London Daily

Focus on the big picture.
Monday, Oct 19, 2026

Zillow slapped with first federal lawsuit from shareholders over home-flipping business flop

Zillow slapped with first federal lawsuit from shareholders over home-flipping business flop

Zillow is facing a new federal lawsuit alleging the real estate company misled investors and caused them great financial losses before its house flipping business folded amid increased unpredictability in the market.

The lawsuit filed Tuesday in U.S. District Court for the Western District of Washington at Seattle alleges that Zillow made "materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects." The filing is the first federal case opened regarding Zillow Offers, as two other Boston-based law firms have also asked additional shareholders to come forward as they investigate lost money by investors, the Seattle Times reported.

An investor named Dibakar Barua and others allege Zillow failed to disclose that, despite operational improvements, the company experienced significant unpredictability in forecasting home prices for its Zillow Offers business. That issue, combined with labor and supply shortages, led to a backlog of inventory.

Despite knowing the company was reasonably likely to wind down its Zillow Offers business, which would have an adverse impact on its financial results, Zillow made "positive statements about the company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis," the lawsuit filed in Seattle claims.

"As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages," the lawsuit continues.

The allegations came a day before Zillow announced it is moving forward with a plan to place Denver’s homeless population into vacant units, as city leaders cited housing affordability as one of the leading factors contributing to homelessness in the Colorado region.

Yet, Zillow Offers is among a group of so-called "iBuyers" companies – which include Redfin and Opendoor – that buy homes, typically from sellers who want to sell their home quickly, and then put the homes back on the market. These companies have been competing with regular homebuyers as the housing market superheated over the past year amid a shortage of properties on the market.

The lawsuit also comes approximately two weeks after Zillow, an American online real estate marketplace company based in Seattle, announced its Zillow Offers unit would stop buying and selling homes, citing the "unpredictability" of forecasting housing prices. Winding down the unit will take several quarters and will result in about a 25% reduction in the company’s workforce, which is now at about 5,300.


About a month ago, Zillow said it would pause buying homes through the end of 2021, citing a backlog in renovations and other operations due to labor and supply constraints. The idea was to temporarily stop buying homes and focus on selling those it had already purchased. But the company decided since then to shutter its home-flipping business altogether.

In announcing company's third-quarter results, CEO Rich Barton pinned the reason for closing down Zillow Offers on how difficult home-prices forecasting has become. "We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility," Barton said.

The company disclosed it took a write-down of about $340 million because it bought homes during the third quarter at prices that exceed Zillow's estimates for what those properties will fetch in the future.

The home-flipping business has helped juice Zillow's revenue this year. For the nine months ended in September, Zillow Offers' revenue increased 88% to $2.65 billion versus the same period of 2020. Zillow said it expects to book an additional $240 million to $265 million in losses in the fourth quarter primarily on home transactions expected it close this quarter.

Shares in Zillow fell 10.2% before the release of its earnings amid published reports about the company's plans to shutter the home-flipping business. The stock slumped another 12% in after-hours trading following its announcement.

