Zillow Faces New Lawsuit Amid Real Estate Industry Shakeup

Major real estate technology companies are navigating a period of significant change, marked by new legal challenges and executive shifts. Zillow is now the target of a class-action lawsuit filed by law firms involved in the landmark Moehrl commission cases, while other industry players like Rocket and Opendoor are also experiencing notable developments.

The lawsuit against Zillow alleges that its agent referral program misleads consumers and inflates commission costs. This legal action comes as leaders from Rocket and Redfin signal a potential alliance focused on consumer advocacy, and iBuyer Opendoor announces another change in its financial leadership.

Zillow Targeted in New Commission-Related Lawsuit

The legal battles transforming the real estate industry have expanded to include one of its largest online platforms. Law firms that led the successful Moehrl antitrust case have filed a new class-action lawsuit against Zillow Group, accusing the company of practices that harm homebuyers.

The core of the complaint focuses on Zillow's Premier Agent Flex program, a system where agents pay Zillow a fee only after a referred client closes a transaction. The lawsuit alleges this model is deceptive. According to the filing, the program "tricks" consumers into believing they are being matched with a top local agent, when they are instead connected to an agent who has agreed to pay Zillow a significant referral fee.

Allegations of Inflated Commissions

A central claim in the lawsuit is that the Flex program directly contributes to inflated buyer-agent commissions. The suit argues that because agents must pay a large portion of their commission to Zillow, they are less likely to negotiate lower fees with their clients.

This structure, the plaintiffs contend, ultimately forces homebuyers to pay more than they would in a more transparent market. The lawsuit describes the arrangement as a method to maintain high commission rates across the industry, benefiting Zillow at the expense of consumers.

Furthermore, the lawsuit criticizes Zillow's policy that restricts the display of private or off-market listings on its platform. The plaintiffs label this policy a "scheme to defraud buyers," suggesting it limits consumer choice and funnels them toward properties that generate referral fees for Zillow.

Industry Leaders Hint at New Alliances

While some companies face legal headwinds, others are signaling a shift in strategy focused on consumer interests. Varun Krishna, the CEO of Rocket, recently spoke about a shared mission with Redfin CEO Glenn Kelman.

"We can do a lot together," Krishna stated, highlighting a "common bond" between the two companies. He emphasized a mutual goal to prevent consumers from getting "screwed over" during the complex process of buying and selling a home.

This alignment between a major mortgage lender and a technology-focused brokerage could indicate future collaborations. Both Rocket and Redfin have built their brands on using technology to streamline and simplify the real estate transaction, often challenging traditional industry models.

Krishna's comments suggest a proactive approach to industry reform, positioning his company as a consumer champion. As the market adapts to new commission rules, partnerships between technology-forward companies like Rocket and Redfin could offer alternative models for consumers seeking more transparency and lower costs.

Leadership Changes Continue at Opendoor

The iBuying sector, which has faced significant market volatility, is also seeing internal adjustments. Opendoor, a pioneer in the instant home-buying model, has announced another change in its executive team.

The company has appointed Christy Schwartz as its interim Chief Financial Officer (CFO). This is familiar territory for Schwartz, who previously served in the same interim role from 2022 to 2024. She has also been the company's chief accounting officer, demonstrating deep financial experience within the organization.

This leadership shuffle comes as Opendoor and other iBuyers continue to refine their business models in a fluctuating housing market. The sector has struggled with profitability and accurate home-price forecasting, leading to strategic pivots and executive changes across the industry.

The Broader Context of Industry Disruption

These individual events at Zillow, Rocket, and Opendoor are not isolated. They are part of a broader, industry-wide transformation driven by legal, technological, and market pressures.

The wave of litigation targeting commission structures is forcing every company in the real estate ecosystem to re-evaluate its value proposition. Zillow's referral-based model is now under the same legal scrutiny that traditional brokerages have faced.

Simultaneously, statements from leaders like Varun Krishna show that some companies see this disruption as an opportunity to win over consumers by offering more transparent and cost-effective services. The leadership instability at Opendoor reflects the ongoing challenge of building a sustainable and profitable business model in a rapidly changing environment. For consumers and real estate professionals, this period of upheaval is likely to bring both challenges and new opportunities as the market evolves.