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Illustration by Lanette Behiry/Real Estate News; Shutterstock

Can REX make a comeback? 

The low-fee brokerage continues to pursue antitrust claims against Zillow as it looks for a chance to start again.

June 17, 2024
4 minutes

Key points:

  • Company co-founder Lynley Sides said it’s a “very different world” in the industry compared to when they first filed claims against Zillow and NAR in 2021.
  • REX has been dormant since May 2022, and Sides said the industry needs to make more significant changes before a company like theirs can successfully compete.
  • The company is currently appealing its case against Zillow, which it lost last year following a jury trial.

Buoyed by the recent outcomes in the commissions antitrust cases, a low-fee brokerage hopes to convince the courts that its original claims are now more valid than ever.

Real Estate Exchange, more commonly known as REX, filed a brief in the Ninth Circuit Court of Appeals at the end of May, hoping for another chance to make its case. That brief was sealed by the courts with no reason given, although it is not uncommon for a filing to be sealed when proprietary information is included.

The case has also caught the attention of the U.S. Department of Justice, which has a June 20 deadline to file an amicus curiae brief.

REX co-founder Lynley Sides said if the appeal is accepted, she believes the company — a low-commission brokerage that ceased operations in May 2022 — may have a stronger argument than it did in 2021, when the case was originally filed. 

"It's a very different world now than when we first filed these claims," noted Sides. "So we're hopeful that there's better understanding in general about what's going on and the anti-competitiveness of NAR and the cartel, as we call it."

And indeed, much has changed since then. Three years ago, commission cases like Sitzer/Burnett, Moehrl and Batton were just getting started — and were largely under the radar for many in the industry. 

After 2 strikes, REX is hoping for a home run

In 2021, following NAR policy changes, REX sued Zillow and NAR over deceptive practices to conceal non-MLS listings on Zillow's heavily trafficked website.

The case suffered its first blow last August when a judge ruled the antitrust claims were without merit, and NAR was dropped from the suit. A trial followed, and in September 2023 — a month prior to the Sitzer/Burnett verdict — a jury ruled that Zillow did not harm REX by moving its listings to a secondary tab with less traffic. 

In pursuing an appeal, Sides said the claims remain the same, but this time around, she thinks a judge or jury is more likely to understand the anticompetitiveness aspect and "why it's bad for home sellers."

The spotlight on commissions could help REX reboot

When REX filed the original lawsuit, the company was a licensed broker active in 19 states. Instead of marketing homes through the MLS, REX 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.

Since May 2022, the company has been in a dormant state, Sides said, but they continue to watch the industry and are planning for the future. While she believes the $418 million NAR settlement in March was a step in the right direction, Sides said "it's nowhere near enough to eliminate steering and drop prices in a meaningful way."

"We'll act accordingly when we believe that the opportunity is there to truly offer a lower cost/better option for consumers that can't be tanked by a decision made by Zillow implementing an NAR rule," Sides said.

Asked to comment about the appeal, a spokesperson for NAR said the organization "continues to believe this lawsuit is without merit and that the district court's determination on summary judgment that there was no antitrust violation should be affirmed."

As the commissions cases have made their way into the consumer consciousness, Sides said there has been a massive increase in awareness about agent fees in a fairly short amount of time.

"It makes it a lot more likely that the additional changes that are needed will happen, and that people will understand and support them," Sides said.

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