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If you want to buy, sell, or rent real estate in the U.S., Zillow appears to be the only game in town. That’s according to the Semrush Traffic Analytics tool, which tracked over 225 million visits to the listing giant in September, more than double its closest rivals, Craigslist.com and Realtor.com.
However, Zillow is alleged to have paid the price to be boss, as five states have filed lawsuits against the company for paying $100 million to rival Redfin to withdraw from the hotly contested rental listings market, thereby allowing Zillow dominance.
Why the U.S. Rental Market Is So Important to Listings Platforms
The U.S. residential rental market has gained increased importance in recent years, as would-be homebuyers have turned to rentals or are backing out of home purchases. For example, in August, buyers canceled around 56,000 purchase contracts, which represents 15.1% of homes that were under agreement, according to a Redfin report. The cancellations not only represent the highest number since 2017, but are also up from 14.3% of cancellations in August 2024.
“Home purchases are falling through more frequently because buyers and sellers oftentimes aren’t on the same page and aren’t willing to compromise,” the Redfin report stated.
Redfin’s most recent report was unrelated to its alleged deal with Zillow, which occurred in February, when Zillow made a payment of $100 million on the condition that Redfin cease its apartment rental advertising operations and terminate its contracts with property managers advertising multifamily properties. Instead, Redfin was required to redirect these clients to Zillow’s platform, a move that states contend gave Zillow an unfair advantage over its competition.
What the Complaint Against Zillow and Redfin Alleges
According to the complaint filed jointly by state attorneys general from New York, Arizona, Connecticut, Washington, and Virginia, the lawsuit argues that this elimination of competition hurts both property managers and renters by raising advertising costs and reducing housing options.
Zillow and Redfin also face legal challenges from the Federal Trade Commission (FTC), which accused the companies of antitrust violations, alleging many of the same complaints that the state contends, as well as asserting that Redfin was operating as an extension of Zillow, as it served as an exclusive syndicator of Zillow’s listings instead of as an independent competitor.
Zillow’s Response to the Allegations
A Zillow spokesperson said in a statement sent to Real Estate News:
“Our listing syndication with Redfin benefits both renters and property managers and has expanded renters’ access to multifamily listings across multiple platforms. It is pro-competitive and pro-consumer by connecting property managers to more high-intent renters so they can fill their vacancies, and more renters can get homes. We remain confident in this partnership and the enhanced value it has delivered and will continue to deliver to consumers.”
How the Zillow Lawsuits Affect Mom-and-Pop Real Estate Investors
While Craigslist and Facebook Marketplace remain relatively affordable to advertise on, they do not have the same safeguards in place as Zillow to protect landlords from fraud. However, if Zillow has a monopoly over the rental market, reducing competition can lead to higher advertising fees.
This would hurt smaller investors, who are already squeezed by the costs of running a rental business, without factoring in the expense of advertising vacant units. Considering 41% of U.S. rental units are owned by individual investors, this is a sizable market.
“Rent Is Completely Unaffordable”
To offset increased costs, landlords have already been forced to raise rent substantially. Adding the cost of marketing, traditionally one of the lesser expenses compared to maintenance, taxes, and insurance, will only lead landlords to further raise rents on tenants, many of whom are already cost-burdened.
According to the rental management software company Baseline, 85% of landlords increased rent in 2024, and 78% plan to increase rent in 2025 by a weighted average of 6.21%.
“Rent is completely unaffordable right now, and this deal is going to make things worse,” William Tong, Connecticut attorney general, said. “This unfair and anticompetitive agreement between listing giants Zillow and Redfin will jack up costs for property managers, who will pass those costs on to renters.”
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A Typical Family Needs to Earn $80,000 to Afford a Median Rental
Zillow’s rental market report shows that the typical asking rent in the U.S. was at $1,858 in April, up 28.7% since April 2020. A typical household currently spends 29.6% of its income on rent. It needs an annual income of $80,949 to afford the median rental.
Zillow is aware of the increased expenses landlords currently face, despite the cost of advertising with them. “Housing costs have surged since pre-pandemic, with rents growing quite a bit faster than wages,” Orphe Divounguy, senior economist at Zillow, stated in the company’s spring report. “This often leaves little room for other expenses, making it particularly difficult for those hoping to save for a down payment on a future home. High upfront costs are often overlooked, which can keep renters in their current homes.”
Zillow’s Ongoing Feud With CoStar
Plot twist: While Zillow dominates overall real estate volume, according to property tech strategist Mike Delprete, a scholar-in-residence at the University of Colorado Boulder, it still trails CoStar’s Apartments.com when it comes to visits to its rental site.
There’s a lot of cash at stake. Apartments.com generated $1 billion in income in 2024.
In the first half of 2025, Zillow’s multifamily rental business earned around $200 million, while Apartments.com generated over $570 million, accounting for 38% of total company revenue. The increased focus on rentals has seen both companies grow significantly over the last two years.
However, Zillow is gaining, cutting Apartments.com’s lead by 50% in 24 months. Things have grown increasingly contentious between the two real estate juggernauts. CoStar is currently suing Zillow over multifamily photo copyright infringement, with potential for $1 billion in damages.
Final Thoughts
No one likes being dictated to when it comes to running their business. Rental real estate continues to boom in the U.S., and now the tech platforms want their slice of the action. It would be foolish for landlords to expect the fees tech companies charge for listing on their platforms to abate because of a lawsuit. Even if the states’ AGs and FTC prevail, tech will be back.
There are a few things landlords can do. First, in the age of artificial intelligence (AI) and massive fraud, they will need safeguards against bad actors. Forking over protection money to listings platforms with robust security and vetting systems might be the cost of doing business.
To cover this, increasing revenue is a necessity. But there also needs to be a sea change in the old-school ways investors choose to leverage their money.
With expenses on the rise, it’s time to adopt more conservative investment strategies. In the modern age, real estate is a far less lucrative play than it once was. In the short term, it’s about covering costs and attaining tax write-offs and possibly gaining appreciation. Cash flow only comes into the picture in the long term, when the equity paydown is sufficient to allow it.
While institutional investors and Wall Street REITs can afford to buy apartment buildings en masse to capitalize on the rising rental market, mom-and-pop investors need to be more judicious. Factoring in the cost of marketing their rentals on tech platforms is part of that strategy.
Increasing word-of-mouth networking locally and organically through trusted sources should also be a part of the plan. It’s much harder to commit rental fraud when a family member or close friend referred your tenant. That doesn’t mean you should screen them just as robustly as if they were a stranger, but at least you wouldn’t have given a tech listing site your money to find them.
