EXp Realty is now part of a six-month legal battle against Zillow, in which a group of 12 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 isn’t being forthcoming with homebuyers about its Flex program, in which agents pay a 40 percent referral fee for closed deals and agree to meet a Zillow Home Loans preapproval quota. Both program terms have resulted in higher costs for homebuyers through inflated commissions and the loss of an opportunity to secure more favorable mortgage terms, according to court documents.
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 for posting a series of YouTube videos explaining how agents can increase their Flex conversion rates. The amended complaint also highlighted the brokerage’s support of Zillow’s Listing Access Standards and noted that an eXp agent, listed as “R.H.,” represented Alucard Taylor, the plaintiff who filed the complaint in September.
“The Zillow Fraudulent Business Enterprise has consisted of legally distinct 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 home buyers to use Zillow Flex agents and to illegally steer buyers to Zillow Home Loans, as alleged above,” the court document read.
An eXp spokesperson said the firm “has been improperly named in this matter.”
“Should we be drawn into this litigation, we will vigorously defend against these claims, which we believe have absolutely no merit,” the spokesperson told Real Estate News on Thursday.
Zillow filed a motion to dismiss for failure to state a claim in February, saying the plaintiffs’ complaint is based on a “nonsensical” chain of events, including homebuyers believing they’re being connected with the listing agent, despite having signed a touring agreement and a buyer-broker agreement. The portal also said all listing agents’ contact information is “readily available” on every listing page.
As for the latest filing, the company said it “doesn’t offer any new substance” and “slings new legal theories against the wall” without adequate proof.
“Zillow’s motion to dismiss, which remains pending, argues that despite all of the plaintiffs’ rewrites to amend and refine their claims, they still do not sufficiently make a single valid claim against Zillow,” the company posted on its Front Porch blog. “This lawsuit and its allegations continue to be in service of driving noise over facts.”
“Plaintiffs are unable to maintain a stable theory of who the wrongdoers even are, let alone a stable theory of what anyone did wrong,” they added. “… This new complaint still does not identify consumer harm. The plaintiffs do not plead a single fact showing that using Zillow’s connection tools or obtaining a free pre-approval letter actually increased a home’s sale price, 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 commented on the case via its Front Porch blog. An earlier version of this story stated the company has declined to comment publicly.
