Home Buyers Accuse EXp of Supporting Zillow’s ‘Fraudulent Business’
The plaintiffs in a Zillow class action complaint claim eXp harmed buyers by advertising Zillow Flex and supporting the portal’s listing ban.
EXp Realty is now part of a six-month legal battle against Zillow, in which a group of twelve homebuyers accused Zillow of violating their state consumer rights, the Real Estate Settlement Procedures Act (RESPA) and the Racketeer Influenced and Corrupt Organizations Act (RICO).
The lawsuit, filed in Washington state, alleges that Zillow is not open to homebuyers about its Flex program, in which agents pay a 40 percent referral fee on closed deals and agree to meet a pre-approved quota from Zillow Home Loans. Both program terms have resulted in higher costs for homebuyers through higher commissions and the loss of the ability to obtain more favorable mortgage terms, court documents show.
The Real Brokerage and two real estate teams, Nevada-based GK Properties and Florida-based Frano Team, are already listed as co-defendants, and now eXp has been added to post a series of YouTube videos explaining how agents can increase their Flex conversion rates. The amended complaint also highlighted the brokerage’s support for Zillow’s Listing Access Standards and noted that an eXp agent, listed as “RH,” represented Alucard Taylor, the plaintiff who filed the complaint in September.
“The Zillow Fraudulent Business Enterprise consisted of legally separate entities and individuals, including Zillow, Inc., Zillow Group, Inc., Zillow Homes, Inc., Zillow Listing Services, Inc., Zillow Home Loans, LLC, EXP Realty, LLC, GK Properties, Real Broker, LLC, the Frano Team, and other individuals and entities, including unknown third parties, who coordinated their conduct to fraudulently induce homebuyers to use Zillow Flex agents and to illegally route buyers to Zillow Home Loans as alleged above,” the court document states.
A spokesperson for eXp said the company “has been wrongly named in this matter.”
“If we become involved in this lawsuit, we will vigorously defend against these claims, which we believe have absolutely no merit,” the spokesperson said. Real estate news on Thursday.
Zillow filed a motion to dismiss in February for failure to state a claim. He said the plaintiffs’ complaint is based on a “nonsensical” series of events, including homebuyers believing they are connected to the broker despite having signed a travel agreement and a buyer-broker agreement. The portal also said that contact information for all listing agents is “readily available” on every listing page.
As for the latest filing, the company said it “provides no new content” and “throws new legal theories at the wall” without sufficient evidence.
“Zillow’s motion to dismiss, which is still pending, alleges that despite all of Plaintiffs’ rewrites to modify and refine their claims, they still do not sufficiently state a single valid claim against Zillow,” the company posted this on its Front Porch blog. “This lawsuit and its allegations continue to serve the purpose of making noise about facts.”
“Plaintiffs are unable to maintain a stable theory of who the wrongdoers are, let alone a stable theory of what someone did wrong,” she added. “… This new complaint continues to identify no consumer harm. Plaintiffs allege no facts showing that using Zillow’s connection tools or obtaining a free pre-approval letter actually increased the sales price of a home, increased the cost of a buyer’s loan, or resulted in a worse outcome than any available alternative.”
Read the amended complaint below:
Correction: Zillow has publicly responded to the matter via its Front Porch blog. An earlier version of this story stated that the company declined to comment publicly.
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