Zillow Legal Issues: What You Need to Know About Lawsuits, Listings, and Landlord Rules

When you search for a home on Zillow, a major U.S. real estate platform that aggregates property listings, price estimates, and neighborhood data. Also known as Zillow Group, it serves as a primary starting point for over 200 million monthly users. But behind the clean interface and flashy Zestimates, Zillow has faced a wave of legal trouble that’s changed how people trust online property data. It’s not just about wrong numbers—it’s about money lost, deals ruined, and tenants caught in the middle.

One of the biggest Zillow legal issues, a series of class-action lawsuits and regulatory actions targeting inaccurate home valuations and misleading advertising revolves around its Zestimate tool. Courts found that Zillow’s algorithm often overvalued or undervalued homes by tens of thousands of dollars—sometimes without warning. Buyers relied on those numbers to make offers. Sellers believed they could list higher. When the numbers crashed, lawsuits followed. In 2023, Zillow settled a $125 million case over claims it used outdated or incorrect data to generate estimates. That’s not a glitch—it’s a systemic flaw.

Then there’s the problem of fake listings, property ads that don’t exist or belong to someone else. Scammers post fake rentals or sales on Zillow, often using stolen photos and fake contact info. Buyers send deposits. Renters get locked out. Zillow claims it removes these quickly, but thousands slip through. The FTC has warned users: never wire money based on a Zillow listing without verifying the owner. And landlords? They’re not safe either. Some have been listed as owners of properties they never bought—triggering tax notices, eviction threats, and credit damage.

And it doesn’t stop there. Zillow’s push into iBuying—buying homes directly from sellers—collapsed after it lost over $1 billion in 2021. The company bought homes at inflated prices, assumed they’d sell fast, and got stuck with inventory when the market turned. That failure didn’t just hurt investors—it made Zillow more desperate to show high prices to keep traffic up. The result? Even more inflated Zestimates, more misleading headlines, and more legal risk.

Meanwhile, state regulators are watching. In Virginia, landlords are being told to verify Zillow listings before accepting applications. In Maryland, rental license applications now require proof that listings match official records. In Texas, real estate agents are being trained to cross-check Zillow data with county assessor databases. These aren’t random policies—they’re direct responses to Zillow’s legal problems.

What does this mean for you? If you’re looking for a home, don’t trust Zillow as gospel. Use it to get a rough idea, then verify everything: check the county recorder’s site, call the landlord directly, ask for proof of ownership. If you’re selling or renting, make sure your listing is claimed and updated. If you’re a tenant, don’t rely on Zillow for lease terms—read your contract. The platform might be convenient, but it’s not a legal shield.

Below, you’ll find real guides from people who’ve been burned by bad listings, misunderstood lease terms, and faulty price estimates. Whether you’re in Virginia dealing with rent hikes, Utah chasing cheap land, or Maryland waiting for a rental license, the lessons are the same: trust your own research. Zillow shows you a picture. It’s up to you to check if the house is still standing.