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REX anti-trust lawsuit accuses Zillow, NAR of being in a ‘cartel’

(REAL ESTATE) Real Estate Exchange, Inc. (REX) is suing Zillow and NAR, alleging a cartel wherein non-MLS members like themselves are edged out of the marketplace.

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Real Estate Exchange, Inc. (REX) has today filed an federal anti-trust lawsuit against Zillow and the National Association of Realtors (NAR).

REX accuses NAR of “non-negotiable” compensation structures baked into the MLS, an assertion that has been proven otherwise in the past.

They go on to accuse Zillow of making changes recently to their site that makes “non-MLS listings accessible only via a recessed, obscured, and deceptive tab,” leading to REX’s listings (on Zillow) losing traffic, “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” which they say ultimately disadvantages consumers.

REX claims that Zillow (and other real estate aggregators) have helped them “to maneuver around the NAR/MLS cartel’s high commission structures” by aiding them “to reach a large audience of potentially interested buyers.”

But then Zillow went and became an ibuyer, shifting their focus from search to owning inventory, eventually joining NAR in 2020.

REX accuses Zillow of hiding non-MLS listings like theirs through their redesign. All of their homes are listed by a licensed real estate agent, but they are not NAR members and proclaim they never will be.

The crux of REX’s argument is that as a newly minted member of NAR, Zillow must follow rules set by NAR (which is done by members in committees, not the executives), and so they have joined forces to conceal non-MLS listings on Zillow’s site, thus entering into an anticompetitive posture together.

“Zillow began like so many other platforms: it served a great value to American consumers. Unfortunately, we see Zillow as backtracking on their original mission to serve consumers, instead focusing on their own profits,” said REX CEO Jack Ryan in a press release today.

In the last week of February, REX presented this case to 35 states attorneys general, leading up to their federal filing (their presentation can be found here).

The full lawsuit can be found here.

In a statement to The American Genius, Mantill Williams, NAR VP of Communications states, “This lawsuit has no legal basis, and we intend to vigorously contest it. This is an example of a brokerage trying to take benefits of the MLS system without contributing to it. It has been long recognized that the MLS system provides considerable pro-consumer, pro-competition value. REX’s lawsuit seeks to undermine that consumer value—simply for REX’s own benefit.”

Williams continues, “The MLS system levels the playing field for small businesses and allows innovation to flourish, all to the benefit of buyers and sellers. The advanced MLS technology gives publishers access to all the same information, allowing buyers to see as many properties for sale in one place as possible, while simultaneously ensuring sellers have access to the largest pool of buyers. Because of MLSs, we’re at a point in the market where we’re seeing unprecedented benefits to consumers and competition among brokers, especially when it comes to service and commission options.”

A Zillow spokesperson tells us, “We are aware of the lawsuit and believe the claims are without merit and intend to vigorously defend ourselves against it. Zillow is committed to giving consumers the most up-to-date housing information on the most amount of listings possible on a single platform. As part of our switch to MLS Internet Data Exchange (IDX) feeds and becoming formal MLS participants earlier this year, we were required to make changes to the way some listings appear on the site in order to be compliant with MLS rules. As a result, when using one of our platforms to search for homes, buyers may see two options to view their search results – “Agent listings”, and “Other listings” – which include For Sale by Owner listings or Coming Soon listings not on the MLS or, for that matter, on most other real estate sites.”

They conclude, “As part of our efforts to empower consumers, we have been actively working to update the industry rules, including those around ‘co-mingling,’ to allow a seamless search experience so we can continue to display all types of listings on our platform.”

Real Estate Corporate

Zillow’s overly generic patent application is further proof they could be suing you soon

(REAL ESTATE) Zillow has been on a patent rampage in recent years, and this most recent application is so wildly generic, we would laugh, but the government has a track record of approving their every wish, making all other real estate sites vulnerable to lawsuits.

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Zillow has, at this point, demonstrated an apt propensity for setting themselves up as future patent trolls and the U.S. Patent Office has been generous in granting their every last wish. It should come as no large surprise, then, that their latest endeavor to monopolize real estate searches comprises presentation of visual information by way of computation and other common factors – something that will further the real estate giant’s ubiquity in online markets.

