Zillow Sued in New Class Action: What Realtors Need to Know

Anthony Lamacchia:

Well, Zillow is now being welcomed into the class action lawsuit party. They may have thought they dodged a bullet with the prior lawsuits and the prior settlement, but as of last week, they have been sued. What does that mean for those of you that buy Zillow leads? Those of you that are on Zillow Flex, those of you that are doing Zillow showcase.

And other Zillow products. What does it mean for those of you that do business with realtor.com, homes.com? Also, other things happening in the real estate space like Compass making a massive power move yesterday and buying anywhere real estate or signing a contract to buy, and it sounds like they’re going to close late next year.

Now, here’s the interesting thing. Remember back in June, compass sued Zillow over CCP, and when Zillow sort of. Put themselves in the line of fire and became the industry enforcer of the clear cooperation policy. In addition to that, the MLS Pin Nose Elect case goes for final approval on [00:01:00] September 29th.

So lots to talk about here, but I’m gonna spend most of my time on this Zillow case, uh, from this latest, latest manufactured plaintiff. Remember I used to use that term because all the plaintiffs in the original CIT or Burnett case I had always said. They were fake plaintiffs and they were manufactured by the, uh, very talented, uh, plaintiff’s attorney, Michael Ketch.

Mark. Well, now it seems that this attorney who was involved in the prior case, ’cause it’s the same firm, Hagens Berman, uh, and then, um, there’s another one here, Kohl’s Cohen Millstein, but they’re copying the catch mark playbook. Steve Berman was quoted as saying. We believe Zillow is well aware of the potential for Ill-gotten gains in this space and has sought to play fast and loose when real people’s basic need of housing is on the table.

Fast and loose is a catch mark line. Steve, you should probably disclose that. Just want to point that out. Um, the plaintiff in this case, right, they have so many plaintiffs and they have so many [00:02:00] people hurt. That there’s one lonely plaintiff who’s willing to give their name up and actually be the listed plaintiff.

Uh, and that’s a lucid Taylor. A Lucid Taylor. We had a whole debate about this name and, you know, who knows who this person is. They bought a home. Good luck to them. They probably got convinced into being the, uh, the plaintiff, uh, be just like the other manufactured plaintiffs in the other cases. But the plaintiff brings this action on behalf of himself and on behalf of the plaintiff.

Of the class consisting of all persons and entities who bought a home using a Zillow agent. They keep using that Zillow agent phrase, and it’s. Classic lawyering because these lawyers, they’re, they’re not dumb people. Okay? They hate capitalism for sure. They hate capitalism for sure. They don’t really understand capitalism, but on laws and legalities, they’re smart people and they know how to pitch things in their complaints.

But one thing they did for Zillow, I mean, if I was Lloyd and Rich, I would kinda like this introduction, right? I’m gonna read [00:03:00] this. Zillow is the undisputed market leader in online real estate listings in investment presentations. It notes that it has 66% of the US real estate audience share twice as high as its nearest competitors.

It also promotes the fact that 80% of consumers come directly to Zillow, uh, blah, blah, blah. Their revenue Zillow’s ama, Zillow does this. Zillow does that. Uh, if the agent is part of the Zillow Flex program, Zillow gets 40% of the agent’s commission a payment on the backend. That is undisclosed to all parties involved.

Ooh. Never heard of an industry buying leads. Never heard of an industry doing something like that. That’s That’s something we’ve never heard of. Yeah, right. It happens in every darn industry. And hey, I’ll take a minute before I jump back into the complaint. And I’ll say, I’m not necessarily here to defend Zillow.

I was on Zillow’s side about CCP back in the spring and Zillow appreciated that. I heard [00:04:00] that, but I’m not necessarily here to completely defend them on this. I am here to say that this is another scam lawsuit. It’s another anti-capitalism money grab, right, from lawyers that are just trying to fleece the industry as they’ve already done, and they’ve had a tremendous negative effect.

On realtors, on home buyers and home sellers across our nation. Uh, and now it looks like they’re working to get more of a negative effect. But I will say, you know, I’m not Zillow’s Defender. We do business with Zillow. There are areas and products that Zillow offers that we do business with them. And then there are products that we don’t do business with them because we feel that they’re too tough and too overreaching and asking for too much.