Newsletter

Related Articles

0:00
0:00
Close
Surging Cloned Number Plates Severely Complicate Traffic Enforcement and Police Investigations
Mounting Opposition Challenges Planned Rollout of Autonomous Taxis Across London
Influential Think Tank Urges Rejoining European Union to Navigate Geopolitical Crises
Government Review Recommends Slashing Benefits to Fund Youth Employment Initiatives
Senior Minister Shabana Mahmood Seeks New Law Enforcement Pact With European Union
Airbus Executive Warns Britain Risks Losing Crucial Role in European Space Industry
Exorbitant Electricity Costs Push British Steelmakers to Worst Competitive Position in Three Years
British Food and Beverage Exports to European Union Collapse by Over a Third Since Brexit
Up to Twenty English Maternity Units Face Impending Closure Due to Safety and Staffing Crises
Government Declares Severe Drought Across Southern England Following Record Dry Spell
Corporate Profit Warnings Reach Two-Year High Amid Middle East Conflict and Rising Costs
International Monetary Fund Warns Chancellor John Healey Against Proposed Bank Tax Raid
Northern Ireland Secures Favorable Agricultural Export Agreement with European Union
Scottish Government Approves Major Offshore Floating Wind Farm Near Aberdeenshire
High Speed Two Rail Project Faces Three Billion Pound Cost Escalation on Initial Phase
National Health Service Warns of Winter Capacity Crisis Across English Hospitals
Tata Steel Confirms Two Thousand Job Cuts at Port Talbot to Fund Green Transition
Global Microchip Developer Announces Three Billion Pound Semiconductor Plant in Cambridge
United Kingdom Artificial Intelligence Safety Institute Proposes Mandatory Licensing for Generative Models
United Kingdom Commits Additional Long-Range Weapons and Air Defenses to Ukraine
British Chancellor Overhauls Infrastructure Financing to Bypass Borrowing Constraints
Bank of England Holds Benchmark Interest Rate at Four Point Five Percent
First Minister Rhun ap Iorwerth Confirms Constitutional Discussions Over Welsh Independence During Initial Bilateral Call with Prime Minister
Labour Party Instructs Local Council Groups to Sever Power-Sharing Accords with Green Party Over New Controversial Policy Positions
Institute for Fiscal Studies Warns of Thirty-Five Billion Pound Fiscal Gap Ahead of Chancellor John Healey Upcoming Autumn Budget
House of Lords Backs Landmark Legislative Amendment to Decriminalize Abortion Across England and Wales
United Kingdom Defence Secretary Wes Streeting Travels to Pentagon for High-Level Strategic Talks Amid Escalating Tensions Over Ukraine and United States Policy Shifts
Bank of England and International Monetary Fund Officials Issue Urgent Warnings Regarding Potential Artificial Intelligence Financial Market Shocks
Reform UK Faces Severe Political Fallout and Scrutiny After Undercover Media Investigations Reveal Systemic Racism Among Candidates
Former Democratic Unionist Party Leader Jeffrey Donaldson Sentenced to Fifteen Years in Prison Following Landmark Child Sexual Abuse Trial
House of Lords Votes to Amend Schools Bill Implementing Comprehensive Social Media Ban for Children Under Sixteen Years of Age
International Monetary Fund Upgrades United Kingdom Growth Forecast for Two Thousand Twenty-Six While Warning of Energy-Driven Inflation Pressures
Competition and Markets Authority Launches Formal Inquiry Into Corporate Artificial Intelligence Partnerships
Automotive Industry Leaders Urge Westminster to Accelerate Electric Vehicle Charging Infrastructure Rollout
Home Office Expands Digital Border Security Framework With Mandatory Electronic Travel Authorizations Across United Kingdom
Northern Ireland Executive Reaches Final Consensus on Public Sector Pay Reform and Budget Allocations
Welsh First Minister Secures Additional Funding for Rural Agricultural Transition and Sustainable Farming Schemes
Scottish Government Unveils Accelerated Regional Infrastructure Strategy to Boost Clean Energy Manufacturing
National Health Service England Launches Emergency Recruitment Drive to Alleviate Severe Acute Care Winter Backlogs
Bank of England Monetary Policy Committee Signals Cautious Approach to Interest Rate Reductions Amid Persistent Wage Growth
British Government Finalizes Emergency Energy Support Package to Protect Households From Winter Price Surges
Russell Brand Trial Begins at Southwark Crown Court
UK Parliament to Debate Climate Risks and Council Tax Following Public Petitions
Department for Transport Demands Safety Audits Following Regional Rail Disruptions
House of Lords Scrutinizes Amendments to Armed Forces Bill
Devolved Administrations in Scotland and Wales Criticize Post-Brexit Funding Framework
Prime Minister Andy Burnham Defends Middle East Military Support Under Parliamentary Scrutiny
NHS Leaders Warn of Severe Pressure on Hospitals from Winter Virus Outbreaks
Retailers and Business Groups Lobby Chancellor for Relief from Rising Employment Taxes
City of London Taskforce Urges Radical Reform to Prevent UK From Becoming "Incubator Nation"
×