Is Zillow’s Co-Marketing Program Illegal?


Many in the market for a new home look to the web when beginning their search.  Most likely, Zillow.com is one of the site visited by prospective buyers.  Not only can these house hunters view homes for sale in their desired neighborhood, recently they have also been shown advertisement for “premier” agents and brokers.  According to an article published by the Miami Herald, these real estate professionals “ …pay hundreds or thousands of dollars a month in advertising fees to the company. Premier agents need not be the highest volume or most successful agents in their area; they simply need to pay for the label.”

The program then expanded about 6 years ago, and introduced a program allowing agents to share advertising costs by partnering with lenders.  It was a win win for agents, who were able to have much of their advertising cost covered, and lenders, who could get a foot in the door with prospective home buyers.  However, it is now being reviewed to determine if this program violates the Real Estate Settlement Procedures Act which “prohibits payment of fees for business referrals among realty, mortgage and title industry providers that are not for services actually rendered”, according to journalist Kenneth R Harney. 

In fact, a judge in the U.S. district court in Seattle determined that, “the court can draw a reasonable inference that Zillow designed the co-marketing program to allow agents to provide referrals to lenders in violation of RESPA.” The class-action lawsuit filed will hear from both whistle blowers alleging violations and certainly Zillow defending its program’s legality.

Read the entire article.

Learn More