REX Sues Zillow, the NAR Over Listing Display
Laura Agadoni
other
No matter how thin the pancake, it always has two sides. And that sums up the complaint real estate tech platform REX has with Zillow (NASDAQ: ZG) (NASDAQ: Z) over listing displays.
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It’s a testy time in the residential real estate world, as the traditional way of doing business continues to be shaken up with the meteoric rise of real estate tech companies. These tech outfits are cutting into the action. Traditional Realtors have beefs with industry giant Zillow — a company so meaningful to the industry that 80% of homes in the United States have been viewed on its site.
And smaller tech companies have beefs with Zillow, too. It seems as if everyone in the real estate game is fighting for (what else?) territory. Here’s what’s happening with the latest lawsuit against real estate tech giant Zillow.
REX sues Zillow
REX, a digital platform and full-service real estate brokerage, filed a federal antitrust complaint against Zillow, Trulia, and the National Association of Realtors (NAR), the largest, most powerful real estate trade group in the country, on March 9.
Zillow, the site most people use when home shopping, started on Jan. 12 segregating listings into two tabs: “Agent listings” and “Other listings.” To get in the agent listings tab on Zillow, you need to belong to the NAR. REX is not a member of the NAR, as Zillow and Trulia now are, so REX’s listings fall into the “Other listings” tab, along with people who sell homes “for sale by owner” (FSBO), homes listed by agents who aren’t NAR members, and foreclosures.
REX concludes that having a separate tab for non-NAR members benefits NAR members and hurts non-NAR members. REX claims Zillow is violating antitrust laws by competing unfairly to benefit NAR brokerages, which ultimately hurts consumers.
Is Zillow guilty?
When you search for homes on Zillow, homes that fall under the agent listing tab are displayed first. To see other homes, you need to click the “Other listings” tab. The way REX describes this procedure in its lawsuit is a bit deceiving, however. In it, REX calls the “Other listings” tab a “recessed, obscured, and deceptive tab that consumers do not see.” In reality, here’s what you see:
Image source: Zillow.
REX alleges that because it isn’t a member of NAR and, therefore, doesn’t need to pay NAR fees, it can pass those savings onto homebuyers. That may well be true. And if better deals are to be had on homes listed in the “Other listings” tab, people will click that tab to search for them.
So whether having two tabs hurts REX, start-up companies like REX that aren’t part of the NAR, and homeowners who sell without an agent remains to be seen, as it’s too early to test the theory regarding whether separate tabs favor one group over the other.
Does Zillow have the right to segregate listings?
The question remains as to whether Zillow has the right or, conversely, must segregate listings in the manner in which it’s currently doing. A Zillow spokesperson told Politico that Zillow is “required” to segregate listings based on rules it now must follow. The spokesperson is referring to the fact Zillow is now a participant in the Multiple Listing Services Internet Data Exchange feeds (IDX). The Zillow spokesperson interprets IDX rules to “require participants to segregate listings.”
Here’s what the IDX rule is
REX says Zillow violates antitrust law because it hides listings. And Zillow says it’s required to segregate listings based on its NAR status. Is it?
This is the actual rule, published on NAR’s site: “Where MLS participatory rights are available to non-member brokers or firms as a matter of law or local determination, the right to IDX display of listing information may be limited, as a matter of local option, to participants who are Realtors.”
The Millionacres bottom line
Zillow is the No. 1 real estate listings website in the United States. As such, it engages in practices that not all groups like. But whether Zillow is breaking the law with this one remains to be seen. Real estate investors should keep a close eye on this lawsuit.
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