. Legal experts note that while referral practices exist in other industries, stricter rules in real estate complicate their legality. This case follows several lawsuits filed this year challenging Zillow’s agent and lender partnerships.
