Zillow will pay $212.5 million to settle a shareholder lawsuit over its failed home-flipping venture.

The Seattle company disclosed the deal in a Securities and Exchange Commission filing on Oct. 27. About $48 million of the payout is expected to come from insurance. The settlement includes no admission of wrongdoing and still requires court approval.

The case, Jaeger v. Zillow Group, was filed in November 2021 in the U.S. District Court for the Western District of Washington. Investors alleged Zillow and certain executives made misleading statements about the company's home-buying unit, Zillow Offers, inflating the stock price before the business collapsed.

Steve Berman, managing partner of Seattle law firm Hagens Berman, served as court-appointed class counsel.

Berman said in a statement he believes the deal is the largest single securities settlement in the history of the Western District of Washington, the federal court district that includes Seattle.

"The parties reached a mutually acceptable resolution by way of a mediated settlement, and we are satisfied with this resolution," Berman said, according to a Hagens Berman press release.

A Zillow spokesperson said the company was "pleased that the parties have reached a resolution on the matter," GeekWire reported.

How Zillow Offers fell apart

In 2019, co-founder Rich Barton returned as CEO and projected the home-buying operation would reach $20 billion in annual revenue within three to five years, according to GeekWire.

Zillow used pricing algorithms to buy houses, renovate them and resell them.

The strategy unraveled in fall 2021. An analyst report found two-thirds of 650 sampled homes in Zillow's inventory were listed for less than the company paid, GeekWire reported.

Days later, Zillow shut down the business, cut about 2,000 jobs and took a $304 million inventory writedown. Barton cited the unpredictability of the company's home-price forecasts.

The lawsuit pointed to upbeat statements executives made in the months before the shutdown. That included a September 2021 remark by Jeremy Wacksman, then Zillow's chief operating officer and now its CEO, that "the strength and the appeal for Zillow Offers just continues to grow."

What happens next

The settlement came about three weeks after the U.S. Supreme Court declined to hear Zillow's challenge to the case's class certification, according to GeekWire. The U.S. Chamber of Commerce and other business groups had backed Zillow's petition.

The settlement class covers investors who bought Zillow Class A or Class C shares between Aug. 5 and Nov. 2, 2021. No claim form or deadline exists yet, according to OpenClassActions. If a judge grants preliminary approval, Zillow will deposit the money into an escrow fund within 20 business days.

Separate shareholder lawsuits filed against company leaders, known as derivative suits, remain pending.