Zillow is being sued in a proposed nationwide class-action lawsuit that alleges it misleads consumers on its site while quietly pocketing up to 40% of the buyer agent’s commission, and doing it without disclosure to either the buyer or the seller.
The lawsuit, filed by Oregon homebuyer Alucard Taylor on September 19, 2025, targets Zillow’s “Flex” agent referral program and accuses the company of violating both the Washington Consumer Protection Act and the federal Real Estate Settlement Procedures Act (RESPA).
At the core of the complaint is Zillow’s popular “Contact Agent” and “Request a Tour” buttons, which most buyers assume will connect them with the listing agent. Instead, Zillow routes the lead to a Flex agent (someone who pays Zillow a chunk of their commission). Buyers are asked to sign a “Touring Agreement” that implies the service is “free.” But as the suit puts it: “This is deceptive and not true.” That buyer agent earns a commission if the deal goes through, and up to 40% of it goes back to Zillow, with no disclosure of that payment to either party.
The lawsuit calls this a “classic bait-and-switch” and claims it inflates costs for buyers and makes it harder for Flex agents to negotiate commission reductions, even when it might help their buyer win in a multiple-offer situation. According to the suit, Zillow’s hidden fees and routing practices “drive up the prices that buyers must pay” by keeping commissions high and inflexible.
It also claims Zillow uses its dominance (66% U.S. real estate audience share) to pressure listing agents to post to Zillow within 24 hours of marketing a property. If agents don’t comply, Zillow blocks their future listings, potentially forcing sellers to switch agents. This “Listing Access Standards” policy is presented as anti-competitive and further increases Zillow’s control over listing traffic.
From a consumer standpoint, this raises big transparency concerns. For agents, especially listing agents, this could further complicate how they represent clients and compete for exposure. If buyers believe they’re contacting the listing agent but are redirected to a Flex buyer agent who is financially obligated to Zillow, that’s a disclosure issue, plain and simple.
The lawsuit seeks to represent all consumers nationwide who bought a home through a Zillow-affiliated agent since 2021. It demands restitution, damages, and a halt to these practices.
Takeaway: Regardless of the outcome, this suit underscores how critical it is, now more than ever, for buyers and sellers to understand who’s representing them, how they’re being compensated, and who’s really pulling the strings behind the screen.