Zillow’s Brutal Week: Competitors Surging, Fresh Lawsuits, and New Questions About Flex

The real estate world just watched Zillow absorb one of its roughest stretches in recent memory. In a matter of days, its longtime rival vaulted into the No. 1 spot, a new lawsuit targeted its Flex model, and a former insider filed a suit referencing mishandled harassment complaints—while industry chatter reignited concerns about how Zillow Home Loans may be intertwined with Flex performance. Here’s what happened, why it matters, and what to watch next.

1) Compass moves to the top of the mountain

On September 22–25, 2025, Compass announced a deal to acquire Anywhere Real Estate in an all-stock transaction (~$1.6B) that would create the world’s largest residential brokerage by volume and agent count. Market reaction was mixed, but the headline was unmistakable: Compass cemented its position at the top. SFGATE+4Wall Street Journal+4Reuters+4

Why it stings for Zillow: Zillow’s consumer portal dominance has long been counterbalanced by brokerage consolidation. A larger Compass—now paired with Anywhere’s brands (Coldwell Banker, Century 21, Sotheby’s, etc.)—strengthens an “off-Zillow” distribution and negotiating bloc across listings, referrals, and ancillary services. Wall Street Journal

2) New class-action targets Flex: “inflated costs” for buyers

On September 19–22, 2025, plaintiffs represented by Hagens Berman and Cohen Milstein filed a federal class-action alleging Zillow deceived consumers into using company-affiliated agents via its Premier Agent/Flex programs and, in doing so, drove up buyer costs. Coverage notes potential billions in damages sought for buyers who used Flex since 2021. Zillow has not yet filed a response. Hagens Berman+4HousingWire+4GeekWire+4

Why it matters: Flex is a key revenue engine, shifting agent spend from upfront ad buys to post-closing referral fees. Legal scrutiny that frames Flex as deceptive or anticompetitive could pressure margins, reshape disclosures, or force program changes. Convin

3) Ex-employee lawsuit raises misconduct and harassment oversight claims

Also this week, a former senior Zillow employee filed suit alleging the company retaliated against him after he raised concerns about race discrimination and that leadership overlooked sexual harassment complaints against certain executives. While the case is at an early stage and allegations must be proven, it adds reputational risk and invites discovery around internal conduct. RealEstateNews.com

(Context: Zillow has faced harassment-culture suits in years past, separate from this week’s filing—another reason the new allegations drew attention.) FindLaw+2employmentattorneyca.com+2

4) The Flex + Zillow Home Loans question: target, requirement, or rumor?

Agents have long debated whether Flex teams are expected to route a share of buyers through Zillow Home Loans (ZHL)—and whether failing to hit that share quietly dings lead flow/quality. Zillow’s own Flex Performance Standards reference a “Zillow Home Loans pre-approval target” that “may differ by market,” but they stop short of stating a universal requirement or specific percentage. Zillow

You’ll find social posts and forum threads alleging thresholds (like “10% through ZHL”) and consequences for missing them, but those claims are anecdotal and unverified. Treat them as industry chatter, not fact. If you’re in Flex, the only authoritative source is your market’s General Agent (GA) and your executed program terms. Reddit

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What this all means for agents and teams

• Lead-gen diversification just got more urgent. With Compass + Anywhere consolidating distribution and Flex under legal fire, don’t be over-exposed to any single portal. Balance with sphere marketing, listing lead funnels, Google LSAs, Meta/YouTube ads, and lender/BUILDER partners.

• Scrutinize your Flex economics. Model referral fees, conversion, and CAC/LTV against alternate channels. If you’re asked to meet any ZHL targets in your market, get them in writing, understand how they’re measured, and confirm whether performance affects allocation. Zillow

• Compliance and disclosure matter. With plaintiffs alleging deception around agent steering and fees, make sure your buyer representation agreements, lender disclosures, and marketing claims are buttoned up. HousingWire+1

• Reputational risk is operational risk. Culture and compliance headlines can impact recruiting, referrals, and consumer trust. Keep your own policies clear on harassment reporting, retaliation, and conduct—then train, test, and enforce them. RealEstateNews.com

Bottom line

Zillow’s week combined competitive pressure, litigation risk, and renewed skepticism about how Flex aligns with Zillow Home Loans. For agents, the play is simple: control what you can control—diversify lead sources, know your numbers, demand clarity in your contracts, and keep your client disclosures pristine. The industry is shifting fast; build a marketing system that isn’t dependent on any one platform—Zillow included.