After just under five years of litigation, Zillow announced today that it is paying out over $210 million to shareholders who claimed the company misrepresented the company’s ability to predict and profit from flipping homes at the height of the pandemic boom market, resulting in significant losses for the company.

“We are incredibly pleased to obtain this result for investors,” said Steve Berman, managing partner of Hagens Berman, a law firm that also led the original commission-related lawsuits against the National Association of Realtors and big brokerages.

In a statement shared with RISMedia, a Zillow spokesperson commented, “We are pleased that the parties have reached a resolution on the matter.”

The settlement comes a little over three weeks after the Supreme Court denied a request by Zillow to overturn lower court rulings related to how the class of shareholders was certified. The case had been scheduled to go to trial in September of 2027.

According to a regulatory filing from Zillow, about $48 million of the settlement will be paid through insurance proceeds. Hagens Berman said in a statement the settlement was “potentially the largest single securities settlement in the history of the Western District of Washington federal court.”

The settlement must still be approved by a judge.

Zillow’s iBuying business, dubbed Zillow Offers, was launched 2018 with the promise the company could scale the business model of buying and quickly flipping homes, using technology to help predict short-term market fluctuations and patterns.

But after the company bowed out after around three years, selling a backlog of almost 18,000 homes at a loss of around $550 million, Hagens Berman filed the lawsuit, arguing the company had not adequately disclosed its struggles to price and purchase homes while misleading investors in its public statements and communications.

The lawsuit, known as Jaeger v. Zillow Group, alleged that even as late as August of 2021, two months before Zillow Offers shut down, Zillow executives were touting the strength of the business even though they knew it was struggling.

The lawsuit further alleged that Zillow employees raised concerns behind the scenes in regards to how the company allegedly put “overlays” on top of its algorithm to increase the volume of homes it purchased, overpaying for properties to maintain the appearance its iBuying effort was successful.

After the demise of Zillow Offers, other companies, including Redfin, shuttered their own iBuying businesses, mostly citing a difficult housing market. Pure iBuyers like Opendoor and Offerpad continue to operate at a much smaller scale, most offering agent partnerships and expanding their business models beyond flipping homes.

This is a breaking story. Stay tuned to RISMedia for updates.

Editor’s note: this story was updated at 6:39 p.m. eastern time with additional information throughout.

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