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Real Estate

Real Estate Exchange files antitrust suit against Zillow, NAR

MLS rules required Zillow's site change, officials said

Real Estate Exchange (REX) filed an antitrust lawsuit Tuesday in federal court against Zillow, accusing the company of anticompetitive behavior related to showing certain homes on its platform. Trulia and the National Association of Realtors are also named in the suit.

REX, an Austin-based real estate startup, said Zillow’s new listing layout, which includes tabs entitled “agent listings” and “other listings,” positions its listings in a “recessed obscured, and deceptive tab that consumers do not see.”

“The NAR and its MLS partners, which now include Zillow, are allowed to once again close off transparent access to home inventory by entering into agreements among themselves that disadvantage all but their own membership; consumers and competition will suffer,” read the lawsuit.

In addition to lodging the antitrust complaint in federal court, REX filed a preliminary injunction motion asking for immediate relief.

In September, Zillow unveiled Zillow Homes, a licensed brokerage entity, which serves as the brokerage of record for all Zillow Offers transactions. Zillow now has brokerage licenses in all 50 states, which has allowed it to transition from being a listing distribution partner to a member of NAR and local Realtor associations, giving the company access to Internet Data Exchange (IDX) feeds. That change is significant, as it allows Zillow to source homes from MLS databases, and means other real estate brokers are not able to specifically exclude Zillow from receiving their listings.

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In response to the lawsuit, Zillow officials said the company has been actively working to update the industry rules to allow a “seamless search experience.”

“We believe the claims are without merit and we intend to vigorously defend ourselves against it,” the statement read. “As part of our switch to MLS Internet Data Exchange (IDX) feeds and becoming formal MLS participants earlier this year, we were required to make changes to the way some listings appear on the site in order to comply with MLS rules. As a result, when using one of our platforms to search for homes, buyers may see two options to view their search results, which include For Sale by Owner listings or Coming Soon listings not on the MLS or, for that matter, on most other real estate sites.”

REX CEO Jack Ryan said in a statement that he believes the litigation will “define whether technology will serve and protect Big Brokers and the NAR cartel” or continue to prove transparency and lower commission fees for consumers.

“Zillow began like so many other platforms – it served a great value to American consumers,” Ryan said. “Unfortunately, we see Zillow as backtracking on their original mission to serve consumers, instead focusing on their own profits.”

Zillow’s online traffic reached record highs in 2020, with 201 million average monthly unique users reported in the fourth quarter – the most unique users Zillow has ever had in the fourth quarter of a year, according to officials – and 2.2 billion visits. But the company’s growth, especially as it gains country-wide brokerage status, is worrying some real estate agents.

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