Real Estate

Zillow Hits Back In REX Antitrust Lawsuit

Discount brokerage REX filed its antitrust lawsuit in March. But in a new filing, Zillow calls REX’s claims “self serving” and without merit.

Almost two months after discount real estate brokerage REX filed an antitrust lawsuit against Zillow, the online giant hit back, saying in a new filing Friday that the case has no merit.

In the filing, which is technically an opposition motion to REX’s suit, Zillow says that REX filed the suit because it was “unhappy with Zillow’s independent decision to obtain faster, more reliable, and better data for Zillow’s consumers.” Zillow’s filing goes on to call REX’s suit “self serving,” and says that “Zillow has not conspired with anyone to harm REX.”

Zillow filed the opposition motion late Friday evening. Inman reached out to REX Friday night but did not immediately hear back.

The filing is a response to a lawsuit REX filed in early March. That suit names Zillow, Trulia and the National Association of Realtors (NAR) as defendants, and argues that they have effectively conspired to maintain a status quo that requires buyers to pay buyer broker commissions.

Meanwhile, REX’s suit says that the company was founded to “drastically reduce commissions.” And one way it does that is to operate outside of multiple listing services (MLSs), which are cooperative data feeds often powered by local Realtor associations that allows brokerage sites to more easily and uniformly share real estate listings.

In other words, REX wants to offer a discounted service, but believes NAR and Zillow are thwarting its efforts to do so.

Zillow was dragged into the case thanks to a change in the way it gets its listings. In the past, the company got listings via a patchwork of thousands of separate feeds through agreements with brokerages and MLSs. However, Zillow recently switched to an IDX feed, which reduced the number of data streams coming into the company to around 600.

The switch meant that Zillow is bound by local MLS rules. It also involved Zillow putting a greater emphasis on agent listings, so those listings being featured more prominently can also give off the perception of fewer listings overall. On the Zillow mobile app, agent and non-agent listings show up on different tabs.

REX took issue with these changes, saying that they have resulted in its own listings “losing significant traffic,” according to its lawsuit. The company also believes the changes are “severely impacting REX’s reputation, its ability to execute its innovative and disruptive business model, and driving consumers away from REX and back into the MLS regime, ensuring higher commissions that benefit NAR’s members.”

“Zillow’s recently implemented website changes make non-MLS listings accessible only via a recessed, obscured, and deceptive tab that consumers do not see, and even professional real estate agents find deceiving,” the lawsuit argues.

REX’s complaint seeks damages and a preliminary injunction that would remove REX-affiliated listings from the non-agent listings section of the Zillow search portal.

In it’s new court filing, however, Zillow took issue with the suit’s claims, saying that REX’s “desire for its listings to be located on a different tab does not make Zillow’s actions a conspiracy or boycott, and certainly not a per se antitrust violation.” Zillow also describes REX as a “vertical supplier” of property listings, rather than a competitor, meaning a conspiracy against the company wouldn’t “make sense.”

“Indeed, Zillow benefits from having as many listings as possible on its online platforms,” the company argued, adding later that “while REX is free to model its business around aggregators like Zillow and others, that does not give REX the right to dictate the design of Zillow’s online platforms.”

The new court filing also argues that REX knew changes were coming to Zillow’s platform, but waited until months later to seek relief.

In an emailed statement to Inman, a Zillow spokesperson added that “we believe REX’s claims are without merit.”

“As MLS participants, we are required to abide by the MLS rules and regulations,” the spokesperson continued. “We are always advocating for rules that benefit our consumers, the entire industry and drive innovation for all.”

In addition to suing Zillow, REX has also filed an antitrust lawsuit against a number of state officials and agencies in Oregon. In addition, there are multiple lawsuits currently taking aim at the practice of the seller paying a buyer brokers’ commission.

In any case, Zillow’s new filing ultimately concludes that the company’s “conduct is motivated by legitimate business concerns” and that REX “cannot demonstrate irreparable harm.” And the filing ends by asking a judge to deny REX’s request for a preliminary injunction.

Read Zillow’s latest filing here: 

Email Jim Dalrymple II

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