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NAR Counter Sues Online Brokerage REX

Jan 31, 2022
REX

Claims REX-Real Estate Exchange Inc. deceives consumers; suit follows antitrust complaint REX filed vs. NAR, Zillow & Trulia last year.

The National Association of Realtors has counter-sued REX-Real Estate Exchange Inc., claiming the online brokerage has made false and misleading advertisements and statements about its services to deceive consumers.

NAR's lawsuit was filed as part of ongoing litigation between NAR and REX in the U.S. District Court for the Western District of Washington in Seattle. NAR is seeking monetary damages, an injunction preventing REX from continuing its false and misleading practices, and reimbursement of costs and attorneys' fees.

NAR’s suit follows an antitrust lawsuit filed by REX in March 2021 against NAR, Zillow, and Trulia. REX stated at the time that its lawsuit was filed on behalf of its clients and American consumers who are concerned about competition and transparency in real estate.

In a statement issued when the antitrust complaint was filed last year, REX CEO Jack Ryan said his company believes ”this litigation will define whether technology will serve and protect Big Brokers and the NAR cartel, or whether it will make good on its promise of greater ease, service, transparency, and lower commission fees for consumers.”

In its counter lawsuit last week, NAR says REX’s false and misleading advertisements result in discouraging consumers from obtaining “the pro-consumer, pro-competitive benefits provided by NAR members” and independent, local multiple-listing services marketplaces.

"NAR will oppose attempts to mislead consumers, including attempts to mislead consumers about buying or selling a home generally or about the services or cost of using Realtors, most of whom are small businesspeople," said NAR President Leslie Rouda Smith. "Independent, local multiple listing services benefit competition and fair housing, and NAR will ensure consumers can make the choice to participate in local broker marketplaces, or not, with a full understanding of how they work.”

Smith added, “The truth is that if home buyers and sellers are deceived into avoiding multiple-listing services, they would lose the services' pro-consumer, pro-competitive benefits. Sellers lose exposure to the largest available pool of buyers, and buyers lose access to the largest available pool of properties for sale. Our goal with this action is to protect consumers."

NAR's complaint states that REX misleads consumers by:  

  • Falsely advertising that sellers will receive greater proceeds because, in a REX transaction, sellers don't pay commissions to the buyer's broker.

NAR states in the lawsuit that REX has admitted that, as is customary in the industry, when a home buyer is represented by an agent, REX's seller-clients may pay buyer-agent commissions. 

  • Falsely claiming that it developed innovative and superior technology that can proactively identify the "perfect" buyer for a seller's property using artificial intelligence and data analytics, allowing it to offer lower commissions.

NAR states that REX has admitted it relies on Zillow's website to display its listings and that it believes it needs access to aggregators like Zillow to compete effectively. NAR says that means the viability of REX's business hinges on its ability to access and use proprietary technology that was built by Zillow on the exact terms REX wants.

  • Falsely advertising that NAR has enacted a series of anti-competitive policies — including making agent commissions non-negotiable to brokers who want to put their listings on the MLS — to prevent competitors from offering consumers lower transaction fees.

NAR states that its rules and multiple-listing service policies have always allowed negotiations between the listing broker and a cooperating broker at any time during the transaction. NAR said its rules expressly authorize the listing broker and cooperating broker to come to an agreement to change cooperative compensation, and that can happen before a property is shown, after a showing, or even after an offer is accepted. 

Michael Toth, senior vice president and general counsel for REX, said NAR's counter suit is standard operating procedure (SOP) for NAR.

"We have seen this play book before," Toth wrote. "NAR’s SOP when they are called out for limiting competition and consumer choice is to try create a false narrative. NAR did not file a new lawsuit against REX, it filed a baseless counterclaim in our lawsuit against Zillow and NAR's collusion to restrict consumers from having digital access to all the homes for sale."

Toth continued, "NAR did the same thing last fall regarding the U.S. Department of Justice. NAR claimed it was suing DOJ, when in fact NAR was merely attempting to quash a legitimate subpoena into NAR's anti-competitive practices. And it did the same thing in our case when it misstated prior consent decrees with DOJ, which led the Justice Department to intervene in our case to correct the record. The facts and law are on the side of REX and consumer choice, not NAR and industry control." 

The National Association of Realtors is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. 

REX, based in Austin, Texas, was founded in 2015 by Jack Ryan and Lynley Sides. It conducts business in 15 states — Arizona, California, Colorado, Florida, Georgia, Illinois, Maryland, Nevada, New York, New Jersey, Oregon, Pennsylvania, Texas, Virginia, and Washington — and the District of Columbia.

About the author
David Krechevsky was an editor at NMP.
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