Supported by Consumer Groups, REX Defends Lawsuit in Oregon

REX's brief explains why Oregon's law prohibiting rebates to home buyers in unlawful

Oregon is one of a handful of states continuing to protect real estate brokers’ profits at consumers’ expense, Oregonians could have saved $249 million in 2020 alone if not for the state’s unconstitutional anti-rebate law

[See Case 3:20-cv-02075-HZ Document 29 filed Wednesday, March 24, 2021]

Portland, Oregon, March 25, 2021 – REX, the technology company resetting traditional real estate on behalf of consumers, has filed a response brief in the lawsuit against the state of Oregon over its anti-rebate law. If REX is successful in it’s lawsuit, Oregon real estate consumers will be freed from a state-sanctioned system that has allowed traditional real estate to operate in secrecy, fix prices, and manipulate rules for the benefit and profit of big brokers.

REX’s brief, which follows an amicus brief filed earlier this month by the Consumer Federation of America and the Oregon State Public Interest Research Group, shows how the state’s policies put a brazenly anti-consumer exclamation point at the end of the traditional real estate transaction which is already set up to benefit the broker at the consumer’s expense. 

The law prohibits firms like REX from rebating fees back to its clients. In 2020 alone, REX’s cash back program could have saved Oregonians nearly $250 million.

Oregon is among a dwindling handful of states that forbids pro-consumer rebates.  As REX’s brief points out, regulators in many states have determined laws like Oregon’s should not be enforced in a way that costs homebuyers thousands (if not tens of thousands) of dollars. REX’s response brief demonstrates how Oregon’s rebate policies are anti-consumer, anti-innovation, and unconstitutional. 

At a time when housing affordability is already a major issue in Oregon, many consumers simply cannot afford the state’s anti-consumer policies. An anti-rebate law prevents buyer brokers from reducing egregiously high transaction costs, which cause consumers to pay two to three times more in real-estate commissions than consumers in comparable international markets. Without reform, the status quo policies place homeownership out of reach for lower- and middle-income Oregon families.

REX CEO and Co-Founder Jack Ryan commented on the filing of the brief:

“There is no place for laws that guarantee special protection for real estate brokerages and punish consumers. I am pleased to see REX standing with national and state consumer groups in this case as it reflects our employees’ commitment to disrupting the old anti-consumer model that has dominated real estate for decades. Our company is decidedly on the side of Oregon consumers and we will continue to lower costs and improve consumer experiences everywhere we do business nationwide.”

Earlier this month, the Consumer Federation of America (CFA) joined the Oregon State Public Interest Research Group (OSPRIG) in filing an amicus brief in the case and called out the state for “prohibiting buyer rebates that reinforce high and uniform real estate commissions.” CFA and OSPRIG’s brief also called out the $100 billion consumers pay in traditional real estate fees each year as well as the forty other states who have updated their laws to allow firms to rebate significant savings back to consumers.

Key Arguments Made By REX In The Response Brief:

  • Oregon’s rebate bans prevent consumers buying homes from receiving cash back from their brokers. In other words, the rebate bans make illegal pro-consumer price competition among buyer brokers. The bans make it thousands of dollars more expensive for Oregonians to buy homes.

  • State laws prohibiting rebating commissions to real estate consumers are unconstitutional and violate federal law. The anti-rebate regime protects the entrenched cartel while deterring new market entrants—all to the detriment of consumers. The state of Oregon offers no path around that settled law, offering instead implausible defenses of their naked market-distorting protectionism

  • On top of being plainly anticompetitive, real-estate rebate bans are relics of the pre-Internet past. Today’s buyers are doing the work themselves, yet rebates protect sky-high commissions even when buyer brokers barely need to lift a finger.

REX’s cash back program represents a major opportunity to Oregonians and the state. Through technological advances and a business model that dramatically lowers transactional costs by pairing machine-learning with licensed salaried real estate agents, REX has lowered fees nationwide to 2.5% and offers cash back at closing to real estate buyers. However, due to Oregon’s anti-rebate law, REX customers are unable to receive thousands of dollars back at close. 

  • Based on MLS data of homes transacted in 2020, Oregon consumers would have saved $249 million using REX’s cash back program.

  • In the Portland metro area alone, REX’s cash back program in 2020 was worth a total of $143 million.

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