But here’s the truth, folks. Zillow has a right to do that. This is capitalism. I have a right to say yay or nay to do BI doing business with Zillow. And this is a business to business relationship in my doing business or not doing business with them. So it’s awful interesting to see the angles that they’re taking here, and they [00:05:00] obviously are hoping the Zillow buckles and Zillow backs down.

But as I said in my Instagram video, uh, yesterday morning, early. These plaintiffs and these, uh, plaintiff’s attorneys, they better be ready for a war. ’cause they’re not fighting a trade organization. Uh, when they fight Zillow, they’re not fighting a trade organization that works by vote. And the leaders are kind of hamstrung to the members.

They’re not doing that. They’re not fighting a public company that’s mainly pushed around by shareholders. Okay. Rich and Lloyd are legitimate businessmen and they’re very tough. And they’re very strong and they’re very smart. So I’m gonna bet right here on camera. That these plaintiffs are gonna be in for a war.

And I’m rooting for that. I’m rooting for that. And the reason I’m rooting for that, go look at all my videos that I had done last year when I said, until these plaintiff’s firms get punched in the mouth, they’re gonna keep coming back and they’re gonna keep trying to fleece our industry. So that’s what I hope [00:06:00] happens.

Lemme get back into the complaint. I, I finished the advertisement for Zillow in the introduction. Now I’m gonna go into, um. Parts of the complaint. Section six. The effect on Zillow’s policies and conduct is to increase the purchase price of homes for buyers. Okay, that’s false. I went through this in my other videos a year, a year and a half ago, coming up on two years ago next month.

That’s false. These people, these lawyers have no understanding. They say that the commission inflates the inflates the price. Listen to other things. They go on to say, since the flex agents only effectively receive 1%. Uh, receive a 1% commission from the purchase price of the home. Parentheses, after paying the hidden Zillow fees and commissions to their firms, they have no practical flexibility in negotiating a lower commission.

Sellers are stuck paying 6% commission or more. Don’t we wish? Sellers, were stuck paying a 6% commission. Don’t we wish? That’s not how capitalism [00:07:00] works, and that is not the case in the practical world. But I know that many of the attorneys are absolutely perplexed. They’ve got all these law degrees. See how I have pictures of my family and my children on the wall?

You’ll notice there’s no degrees ’cause I don’t have any. But I could teach these lawyers many things. These fancy law schools they go to and all these places, and they don’t understand that. The commissions are not jacking up the prices, and these referral fees are not jacking up the commissions or the prices.

Okay? This is the cost of doing business. These are things that many companies and many realtors choose to do, and many realtors choose not to do. Okay. Most of the companies, I will say this, there are cases in our industry of realtors joining companies and being grossly taken advantage of with referral fees and things like that that might be out of control.

It doesn’t happen often, but there are times that people join a company and they’re taking advantage of. But people that are joining Zillow, flex, companies that are joining Zillow [00:08:00] Flex, they’re savvy players. They know what they’re doing. We, we made a business decision not to do it. It’s no knock on Zillow, but we just said, nah, we’re okay with Zillow Flex.

We like to buy our leads and we like to have no referral fee to pay at the end. We’re not interested in that, but that was our choice. So I just want to point out the distinguishment between the two. Um, let me, let me read the rest of this 6% commission or more because the buyer flex agent is receiving such a paltry sum in return.

Thereby increasing the purchase price. They, they don’t know what they’re talking about. Uh oh. Here’s the part about the, uh, here’s the part about the hundreds persons. The court has subject matter jurisdiction, blah, blah, blah. Because the class defined herein contains more than a hundred persons, the aggregate amount in the controversy exceeds $5 million.

So think about that. Only a lucid Taylor had the guts. To be the, uh, plaintiff put on here, which I, I’m sure Lucid was [00:09:00] convinced into doing this, but. Apparently there are hundreds. I thought that was quite interesting. Now I wanna show you something else. Section 38 of the complaint. What they talk about here is this is precisely what happened to plaintiff Taylor in 2022 when browsing zillow.com to look for houses of interest to him.

He clicked on the contact agent button assuming that he would be contacting a listing agent. Instead, he was routed. To a Zillow agent. Pay attention to that part about contact the listing agent. I’m coming back to that ’cause that’s the root of this. During the touring and closing process, plaintiff Taylor did not believe he had any other option other than to use the Zillow agent.

