Federal Judge Greenlights REX/Zillow Suit
This important legal fight will continue to play out as Zillow and the National Association of Realtors must now defend their anticompetitive antics on multiple fronts
Seattle, Washington, September 2, 2021 – Today, U.S. District Court Judge Thomas S. Zilly gave consumers a major victory by denying the motions by the National Association of Realtors (NAR) and Zillow to dismiss REX’s antitrust and consumer protection law challenge to the NAR segregation rule. The Court held that REX sufficiently alleged that NAR and Zillow conspired to restrain trade and to harm consumers.
With today’s ruling, REX, the independent technology company resetting traditional real estate on behalf of consumers, continues to successfully challenge Zillow’s imposition of the NAR segregation rule on consumers, under which Zillow hides the listings of innovative brokers like REX who seek to reduce commissions paid by homebuyers.
Quote from REX CEO Jack Ryan:
“REX is the only real estate industry player willing to fight for consumers in courts of law and public opinion against the cartel that is driving up residential real estate fees, making home ownership so expensive, and making the home buying and selling process difficult and obscure. The broker bosses do not want consumers to choose homes or the price they pay for themselves. REX does. Today’s order is an important first step toward reining in the anti-consumer policies that have come to define big real estate and big tech. The ruling points to the long overdue changes that only REX delivers to home shoppers nationwide.”
Quote from REX General Counsel Michael Toth:
"We’re still in the early innings of our legal and policy campaign against real estate cronyism. We are taking on the buzzsaws of some very powerful lobbies and industry players and we’re winning. Today’s ruling should not be downplayed, especially on the heels of the U.S. Department of Justice bold moves to crackdown on the blatantly anti-competitive agenda of legacy brokers in cahoots with the National Association of Realtors.”
A link to the order is located here. Key quotes from the order:
Page 11: “Because the complaint also alleges that Zillow went a step further—e.g., by affirmatively redesigning its websites to enforce an allegedly misleading labeling system—Plaintiff has plausibly alleged that Zillow agreed to use the MLS rules to restrain trade.”
Page 12: “In other words, brokerages, agents, and even customers allegedly have no choice but to comply with NAR’s so-called optional rules.”
Page 13: “The complaint plausibly alleges NAR’s involvement in an anticompetitive agreement or conspiracy.”
Pages 14-15: “[T[he Buyer Agent Commission Rule, which was allegedly implemented in Zillow's capacity as a real estate broker and MLS participant. … mandates a ‘blanket offer of some compensation to the buyer-broker, . . . [and] by itself, raises antitrust concerns given that the offer is the same regardless of the buyer-broker's experience or the value of services provided by the buyer-broker.’”
Pages 14-15: “[T]he anticompetitive aspects of this NAR rule are exacerbated by the fact that ‘many prospective homebuyers [now] use online websites like Zillow to find homes,’ and that Zillow and other websites ‘have agreed not to compete with the MLSs by becoming licensed brokerages or offering compensation or cooperation.’”
Page 15: “Although NAR members might make up more or less than 70 percent of the active licenses in a given state or local market, the complaint sufficiently alleges that NAR enjoys substantial market power within the market for real estate brokerage services in the states that Plaintiff operates.”
Page 16: The Court found REX’s “complaint is replete with allegations of harm to competition” and that “Plaintiff plausibly alleges that Defendants’ actions have a substantial anticompetitive effect that harms consumers in the relevant market…(concluding the ‘Buyer-Broker Commission Rules have caused an artificial inflation of commission rate’)…”
Page 24: “Because the Court concludes that the fraud-based allegations in support of this claim also satisfy Rule 9(b)’s heightened pleading standards, Plaintiff has plausibly alleged a CPA claim against Zillow.”
About REX’s advocacy for consumers:
REX’s lawsuit is successfully challenging Zillow’s recent web display change, which the platform made to comply with the NAR’s segregation rule. 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.
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.
REX has long been the only industry player fighting real estate broker cartel 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.
Recently, the Biden Administration has put anti-competitive real estate policies, such as the Segregation Rule in its crosshairs.
Recent Biden Administration-NAR legal and policy actions:
On July 1, the Department of Justice (DOJ) nixed a proposed Trump Administration 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 including a broader investigation into the association and its member companies’ anticompetitive practices.
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.
On July 10, U.S. Department of Justice files brief in the REX/Zillow-NAR Segregation Rule case “to prevent the drawing of unwarranted inferences from a now-expired 2008 consent decree” and to stop the National Association of Realtors from using “the 2008 consent decree to shield conduct.”
A copy of the DOJ brief can be found here.