Zillow has become the place where most people start their homebuying journeys, with over 195 million unique visitors visiting the site on a monthly basis. For real estate agents, advertising on the platform can generate a host of new leads for customers, leads that until earlier this year they had been willingly paying up for.
But growth ground to a trickle in 2019, and though the situation seems to have stabilized in the third quarter, with revenue rising 5% to $241 million, Zillow may have another problem that could cause this once-lucrative revenue stream to come undone.
The real estate site has been hit with two lawsuits charging its Premier Agent program is "unfair and deceptive" because it advertises real estate agents on listings for which they are not the broker. The suits allege consumers can get confused and potentially end up entering into dual agency transactions, where the real estate agent is working for both the buyer and seller.
The first lawsuit targeted Zillow's Trulia division and focused on its New York market, but the second lawsuit is against Zillow itself and broadens the scope to include New York, Pennsylvania, "and States where defendant conducts business," potentially making it nationwide.
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