Online Brokerage Accuses Zillow and the National Association of Realtors of Squeezing Competition

REX – Real Estate Exchange Inc. has filed suit against the National Association of Realtors (NAR), a trade organization, and Zillow Inc. and its affiliates, which offer an online real estate marketplace, purporting that they enter into agreements that disadvantage all but their own members and foreclose transparent access to the “home inventory.” The antitrust complaint, following one that Zillow successfully dodged last week, argued that through their illicit agreements, the defendants violated state and federal antitrust laws, the Lanham Act, and deceptive trade laws.

The Western District of Washington filing first explained that internet connectivity has changed access to real estate inventory by enabling firms, aside from the NAR and Multiple Listing Services (MLS), to offer consumers greater access to real estate markets. Tuesday’s complaint stated that REX, founded in 2015, “uses technology to enhance efficiency and drastically reduce brokerage commissions, while delivering a full suite of personalized services to clients.” Thus,  brokerage services like REX reportedly foster competition that benefits consumers through wider choice and downward pressure on traditionally high commission structures.

The complaint claimed that the defendants’ concerted action, chiefly Zillow’s joinder with NAR-affiliated MLSs and its adoption of their associational rules to conceal all non-MLS listings on Zillow’s websites, threatens REX. The result, the complaint claims, is that non-MLS listings are only accessible on Zillow’s heavily trafficked website “via a recessed, obscured, and deceptive tab that consumers do not see, and even professional real estate agents find deceiving.”

In turn, REX alleged that its listings are losing substantial amounts of traffic, its reputation is negatively impacted, and customers are being driven “back into the MLS regime, ensuring higher commissions that benefit NAR’s members.” The complaint contended that if the NAR and its MLS cohorts, including Zillow, are continually permitted to close off transparent access to the home inventory, consumers and competition will suffer.

REX asked the court to permanently enjoin the defendants from engaging in such anticompetitive conduct, and requested statutory and treble damages, among other forms of relief. REX is represented by Foster Garvey PC and McCarty Law PLLC.