Real Estate

Discount Brokerage REX Takes Aim At ‘Real Estate Cartel’

The brokerage is suing Oregon officials, including Gov. Kate Brown, for “antitrust” practices, alleging a law that bans brokerages from providing rebates harms consumers.

After taking aim at the National Association of Realtors and so-called “predatory real estate broker behavior,” real estate brokerage REX is now setting its sights on “Oregon’s real estate cartel.”

Jack Ryan | Credit: REX

The discount brokerage announced Tuesday it was filing a lawsuit against a number of state officials and agencies — including Governor Kate Brown — for “antitrust” practices, alleging the state’s law that bans real estate brokerages from providing rebates and receiving discounted fees both harms consumers and stifles competition.

“Oregon’s rebate ban is an affront to middle- and lower-income families struggling to pull together a down payment,” Jack Ryan, the CEO and co-founder of REX, said in a statement. “As a result of the NAR’s cartel-like behavior and policies like Oregon’s prohibition on discounts, consumers lose $60 billion in incremental fees every single year.

“Our lawsuit against Oregon is a major step toward putting real estate consumers first.”

REX, which is a licensed and active broker in 17 states, is a discount full-service real estate brokerage that claims to use “scalable technology” as a means to deliver discounts to buyers through commission fee rebates, which are strictly outlawed by Oregon state law.

REX launched in Oregon in 2019 and soon after received a letter from the Oregon Real Estate Agency — the state agency that licenses real estate brokerage and agents and regulates real estate activity — targeting REX’s buyer rebate program.

REX, the agency said, was violating state law by sharing commission dollars with an unlicensed individual — in this case the homeowner — which is strictly against the law, according to the complaint.

The rebate program, on average, results in homes costing 1.25 to 1.5 percent less for buyers, according to the complaint.

“Not only are Oregon’s policies nonsensical in that they prohibit consumers from collecting rebates, but the agency’s policies are brazenly anti-competitive,” the complaint reads. “The Agency’s policies, which pose as the product of government, are really impermissible exercises of authority by an entity under the control of market participants — real estate licensees and members of Oregon’s real estate cartel.”

“These policies also disallow consumers and Realtors from setting a market-based price for realty services,” the complaint continues.

The lawsuit seeks to eliminate the practice of banning rebates in the state, as well as compensate REX for damages incurred by the existence of the rebate ban.

The Consumer Federation of America (CFA), a consumer advocacy group, is supporting REX’s lawsuit. In a statement, the group noted that eliminating the law — which exists in 10 states — would allow brokerages like REX and Redfin to immediately offer discounts to consumers.

“The Oregon prohibition on rebates is blatantly anti-competitive, denies home buyers financial relief, and supports the charging of high and near-uniform commissions,” Stephen Brobeck, a CFA senior fellow, said in a statement. “The U.S. Department of Justice has objected to anti-rebate laws and so to, hopefully, will the Oregon District Court.”

REX is no stranger to taking on the real estate industry and practices embedded within. The company was involved in lobbying the U.S. Department of Justice (DOJ), leading to the federal agency’s lawsuit against the National Association of Realtors, and a settlement between the two parties that aims to increase transparency around buyer’s broker commissions.

REX enlisted heavy-hitters in the political sphere like former Governors Chris Christie and Jeb Bush to advise on the lobbying efforts.

In the wake of the lawsuit and subsequent settlement, Ryan said in a statement that REX had been working directly with the DOJ to share the “many ways that the NAR and the [multiple listing services] set their practices to extract money from home buyers and sellers.”

The practice of how buyer’s brokers are compensated has been in the crosshairs for the past two years.

Two related lawsuits were filed in 2019 against NAR and several of the top real estate brokerage and holding companies, alleging the sharing of commissions between the listing and buyer broker — referred to in the suit as the buyer broker commission rules — inflates seller costs and violates the Sherman Antitrust Act.

See REX’s full lawsuit below:

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