Judge rules for Zillow in REX antitrust lawsuit

Judge rules for Zillow in REX antitrust lawsuit
REX grabbed national attention in March when the residential real estate brokerage filed a lawsuit alleging an antitrust conspiracy between listings giant Zillow and the powerful National Association of Realtors. But a judge’s ruling Wednesday forcefully concluded there’s little merit to REX’s allegations, and denied the brokerage’s motion to stop how Zillow is currently listing properties.

“Plaintiff has not supported its claim that there is any deception that is injuring a substantial portion of the purchasing public,” stated a Seattle federal court judge, Thomas Zilly.

The judge dinged REX for making a lawsuit out of, “An optional, internal NAR rule allegedly resulting in display bias.”

The case stems from Zillow changing how it collects the home listings information it publicly displays. The company moved late last year from syndication agreements with various parties to getting Internet data display, or IDX, feeds from Multiple Listings Services that are operated by the NAR.

In order to get these feeds, Zillow had to comply with the vast majority of MLS’s that adopt the NAR’s “no commingling” rule. Under the rule, Zillow was requested to separate out listings from MLS agents with those not part of the MLS, including many homes listed for sale by REX agents.

As a result, there is now an “agent listings” and “other listings” tab on Zillow’s website. Non-MLS listings, including by REX, are relegated to other listings.

REX calls such separation “the segregation rule,” alleging it “falsely indicates that REX’s listings are not represented by licensed agents” and suggests to the consumer that REX’s listings are somehow inferior.

But the Seattle judge sided with Zillow that the listings website “have attempted to explain, in a consumer-friendly manner, the differences between the two tabs by developing pop-up and FAQ pages.”

The judge also noted that REX is not always on the other side of the MLS. The brokerage has “Co-listed properties with MLS agents to increase the online presence of client’s listings.”

Zillow provided a statement on Wednesday that it is pleased with the judge’s decision, “And it’s acknowledgement to our commitment in empowering consumers.”

The ruling suggested that REX, a six-year-old brokerage based in Austin, Texas, is balancing telling the court that Zillow’s business practices are seriously hurting the brokerage, while still operating said business. For example, the judge cited a REX internal communication that, “We still have good views” on a particular Zillow listing as evidence against the company.

In a statement Thursday, REX CEO Jack Ryan pointed out that the case is not over. REX still has, for example, monetary claims against Zillow and the NAR.

“We are disappointed that consumers will continue to face the NAR segregation rule every time they visit Zillow,” Ryan said. “The segregation rule banishes homes that would save consumers thousands–if not tens of thousands of dollars–in fees. REX won’t stop until consumers are freed from this indefensible rule.”   

Though it chafes at the term, REX is a “discount brokerage” meaning that they give their real estate agents a smaller commission, passing along the savings to consumers. Like Redfin, REX’s real estate agents are salaried employees.

The REX lawsuit against Zillow should not be confused with several lawsuits filed against the NAR regarding the commissions that consumers pay real estate agents.

Those lawsuits, which some legal observers say could upend the residential real estate industry, charge the NAR and the biggest brokerages with a “horizontal conspiracy” to fix prices, with home sellers paying agents about 5% of the sales price.

Rulings in these cases have not been made, excepting a Chicago federal judge denying NAR’s motion to dismiss one such lawsuit.
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