Zillow Group (NASDAQ: Z, ZG) has been hit with a new lawsuit that accuses the company of steering homebuyers into using its mortgage lending services.
Reuters reports the proposed class action lawsuit alleged the Seattle-headquartered company of providing affiliated real estate agents with high-value sales leads if they can fill quotas for generating pre-approved mortgages through Zillow Home Loans. The plaintiff is an Alaska homebuyer who claimed she was steered into using Zillow Home Loans without being told of other financing options that might be more affordable.
“Zillow is fundamentally cheating a carefully regulated system in order to win more of the mortgage financing market, and the result is that home buyers do not get objective, clear-eyed advice from their trusted real estate agents,” said the lawsuit, which accuses Zillow of violating both the federal Real Estate Settlement Procedures Act and Washington state’s consumer protection laws.
The lawsuit seeks to expand into a class action case that would cover all US homebuyers directed by a Zillow-affiliated agent into using the company’s mortgage services. The complaint seeks more than $5 million in damages, restitution, and a court order to stop the alleged practices.
This is the second time this fall that Zillow is being sued for allegedly deceptive practices. In September, homebuyers accused the company of deceptively using property listings to encourage their use of the Zillow affiliated agents.
Shame on any Realtor who does not provide a minimum of 3 referrals sources for each home buying service. Let the Buyer exercise their Due Diligence and call various lenders, home inspectors, insurance agents etc. Absolutely provide contacts with whom you know provide outstanding service and competitive rates.
Clients comes first. Zillow does not know that. Clients, Realtors, everyone Beware.
There are plenty of real estate brokerages that steer clients to their closing companies. I received an offer on a personal property the other day that was from Benchmark agent who said we must close with Benchmark’s closing office because buyer was closing there.
What about all the real estate agents who are mortgage brokers? A little conflict of interest there?
Buyers have the right to chose their own settlement company. Sellers have no say so in that.
Shea,
Not necessarily. This can vary by State, County and/or even City. There are a number of situations where the seller must use a specific settlement company such as an estate where there are underlying needs including a specific POA. I just dealt with one. These are typically mentioned in the listing comments.
Zillow dangled leads to new Realtors ONLY if you send them to Zillow home loans! They force the Realtors give their customers Zillow home loans and then Realtors chance losing buyers from Zillow’s predatorial loan practices.
Zillow is unregulated where as realtors are. Zillow needs to meet government regulation and laws because it uses illegal tactics when dealing with buyer and sellers.
Zillow has always used shady practices to entice Agents to work with them.
Unfortunately this practice is not limited to Zillow. As. Real estate broker, I have been approached by Rocket Mortgage and other lenders telling me I can increase my income by referring buyers. I have always declined because the ethical conflict is clear to me. The same way I refuse to “represent” buyers on my own listing.
Such practices should not be allowed because buyers and sellers trust their agent and accept their suggestions.
This lawsuit is sucked out of one’s thumb.
They are plenty of information now to make your own due diligence and research.