Okay? So this is what you call a fabrication. This is what you call bs. Okay? Let’s take it piece by piece. He thought he would be contacting the listing agent. I talked about this in many of my videos over the years, [00:10:00] and I’ve had coworkers over the years that have pointed out, and I’ve pointed out in many, many videos that the real root of this, these lawyers got sicked on our industry by some higher power.

I don’t know who, I have some thoughts, but I don’t know exactly who, but they were sick on our industry. In order to break the system, these lawyers don’t understand why buyers often have buyer’s agents. They’re obviously not connected to the same group of lawyers and consumer advocates from the nineties who said buyers should have an agent.

And that’s when buyer agency was truly born and into the early two thousands, and there was pushback, and then it became a thing. But in most cases, there were two agents for years and years even before that. But then they created true buyer agency and fiduciary duties in most states where buyer’s agents are actually working on behalf of the buyer.

Well, they don’t like that. [00:11:00] And there are some companies out there that don’t like that, and there are some companies out there that seem to be obsessed with just protecting the seller and the listing brokerage. I’ve made that criticism of Mr. Kin at Compass, I’ve said. Why does he talk so much about the good of the seller without mentioning the good of the buyer?

Is he behind this? I doubt it, but it’s awful strange to me. When you look at this and you think about why would these lawyers from Hagens Berman or a CatchMark in McCrite or Cohen Millstein, this Doug Miller character, this guy’s a joke. All he does is pick on the industry all the time. Okay. Why are they obsessed with the industry?

Why do they pick the industry apart? Why do they continue to point out that in their opinion that a buyer is better off going to a listing agent? I’d like to know, did they go to a listing agent? No. ’cause we’ve done research. We’ve done research on some of these attorneys, and when they bought homes, they had buyer’s agents.

So it’s awful interesting when you see that. I’m not gonna get into names [00:12:00] and people’s homes and things. I’ve got more respect than that. But these people are hypocrites, okay? And it’s ridiculous. So what’s gonna happen here? We shall see. I am going to make a few predictions. I think that Zillow will probably get a little more bold with disclosures.

Uh, I think they’ll probably require some disclosures. I think that maybe their website might be a little bit more clear, like, Hey, you’re, you’re contacting another agent. I, although there is a distinguishment by the way. If you go on Zillow, it says, listing agent, and then it says A agent. I mean, you know these, these lawyers want disclosures.

For disclosures. For disclosures. There’s also many other websites that do this. realtor.com, homes.com, la macia realty.com, right? We’re receiving over 30,000 unique visitors in a given week in busy season to laia realty.com. What are we gonna slap? Uh, disclosures all over the website. Go on other websites.

VRBO and all these other Airbnb. What about other [00:13:00] industries? Amazon, I mean, how big do lawyers want disclosures to be? Okay, so I think you’re gonna see Zillow tighten up on a few things. I do think there will be some negative impact naturally on those that have businesses that are more addicted to Zillow Flex, those that have companies that are more addicted to Zillow leads.

Um, I learned that many years ago. Never allow your business to get addicted to one source ever. You always have to be able, ready, willing, and able to walk away from a source. And I’ve proved that to some of these portals over the years. They know that and they know that about me. So if your business is in a position where you are addicted to these sources, you need to think about making some adjustments to your business because this pressure legally will inherently likely cause.

Some changes and it might even hurt the consumer. ’cause remember these lawyers, they don’t give a flying shit about the consumer. They care about fleecing their pockets and they care about disrupting the industry. No question in my mind they say they’re for the consumer. [00:14:00] They’re not for the consumer.

Okay? So that’s my opinion. I’m entitled to it under free speech. And I thought I would mention it. How, what? You know, what is the impact of Compass buying anywhere? Well. The plaintiff in the Compass Zillow case just got a lot bigger, but not quite. It’s gonna take about a year before it closes, but there’s no doubt they’re thinking about it.

There’s no doubt that NARI haven’t talked to them, but I’m sure they’re thinking about the fact that Mr. Kin just pulled off quite a feat. Okay, that’s awful interesting to me. So we shall see how this transpires, but those are my thoughts for now. Thank you all for watching. Stay tuned into Crush It In Real Estate and follow me on Instagram (@ajlamacchia) for small updates along the way.

Thank you.

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