Zillow Settles iBuying Fallout Lawsuit for $212M

Zillow will finally put its failed iBuying business firmly in the past after agreeing to settle a class action lawsuit brought against the portal for misleading shareholders.

Reuters has reported that Zillow will pay affected shareholders $212.5 million, subject to court approval. Insurance would ​cover circa $48 million of the payout, and Zillow would also pay the shareholders' lawyers.

Zillow denies securities fraud, but saw an attempt to get the case dismissed rejected in September.

Assuming the settlement is approved, the case would be closed without Zillow needing to admit any wrongdoing.

In November 2021, Zillow's share price plummeted 32% after then-CEO Rich Barton announced the company would shut down its iBuying division (launched three years earlier), sparking a shareholder revolt.

Shareholders were left with less valuable stock after Zillow admitted properties bought under the iBuying 'Zillow Offers' segment were worth less than the portal had paid for them.

According to the lawsuit, shareholders felt like Zillow had defrauded them into purchasing overinflated shares because the portal was not transparent about the strength—or future—of Zillow Offers.