REX Brief Shows NAR Segregation Rule Props Up High Commissions, Harms Consumers and Competition

Follows on the heels of President Biden’s executive order directing the FTC to look into the industry’s anticompetitive practices

REX has filed briefs in the company’s lawsuit against Zillow and the National Association of Realtors (NAR) over the anti-consumer segregation rule, which prevents home shoppers from finding all homes for sale when they search online. 

REX’s filings show that ​​Zillow, as part of its decision to enter the real estate brokerage market, joined NAR-controlled Multiple Listing Services (MLSs) and agreed to follow their rules. NAR’s segregation rule demands that MLS listings be displayed by themselves and refuses to allow consumers to see all listings together. Successful disruptors like REX, which deliver full service and enhanced choice to consumers, are cordoned off. 

“Consumers are well aware that real estate lags far behind the rest of the service economy, where online search capabilities have unleashed major savings, “ said REX’s General Counsel Michael Toth. “NAR’s segregation rule has no place in the digital era. Today’s real estate consumers deserve to have all listings in one place.”

REX’s filings come after a series of major developments signaling that federal authorities are taking a close look at the real estate industry rules driving expensive transactions. On July 1, the Justice Department announced that it was backing out of a 2020 proposed settlement with the NAR because the proposed agreement did not go far enough in protecting consumers.

As Toth pointed out in a recent Wall Street Journal article entitled a Warning to the Real-Estate Cartel, the Justice Department’s “move sent shock waves through the housing industry. The government occasionally brings an antitrust case and later decides to dismiss it. But never have federal antitrust authorities agreed to a proposed settlement only to back out after receiving public comment.” 

A week later, United States President Joe Biden issued an executive order targeting "unfair tying practices" and  "exclusionary practices" in real estate brokerage. The Federal Trade Commission (FTC) is tasked under the order to address traditional industry rules that cripple market competition, box out innovators, and drive up commissions to sky-high levels. 

Copies of the REX filings are available here and here