DOJ Brief Exposes NAR’s Misstatements About Segregation Rule

REX applauds the United States Department of Justice's filing in REX’s case against the NAR segregation rule, which cordons off homes for sale on Zillow and other real estate websites

Austin, Texas, August 10, 2021 – On Tuesday, REX issued a statement commenting on news that the United States Department of Justice (DOJ) had filed a brief in the company’s ongoing lawsuit against Zillow and the National Association of Realtors (NAR) over the anti-consumer segregation rule. 

REX has long been the only industry player fighting real estate policies which cost consumers thousands to tens of thousands of dollars on every transaction. Recently, the federal government has shown increased interest in the National Association of Realtors’ anti-competitive antics, which REX has continued to challenge.  

Quote from REX CEO & Co-Founder Jack Ryan: 

“The Real Estate cartel’s house of cards is set to topple. For the past six years, REX has been fighting for consumer access to real estate. Since March, we have been in court challenging big tech and big industry collusion. We appreciate the Biden Administration’s decision to intervene on behalf of consumers which will continue to focus the magnifying glass the administration has put on the national real estate cartel’s archaic anticompetitive schemes.” 

Quote from REX General Counsel Michael Toth:

"This is welcome relief and bolsters the legal arguments REX is making on behalf of consumers. For the second time this summer, the US Department of Justice has taken significant action contrary to the National Association of Realtors. There is an old saying in law school, if you don’t have the law, pound the facts; if you don’t have the facts, pound the desk. It appears that NAR has neither the law nor the facts on their side.”

It is rare for the DOJ to file a brief in an antitrust case between private parties, but today’s intervention comes after a series of actions by the Biden Administration signaling that the federal government is prepared to take action against outdated real estate industry rules that overcharge consumers, stifle competition, harm plumbers, carpenters, and other trades involved in home sale preparation, drives up the price of homes, and hinders job mobility.  

The DOJ brief responds to NAR’s mischaracterization of an earlier consent decree that resulted from other infractions by the real estate industry over a decade ago. The filing explains that the earlier decree expired in 2018 and should not be read to apply to more recent industry developments, such as the massive growth of Zillow into an allegedly critical platform for marketing homes directly to consumers (as opposed to through a multiple listing service), which hardly existed in 2008. The DOJ brief also noted the 2008 consent decree expired in 2018.

Today’s news comes on the heels of the DOJ decision to pull out of a Trump administration-era settlement with the NAR and reopen a broader investigation into the association and its member companies’ anticompetitive practices.

Recent US DOJ-NAR legal and policy actions:

  • On July 1, the Department of Justice (DOJ) nixed a proposed settlement with NAR. The unprecedented action sided with REX’s position in a February comment letter which called on the DOJ to back out of the settlement and take further action.

  • On July 9, President Biden’s executive order directed the FTC to address real estate competition. This painted a bull's eye on the broken broker practices REX was born to replace.

Highlights from today’s filing include:

“ By claiming that the government “approved” the search policy in the attachment to the 2008 consent decree, see Doc. 93, NAR Reply in Support of Mot. To Dismiss 7-8, NAR implies that the government has determined that the policy—and by extension the No-Commingling Rule—is consistent with the antitrust laws. That implication, however, is incorrect.1 The 2008 consent decree resolved the United States’ antitrust claims against NAR for specific exclusionary policies targeting brokers using innovative online platforms…”

“In two other pending cases, NAR has tried similarly to use the 2008 consent decree to shield conduct that the government neither investigated nor challenged in the 2005 case that resulted in the decree.”

“No inference should be drawn from the 2008 consent decree that the No-Commingling Rule is consistent with the antitrust laws.”

A copy of the DOJ brief can be found here

Additional Background on REX v. Zillow and NAR

REX’s lawsuit filed in March challenges Zillow’s recent web display change, which the platform made to comply with the NAR’s segregation and other rules. Zillow's web display once aggregated all homes for sale on a single web display This changed after Zillow announced it was becoming a real estate broker and joining NAR and other broker associations. Since locking arms with legacy brokers, Zillow redesigned its website and placed homes listed by innovators under a deceptively labeled "Other listings" tab, which actual consumers call the "hidden" tab, effectively screening listings with lower commissions from consumers. 

Along with challenging NAR’s segregation rule, REX is contesting state rebate bans, which prevents the company from reducing real estate fees by giving rebates to cash-strapped home buyers. In both cases, REX is standing up for homebuyers, who are facing a housing market characterized by soaring prices and record low inventories. If REX is successful in both cases, home shoppers will have more choice and face fewer protectionist restrictions that make real estate commissions in the United States two to three times higher than around the world. 

Check out REX’s newsroom for the latest press releases, podcasts, market analysis, digital real estate data, and information about the company and leadership team.

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