The Real Estate Exchange (REX) has filed a federal lawsuit in Seattle against housing giants Zillow and Trulia, accusing both companies of violating antitrust.
REX argues that changes to Zillow’s website and other company practices are discriminatory against smaller companies. Its federal complaint also includes the National Association of Realtors (NAR).
Zillow and its affiliate Trulia previously allowed users to see all homes available for sale regardless of whether the property had a listing agent. REX claims that the companies began favoring listings by brokers affiliated with the NAR, the country’s largest real estate trade association, in January of 2021. Listings by non-NAR affiliated brokers, foreclosures, and homes listed for sale by owners without agents are now delegated to a hidden tab.
NAR’s site, Realtor.com, has always exclusively shown homes for sale by NAR agents. As a result, non-NAR affiliated brokers receive a substantially smaller amount of visibility than those that are NAR affiliated.
“This is the real estate web returning to this old vision of data segregation rather than data democratization for consumers,” said Mike Roth, REX’s general counsel.
REX is asking the court to prevent Zillow and Trulia from segregating homes shown to viewers, arguing that if it does not, three of the four most popular platforms for viewing homes for sale will funnel customers to NAR-affiliated agents.
Listings from NAR-affiliated agents are usually more expensive. Sellers of these homes, on average, pay broker fees of 5-6% of the sale’s value to be split among agents of both sides, according to CNN. REX’s model eliminates commission for the buyer’s agent and charges small fees of up to only 2%.
Zillow has expanded its services in recent years. The company began offering its own real estate agents in select cities in 2021. In 2018, it launched “instant buying,” allowing customers to purchase homes mostly online.
Zillow is expecting 2021 to be one of the biggest housing booms in the past few decades. Roughly half of all U.S. homebuyers found their homes through an internet search, according to the National Association of Realtors.
Zillow insisted that its decision to segregate listing was beyond its control and the result of participating in the Multiple Listing Services Internet Data Exchange Feeds. The data exchange is operated by the NAR, which Zillow claimed demands that they segregate listings. Zillow spokesperson Viet Shelton said Zillow supports the change.
“We made changes to the way some listings appear on the site in order to be compliant with MLS rules,” Shelton said.
NAR has stated that the lawsuit has “no legal basis” and intends to fight it.
