On the 9th of March, 2021, REX, the real-estate brokerage, lodged a lawsuit against the National Association of Realtors (NAR), Trulia and Zillow for antitrust violations. REX claims that NAR and its constituents suppress competition resulting in soaring commission fees for customers.
According to the litigation, Zillow recently made improvements to its platform that block customers from viewing all available listings, including those from independent companies with lower rates.
Zillow, the online real estate marketplace is listed on NASDAQ. On similar lines, Rex is a real estate broker trying to streamline the process of buying and selling homes. This company is also listed on NASDAQ.
The conflict arises from Zillow's latest plan to establish a brokerage to employ agents instead of only listing homes for sale. Previously, the firm has reported hiring agents in many states for its house-flipping services. Moreover, Zillow will unite with the National Association of Realtors (NAR). In the context of this transition, Zillow altered the ways it gathers listings of properties for sale. This move has led to some consequences that make Rex unhappy.
Zillow's listings divide into two categories,i.e., "Agent listings" and "Other listings." To see the options in the "Agent Listings" section, one has to be a member of the National Association of Realtors (NAR). Since Rex doesn't belong to NAR, its properties register under the "Other Listings" section and other non-NAR members. Thus as per REX, getting a different tab for non-NAR members advantages NAR members while undermining non-NAR members. REX argues Zillow is breaching antitrust laws by aggressively intervening to support NAR brokerages at customers' loss.
Rex suspects that the split would stifle rivalry and retain high real estate commissions. (While most home sellers compensate a fee to around 5% to 6% divided between the realtor and the purchaser's broker, Rex claims its customers spend an average of 3.3 percent.). Subsequently, these effects resulted in a drop in substantial traffic in Rex's listings, wreaking havoc on its image and dragging customers away from the firm. To date, the organization asserts to have rescued homeowners $30 million. Additionally, since 2015 it has raised $135.5 million from investors.
Zillow justified the way offerings are shown in a release, saying that it made improvements to its platform to adhere to NAR regulations. The NAR convicted Rex of trying to profit from the MLS scheme despite participating in it. Rex's complaint aims to stifle the market value, all for Rex's internal gain.