11/01/24 | Case Update: Case Stayed
On Nov. 1, 2024, Judge Zilly stayed the case pending the resolution of Zillow’s interlocutory appeal to the Ninth Circuit regarding class certification. We will provide updates as the appeal goes through the briefing process throughout 2025 and will also update this page once the appeal is resolved and Judge Zilly’s stay is eventually lifted.
The litigation challenges Defendants’ statements concerning the Zillow Offers business, which buys and sells homes directly in dozens of markets across the country and allows sellers control over their timeline.
The Complaint alleges that Defendants falsely touted the durability and acceleration of the company’s “burgeoning sell-side business, Zillow Offers” and improvements to its pricing models. At the same time, Defendants concealed from investors that (1) Zillow faced significant unpredictability in forecasting home prices for its Zillow Offers business, (2) the unpredictability, as well as labor and supply shortages, led to a backlog of inventory, and (3) as a result, Zillow was reasonably likely to wind down the Zillow Offers business.
Investors began to learn the truth on Oct. 18, 2021, when Zillow announced that due to a backlog in renovations and operational capacity constraints, the Zillow Offers business will not sign any new additional contracts to buy homes through the end of 2021.
Then, on Nov. 2, 2021, Zillow announced that due to unpredictability in forecasting home prices, the company is winding down the Zillow Offers business, slashing its workforce by 25%, and incurring a whopping $304 million write-down on housing inventory purchased during Q3 2021. The company also said it expects to incur a $240 to $265 million loss on homes it expects to purchase in Q4 2021.
These events sent the price of Zillow shares crashing lower.
CASE TIMELINE
U.S. District Judge Thomas S. Zilly largely upheld claims brought against Zillow on behalf of its investors in a class-action lawsuit accusing the company of false statements regarding its Zillow Offers business.
In April 2018, Zillow entered the “iBuyer” market, in which companies use algorithms and machine learning to buy and resell homes quickly. They called this offshoot Zillow Offers and the company started aggressively buying thousands of homes each month. The lead plaintiff, Jeremy Jaeger, alleges the company deceived investors about Zillow Offers’ underperformance and inability to accurately value these homes.
Judge Zilly’s decision clears the way for the lawsuit to continue to the discovery phase of the litigation. Please check back here for updates as this case progresses.
Hagens Berman filed a robust complaint detailing Defendants' falling behind its internal home purchasing volume targets and launching a risky business initiative the company hid from investors.
