Five years after pulling the plug on its iBuying program, Zillow Offers, the Seattle-based company has reached a $212.5 million settlement with shareholders who claimed they were defrauded into buying Zillow shares at inflated prices because company leaders painted an overly positive picture of the direct-to-consumer homebuying program.
The lawsuit, Jaeger v. Zillow Group Inc. et al, was originally filed Nov. 16, 2021, in the U.S. District Court for the Western District of Washington. It includes investors who bought shares between Aug. 5 and Nov. 2, 2021.
In a statement, Steve Berman, managing partner of Hagens Berman, which served as court-appointed class counsel in the lawsuit, said: “We are incredibly pleased to obtain this result for investors, what we believe to be the largest single securities settlement in Western District of Washington history. Our securities team works tirelessly to protect the rights of investors.”
When asked for comment, a Zillow spokesperson said, “We are pleased that the parties have reached a resolution on the matter.”
Through its Zillow Offers program, launched in 2018, Zillow directly purchased homes from sellers for cash. After buying a property, Zillow planned to make minor repairs and flip it.
In November 2021, the company announced that it was closing down that part of the business. Company founder Rich Barton wrote in an earnings report that, “we’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.” When Zillow announced that it would shut down the iBuying program, it also said it would take a $304 million write down and lay off 25 percent of its workforce.
Investors tied to the class-action suit say they were defrauded into buying their Zillow shares at inflated prices because the company’s leaders made misleading statements about Zillow Offers’ purchasing volume and pricing accuracy.
A 32 percent plunge in Zillow’s common stock price took place over two days in November 2021, following news that most homes in the Zillow Offers inventory were worth less than the company paid for them, and Zillow was looking to sell 7,000 of them.
Zillow reported the settlement in its 8-K filing on Wednesday. (In early October 2026, the Supreme Court declined in October to hear its appeal on class certification.) The company did not admit wrongdoing in agreeing to the settlement. “The Settlement Agreement contains no admission of liability or wrongdoing by any of the defendants,” the filing states.
Next, the court will review the settlement agreement, according to a release from Hagens Berman; “if favored by the court, it will then proceed through preliminary and final approval.”
Hagens Berman will ask the court to grant preliminary approval of the settlement, according to the firm.
iBuying still exists, though the market has shrunk significantly and consolidated into just two main players: Opendoor and Offerpad. Redfin shut down its own iBuying arm, RedfinNow, in 2022, with 264 of its employees from that division losing their jobs.
After winding down its iBuying business, Zillow refocused on its core agent-facing products, including Premier Agent. More recently, the company has increasingly emphasized its Flex referral model, under which agents pay Zillow a fee when a transaction closes, rather than its traditional pay-per-lead advertising model.
AJ LaTrace contributed reporting to this article.
