Judge dismisses suit accusing Zillow of kickback, racketeering schemes

In the midst of several legal battles over its practices, Zillow has secured a key court victory.

Seattle-based U.S. District Judge James Robart on July 27 dismissed a lawsuit against Zillow that said the company violated the Real Estate Settlement Procedures Act and the Racketeer Influenced and Corrupt Organizations Act by allegedly steering homebuyers toward Zillow-affiliated agents and Zillow Home Loans.

Zillow and fellow defendant GK Properties filed motions to dismiss in February, arguing that the plaintiffs’ lengthy complaint was “heavy on filler but thin on substance.”

“Plaintiffs’ claims of lack of notice are implausible given Zillow’s express, repeated disclosures,” the dismissal ruling reads. “Plaintiffs fail to plead specific facts showing how Defendants’ practices actively undermined the homebuying process, restricted informed lender choice, or eroded trust in real estate professionals.”

In the suit, originally filed in September 2025, the plaintiff alleged that Zillow tricks consumers into using agents affiliated with the portal through its Flex and Premier Agent programs, resulting in inflated home purchase prices. An amended complaint filed in November 2025 said Zillow uses internal incentives to steer homebuyers to use its own mortgage business, Zillow Home Loans.

The lawsuit was consolidated in December 2025 with a second complaint, by another plaintiff, first filed in November 2025 with similar claims.

Robart said in his ruling that the complaint did not have enough factual allegations to substantiate the claims the plaintiffs made.

The ruling said Zillow’s website clearly displays the property’s actual listing agent, and therefore it is implausible that buyers are tricked into working with a Zillow-affiliated agent.

The complaint said that even though buyers are promised that the services of a Zillow-affiliated agent are free, the buyer’s agent still receives a commission if the sale goes through. The ruling said those claims lack standing, because the fees in question came out of the seller’s agent’s total compensation, which was split with the buyer’s agent, rather than from the buyer.

The ruling also said the complaint failed to identify necessary information that highlighted exactly how Zillow allegedly steered homebuyers to its mortgage services.

After the ruling, Zillow praised the judge for dismissing the “baseless complaint.”

The court is allowing the plaintiffs to file an amended complaint by Aug. 17, saying it “cannot conclude that Plaintiffs are entirely incapable of curing these defects” from their earlier filings.