If you wish to purchase, promote, or hire actual property within the U.S., Zillow seems to be the one sport on the town. That’s in response to the Semrush Traffic Analytics tool, which tracked over 225 million visits to the itemizing large in September, greater than double its closest rivals, Craigslist.com and Realtor.com.
Nonetheless, Zillow is alleged to have paid the worth to be boss, as 5 states have filed lawsuits towards the corporate for paying $100 million to rival Redfin to withdraw from the hotly contested rental listings market, thereby permitting Zillow dominance.
Why the U.S. Rental Market Is So Vital to Listings Platforms
The U.S. residential rental market has gained elevated significance lately, as would-be homebuyers have turned to leases or are backing out of residence purchases. For instance, in August, patrons canceled round 56,000 buy contracts, which represents 15.1% of houses that had been beneath settlement, in response to a Redfin report. The cancellations not solely characterize the very best quantity since 2017, however are additionally up from 14.3% of cancellations in August 2024.
“Dwelling purchases are falling by way of extra regularly as a result of patrons and sellers oftentimes aren’t on the identical web page and aren’t keen to compromise,” the Redfin report said.
Redfin’s most up-to-date report was unrelated to its alleged cope with Zillow, which occurred in February, when Zillow made a cost of $100 million on the situation that Redfin stop its residence rental promoting operations and terminate its contracts with property managers promoting multifamily properties. As an alternative, Redfin was required to redirect these shoppers to Zillow’s platform, a transfer that states contend gave Zillow an unfair benefit over its competitors.
What the Criticism Towards Zillow and Redfin Alleges
In line with the complaint filed jointly by state attorneys normal from New York, Arizona, Connecticut, Washington, and Virginia, the lawsuit argues that this elimination of competitors hurts each property managers and renters by elevating promoting prices and decreasing housing choices.
Zillow and Redfin additionally face authorized challenges from the Federal Trade Commission (FTC), which accused the businesses of antitrust violations, alleging most of the identical complaints that the state contends, in addition to asserting that Redfin was working as an extension of Zillow, because it served as an unique syndicator of Zillow’s listings as a substitute of as an impartial competitor.
Zillow’s Response to the Allegations
A Zillow spokesperson mentioned in a press release despatched to Real Estate News:
“Our itemizing syndication with Redfin advantages each renters and property managers and has expanded renters’ entry to multifamily listings throughout a number of platforms. It’s pro-competitive and pro-consumer by connecting property managers to extra high-intent renters to allow them to fill their vacancies, and extra renters can get houses. We stay assured on this partnership and the improved worth it has delivered and can proceed to ship to shoppers.”
How the Zillow Lawsuits Have an effect on Mother-and-Pop Actual Property Traders
Whereas Craigslist and Fb Market stay comparatively inexpensive to promote on, they don’t have the identical safeguards in place as Zillow to guard landlords from fraud. Nonetheless, if Zillow has a monopoly over the rental market, decreasing competitors can result in increased promoting charges.
This would damage smaller buyers, who’re already squeezed by the prices of working a rental enterprise, with out factoring within the expense of promoting vacant items. Contemplating 41% of U.S. rental items are owned by particular person buyers, it is a sizable market.
“Lease Is Utterly Unaffordable”
To offset elevated prices, landlords have already been pressured to boost hire considerably. Including the price of advertising and marketing, historically one of many lesser bills in comparison with upkeep, taxes, and insurance coverage, will solely lead landlords to additional elevate rents on tenants, a lot of whom are already cost-burdened.
In line with the rental administration software program firm Baseline, 85% of landlords elevated hire in 2024, and 78% plan to extend hire in 2025 by a weighted common of 6.21%.
“Lease is totally unaffordable proper now, and this deal goes to make issues worse,” William Tong, Connecticut attorney general, said. “This unfair and anticompetitive settlement between itemizing giants Zillow and Redfin will jack up prices for property managers, who will go these prices on to renters.”
A Typical Household Must Earn $80,000 to Afford a Median Rental
Zillow’s rental market report reveals that the everyday asking hire within the U.S. was at $1,858 in April, up 28.7% since April 2020. A typical family at the moment spends 29.6% of its earnings on hire. It wants an annual earnings of $80,949 to afford the median rental.
Zillow is conscious of the elevated bills landlords at the moment face, regardless of the price of promoting with them. “Housing prices have surged since pre-pandemic, with rents rising fairly a bit sooner than wages,” Orphe Divounguy, senior economist at Zillow, said within the firm’s spring report. “This usually leaves little room for different bills, making it significantly troublesome for these hoping to save lots of for a down cost on a future residence. Excessive upfront prices are sometimes neglected, which might maintain renters of their present houses.”
Zillow’s Ongoing Feud With CoStar
Plot twist: Whereas Zillow dominates total actual property quantity, in response to property tech strategist Mike Delprete, a scholar-in-residence on the College of Colorado Boulder, it nonetheless trails CoStar’s Residences.com in relation to visits to its rental website.
There’s a number of money at stake. Residences.com generated $1 billion in earnings in 2024.
Within the first half of 2025, Zillow’s multifamily rental enterprise earned round $200 million, whereas Residences.com generated over $570 million, accounting for 38% of complete firm income. The elevated deal with leases has seen each firms develop considerably over the past two years.
Nonetheless, Zillow is gaining, reducing Residences.com’s lead by 50% in 24 months. Issues have grown more and more contentious between the 2 actual property juggernauts. CoStar is currently suing Zillow over multifamily photograph copyright infringement, with potential for $1 billion in damages.
Ultimate Ideas
Nobody likes being dictated to in relation to working their enterprise. Rental actual property continues to growth within the U.S., and now the tech platforms need their slice of the motion. It could be silly for landlords to count on the charges tech firms cost for itemizing on their platforms to abate due to a lawsuit. Even when the states’ AGs and FTC prevail, tech might be again.
There are some things landlords can do. First, within the age of synthetic intelligence (AI) and large fraud, they may want safeguards towards dangerous actors. Forking over safety cash to listings platforms with sturdy safety and vetting methods is perhaps the price of doing enterprise.
To cowl this, rising income is a necessity. However there additionally must be a sea change within the old-school methods buyers select to leverage their cash.
With bills on the rise, it’s time to undertake extra conservative funding methods. Within the trendy age, actual property is a far much less profitable play than it as soon as was. Within the brief time period, it’s about overlaying prices and attaining tax write-offs and presumably gaining appreciation. Cash flow solely comes into the image in the long run, when the equity paydown is enough to permit it.
Whereas institutional buyers and Wall Road REITs can afford to purchase residence buildings en masse to capitalize on the rising rental market, mom-and-pop buyers must be extra considered. Factoring in the price of advertising and marketing their leases on tech platforms is a part of that technique.
Rising word-of-mouth networking domestically and organically by way of trusted sources must also be part of the plan. It’s a lot more durable to commit rental fraud when a member of the family or shut pal referred your tenant. That doesn’t imply you need to display them simply as robustly as in the event that they had been a stranger, however not less than you wouldn’t have given a tech itemizing website your cash to seek out them.
