3 things to know about REX’s lawsuit against Zillow
When the case goes to trial next month, NAR policies on IDX feeds — which Zillow began using in 2021 — could be put to the test.
- The lawsuit, which is scheduled for trial in September, involves how non-MLS listings are displayed on Zillow’s website.
- REX contends that its listings, which weren’t a part of an MLS, were unfairly hidden in a secondary tab on Zillow.
- The case could affect NAR’s co-mingling policies, which currently do not allow MLS and non-MLS listings to appear in the same set of search results.
A federal antitrust case against Zillow and the National Association of Realtors is moving closer to trial, and the outcome could be a test of policies that determine how portals display non-MLS real estate listings.
The Real Estate Exchange, known as REX, is suing Zillow and NAR over what it says were deceptive practices to conceal non-MLS listings on Zillow's heavily trafficked website. REX was a low-commission brokerage that ceased operations in May 2022.
The case, which will be heard in the U.S. District Court in Seattle, is scheduled to go to trial on Sept. 18.
On August 4, Judge Thomas Zilly denied and deferred the most recent summary judgment requests filed in the case.
Here are three things to know about REX v. Zillow and NAR:
What is REX?
Founded in 2015, the company's goal was to transform the real estate industry to "push past the outmoded practices of traditional real estate brokers to provide a superior outcome for both buyers and sellers at one-third the cost," its website claimed.
At the time the lawsuit was filed, REX was a licensed broker active in 19 states. Instead of marketing homes through the MLS, the company used digital technology to market directly to consumers, "using data modeling and machine learning to 'match sellers and buyers of homes as accurately and speedily as possible on Zillow, Google, Facebook, and other channels,'" according to the court filing.
REX claimed its model reduced the total commission paid to 3.3% on average, well below the national brokerage rate of around 5.5%. It also estimated that in a five-year period, the company saved consumers more than $29 million in commissions.
What is the REX v. Zillow case about?
The case was filed in March 2021, and in the original complaint, REX claims its business was damaged when non-MLS listings on Zillow were relegated to a secondary search results tab, limiting traffic to those listings.
Zillow had modified its site in January 2021 after it began using the Internet Data Exchange (IDX) feed that handles MLS listings. Zillow said it made the change in order to comply with NAR guidelines, specifically its co-mingling policy.
NAR's policy states: "MLSs cannot prohibit participants from downloading and displaying or framing other brokers' listings obtained from other sources, e.g., other MLSs, non-participating brokers, etc., but can, as a matter of local option, require that listings obtained through IDX feeds from REALTOR® Association MLSs be searched separately from listings obtained from other sources."
In other words, while Zillow is allowed to display non-MLS listings, they cannot be "co-mingled," or displayed alongside MLS listings.
REX said the result of this change was a significant loss of traffic, "driving consumers away from REX and back into the MLS regime, ensuring higher commissions that benefit NAR's members."
In filing its complaint, REX accused the defendants of unreasonably restraining trade, taking part in unfair or deceptive acts, and false advertising.
What happens if the court rules in REX's favor?
In its complaint, REX is seeking damages and attorneys' fees, but a ruling could impact the existing co-mingling policy, should the courts decide the policy unfairly restrains trade.
That, in turn, could change how non-MLS and for-sale-by-owner listings are handled on home search portals like Zillow and Trulia that include a mix of listing types.