The patent application itself describes, in detail, the practice of creating a three-dimensional model of a property, though a “2.5D representation” stipulation is also included in the patent.

The patent also mentions that the model may be “generated after the house is built” in order to display information about the inside of the property, and this generated model “may be displayed to a user of a client computing device in a displayed GUI with various user-selectable controls.”

Additionally, the patent describes the manner in which this model can be displayed, with references to a single, large pane that shows the interior of the house alongside smaller, “additional separate GUI pane(s)” that complement the information shown in the “first pane of the GUI.”

This attention to the use of “panes” and the order in which they are formatted has appeared in prior Zillow patents as well, the end result being a rapidly decreasing number of ways in which competing real estate sites can display similar information.

But the patent application doesn’t stop there.

The computational technology (referred to as “A system comprising: one or more hardware processors of one or more computing systems; and one or more memories with stored instructions”) is also mentioned, with explicit details regarding the process followed by the technology upon submission of a request by a user.

A key word in this section of the application is “automated” as it pertains to a search query.

Attempting to patent search engine automation does a better job of demonstrating just how generic this patent grab really is than perhaps anything else in the application.

Other key elements of the patent application include the ability to “navigate” through a property in a virtual model of the house or structure, simulated lighting as a part of the model, and more details about how this information is processed via mobile device.

Should Zillow manage to snag this patent, the results could be catastrophic for competing real estate sites, both search and brokerage.

Being able to show users an isometric model of a property while showcasing the floorplan is a highly convenient (and existing) feature of many real estate sites; by relegating it to Zillow and Zillow alone, those other sites will have to find new (and less-convenient) ways in which to showcase their properties, lest the Zillow patent troll sue them.

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Real Estate Corporate

Zillow prepares to face the music, real estate agents have had enough

(REAL ESTATE CORPORATE) Zillow has made enough of a rumble in real estate circles that some agencies are fighting back, alleging everything from deception to fully illegal conduct.

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Real estate agent shaking hands with couple over a For Sale sign marked sold from Zillow

Zillow has made headlines in the past few months, though not exactly for their charity work. Between patent trolling and general steamrolling of smaller real estate businesses, the multibillion-dollar company is well on its way to becoming a monopoly—and a couple of people have had enough, as evidenced by emerging lawsuits targeting Zillow.

One lawsuit, originating in Connecticut, comes both from and on behalf of realtors who are tired of not being represented in Zillow’s agent results. The lawsuit claims that clients are being redirected to agents who have inserted themselves into Zillow’s search results.

“A prohibitive majority of homebuyers — 80% or more — use Zillow in the process of looking for a home,” the lawsuit explains. “This market dominance gives defendant the power to tilt the real-world playing field in favor of its own favored customers. These are Premier Agents.”

Premier Agents are, as alleged by the lawsuit, agents who pay a fee to Zillow in order to “be associated with properties which they do not have a listing relationship with.” The lawsuit also alleges that the majority of people who use the website “are unaware that they are being funneled to agents who paid a fee to Zillow to cause this to happen.”

In other words, Zillow is taking payments from agents and, in turn, giving them priority over properties without giving users the chance to opt out—which is illegal.

And, interestingly enough, a second real estate agency—Real Estate Exchange, or REX—is suing Zillow for similar reasons, claiming that both Zillow and Trulia are exempting real estate agents who do not belong to the NAR from search results. The lawsuit alleges that, while non-NAR agents can be found on both websites, their listings have been “relegated to a ‘hidden tab’” to clear the way for NAR agents.

The Connecticut lawsuit also outlines further the process that Zillow uses for their Premier Agents: “a prospective buyer is drawn to the defendant’s [Zillow’s] website for its stated purpose of making it easier to find a home to buy, but it is not evident to the prospective buyer that defendant is more interested in connecting that consumer with a broker who has paid a fee to defendant.”

Meanwhile, REX’s lawsuit says that Zillow “recently joined NAR-affiliated MLSs and adopted their associational rules to conceal all non-MLS listings on Zillow’s heavily trafficked websites.” This led to the current complaint wherein “non-MLS listings [are] accessible only via a recessed, obscured, and deceptive tab that consumers do not see, and even professional real estate agents find deceiving.”

