Dems ask FTC to probe real estate platform referrals 

Two federal lawmakers have asked the Federal Trade Commission (FTC) to take a closer look at the referral practices of major real estate platforms.

The request came just a couple of weeks after Zillow formally responded to the FTC's antitrust allegations in a separate matter already playing out in court.

Concerns about referral, advertising practices

Reps. Jennifer McClellan and Don Beyer, both Democrats from Virginia, sent the FTC their request on May 29, according to The Capitol Forum, which was first to report on the letter. The lawmakers asked the federal agency to investigate real estate platforms' referral practices, review consumer protection measures already in place and, from there, decide whether new guidance is needed. The only company mentioned in the letter is Zillow, which was cited in a footnote.

Some "deceptive or insufficiently transparent internet advertising and solicitation practices" allegedly used by certain real estate platforms "may be steering consumers in ways that are not readily apparent," which "may influence a buyer's choice of agent or lender without clear disclosure of underlying financial relationships or compensation structures," the letter said.

The request was inspired by "concerns regarding rising housing costs and the potential role that certain practices in the online real estate marketplace may be playing in increasing costs for prospective homebuyers," according to the letter, which the lawmakers sent Real Estate News on June 4.

Buyers, for example, may incorrectly think they are contacting the listing agent for a home they're interested in on some of these platforms — and this, the letter said, "undermines informed consumer decision-making and distorts competition."

The FTC confirmed on June 5 that it had received the letter but declined further comment.

'Deceptive' practices make cost of living struggle 'worse'

"The skyrocketing cost of living in this country has only put home ownership further and further out of reach for the American people. Deceptive and non-transparent advertising practices in the online real estate marketplace make this worse by creating greater confusion, frustration or disillusionment with the process," McClellan said in a statement.

"As prospective homeowners struggle to find quality housing that they can afford, I joined Congressman Beyer to send a clear message to the Federal Trade Commission: we can and should do more to give people the tools and support they need to fulfill the American dream of owning a home," McClellan added.

While the letter does not mention CoStar — and there's no evidence the company influenced the lawmakers' call for an inquiry — McClellan and Beyer both have loose ties to Zillow's home search rival.

In 2021, CoStar built a corporate campus in Richmond, which is within McClellan's congressional district. At the time, then-state Sen. McClellan praised the move as a "significant boost for job creation," adding that she was "pleased to see CoStar continue to grow." The real estate giant also relocated its global headquarters to Arlington County — part of Beyer's district — in 2024.

Real Estate News has reached out to CoStar for comment; Beyer's office declined to provide additional comment.

Existing civil suit targets Zillow referral program

Capitol Forum's report came more than eight months after a consumer filed a lawsuit against Zillow over its Flex referral program.

That case, now known as Taylor, was filed on behalf of a homebuyer plaintiff last September. The lawsuit, which McClellan and Beyer cited in a footnote of their letter, alleged that Zillow "tricks" buyers "into signing up with a Zillow agent," with the company getting 40% of the agent's commission if they are involved in Flex. Those buyers initially believe they are contacting the listing agent, the suit alleged, not a Zillow partner agent.

Zillow, which has tried to get the case tossed, has said the lawsuit "fundamentally misrepresents how Zillow operates and the value we've delivered to buyers, sellers and real estate professionals for nearly two decades."

A separate lawsuit filed by the FTC during the same month involves antitrust allegations linked to Zillow's rental listings deal with Redfin.

Zillow: Buyers have freedom of choice

When reached for comment, Zillow pointed to an April blog post that argued the referral program allegations made in the Taylor complaint don't "add up."

When a homebuyer clicks the "Contact agent" or "Request a tour" button on a listing that appears on Zillow, "they are connected with a real estate agent who will represent their interests," the post said. "Buyers are never required to work with that agent and remain free to choose anyone they prefer. The option to connect directly with the listing agent also appears on each home listing."

The Taylor case, Zillow wrote in the post, "keeps changing shape and rotating defendants," with multiple revisions filed over the past several months.

Zillow also referred Real Estate News to recent research suggesting that the typical homeseller loses about $2,000 on dual agency transactions, in which the buyer and seller of a home are represented by the same agent.

This story has been updated with additional information, confirmation from the FTC and comments from Rep. McClellan.