Zillow to Partner Agents: Recent Lawsuits Misrepresent Us

The real estate industry’s best-known portal is under intense pressure after becoming the recipient of lawsuits alleging copyright infringement, kickbacks from brokers with its mortgage arm, deceptive tactics from Flex agents, antitrust violations with its rental syndication agreements and more.

Now it seems that some of Zillow’s partner agents — once known as Flex agents and now as Preferred agents — are a little spooked by all the negative headlines.

Inman learned that the company sent an email from Zillow Preferred Senior Vice President and General Manager Zuhairah Washington to Zillow’s Preferred partner agents on Thursday to provide “clarity and reassurance” about the lawsuit and what it means for agents.

On Friday, the video from the email was published on Zillow’s agent-focused website. Zillow declined to comment further on the report.

The video appeared to largely address allegations made in the recent class action lawsuits over kickbacks and deceptive practices involving the Preferred Agent program.

“The claims in these lawsuits are false and fundamentally misrepresent the way Zillow Preferred operates,” Washington said. “Everything we do starts and ends with the consumer. Buyers and sellers deserve choice in who they work with and transparency throughout the process. And that has been core to our model from day one.”

Washington further emphasized that Zillow takes compliance and legal issues very seriously.

“Zillow Preferred is built on a strong compliance foundation. We operate in a highly regulated environment and we design our programs with careful consideration of the rules – including RESPA [Real Estate Settlement Procedures Act]. We regularly review our processes with internal and external experts and work together with these legal experts. And most importantly, consumers retain full choice of lenders, which is a critical part of RESPA compliance.”

Washington added that Zillow Home Loans’ job is to earn revenue from customers by offering them competitive lending options. She also said the company had reason to believe the lawsuits against them were “competitively motivated,” but she wanted to emphasize that Zillow is committed to supporting agents during this tumultuous time.

All of the company’s partners specifically named in the lawsuits will have the opportunity to join a joint defense in the lawsuit with Zillow, Washington said, and the company will “vigorously defend itself against these claims.”

The lawsuit does not change how Zillow Preferred operates or how agents work with consumers, Washington claimed.

“I take seriously the trust you place in us,” Washington continued. “You rely on us not only to deliver high-quality connections, but also to do so in a way that protects you, your business and your customers.”

The email from Washington also alleged that assumptions made in the lawsuits about Zillow Home Loans’ pre-approval and shopping tools were inaccurate, claiming that consumers can choose to work with whichever broker and lender they prefer.

A common question that Zillow answered in the email was whether or not agents were putting themselves at risk by participating in Zillow Preferred. The company responded by saying it “cannot predict every legal development” but claims its business model is misrepresented in the lawsuit complaints. However, Zillow urged agents to follow their broker guidelines, document places where consumers make their own choices during the transaction, and avoid any behavior that comes across as directive.

Regarding a common question about whether or not Zillow steers consumers to certain lenders, the company said such claims “do not reflect how Zillow operates,” and that consumers are free to choose their agents and lenders.

“Zillow will only succeed if you do,” Washington concluded in the video. “And we are committed to standing with you through moments of industry uncertainty and beyond.”

Email Lillian Dickerson