Both lawsuits clearly focus on the deception of customers, a failure to disclose this deception, abuse of either the MLS or customer trust in recommended real estate listings, and a general erosion of credibility on Zillow’s part. They also, in summary, allege that Zillow has not given all listings and connected realtors a fair shake in the process.

Zillow did respond to REX’s lawsuit, saying that the claims were “without merit” and declaring their intent to “vigorously defend ourselves against it.”

But if these lawsuits are successful, they could set a hopeful precedent for those looking to fight back against Zillow’s impropriety.

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Real Estate Corporate

Zillow: This HUGE patent grab has us asking, what’s left?

(REAL ESTATE CORPORATE) Zillow’s latest patent bid is terrifyingly broad and will likely lead to a real estate monopoly, if it’s granted.

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Man reviewing paperwork from Zillow listing with couple looking to buy

Zillow is no stranger to controversy, largely due to their propensity for acquiring obscenely broad patents. These patents often expand Zillow’s privileges while limiting the mobility of competing real estate companies’ websites and apps, elevating Zillow’s position in the market along the way. Now, Zillow is applying for a monster of a patent—one that, if granted, would effectively bar every other real estate service from the market.

We’ve written extensively about Zillow’s overzealous acquisition of patents that, by and large, demonstrate a desire to complicate the daily operations of competing real estate services. Those patents have included the presentation of photos on real estate sites and how information is formatted, the commonality being that Zillow’s patent requests have been so vaguely worded that competing businesses are forced to alter significantly their practices.

For example, their patent regarding photo use prevents anyone other than Zillow from portraying photos, panoramas, or videos in such a way that they “simulate movement” through a house. This basically means that other real estate services will be forced to arrange their photos in a nonsensical way, thus reducing site usability and increasing the likelihood that former users will migrate to Zillow.

The real estate monolith has also sued competitors for copyright infringement, most notably going after Trulia for having the audacity to tailor search results based on “input” from a user.
This most recent patent request makes it clear that Zillow has no intention of stopping their rampage—at least, not without achieving a literal monopoly in the process. In summary, the patent would afford Zillow complete control over “validation and optimization in an online marketing platform for home sellers.”

In simple terms, the patent refers to any technology or tools used to support the process of real estate searches.

The patent summary corroborates this interpretation: “In some embodiments, the disclosed technology provides a validation tool for users of the online marketing platform to quality check the users’ home feeds in real-time through a graphical user interface of the online marketing platform. In some embodiments, the disclosed technology provides an optimizer tool for the users to optimize the users’ home feeds through a graphical user interface…”

This summary concludes with, “The users of the online marketing platform can be home sellers, which can include, for example, home builders, brokers, and their agents,” describing what one would reasonably assume comprises all possible real estate clients.

Restricting the act of searching for real estate to Zillow alone would prevent competition, full stop. With the power to sue anyone who allowed their real estate listings to be browsed or searched, Zillow would control the entire real estate market for all parties, including home builders. Obviously, this is a problem for several reasons.

The most glaring problem here is that any monopoly is cause for alarm, and the current housing market does not seem poised to benefit from a lack of variety in listing agencies—especially in the wake of COVID and the turmoil we can feasibly expect for years to come.

The patent also fails to take into consideration that Zillow, for all their innovation, did not create the features to which they’re staking their claim. While they may have used search engines with a level of effectiveness heretofore unchallenged by competitors, the fact remains that this patent’s contents cannot, in good conscience, be attributed wholly to Zillow.

Zillow’s justification alleges that homeowners who list their properties on multiple different sites face a “steep learning curve” that can hinder their progress since not all sites use the same listing process and selling tools, but the irony of this faux-concern couldn’t be clearer: By manipulating patents to purposely obfuscate listings on competitors’ sites, Zillow has created the very problem they claim to want to solve.

As this situation develops, bear in mind that Zillow’s predatory patent-trolling may dictate the course of this country’s real estate market for decades to come if they are allowed to continue expanding unchecked.

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