Late last night, the National Association of Realtors (NAR) filed a federal lawsuit accusing REX Homes (Real Estate Exchange, Inc.) of false and misleading advertisements and statements about its services, deceiving consumers and “discouraging them from obtaining the pro-consumer, pro-competitive benefits provided by NAR members and independent, local multiple listing services marketplaces.” This filing is part of ongoing litigation in the the U.S. District Court for the Western District of Washington in Seattle.
The first 21 pages of the suit are answers to REX’s anti-trust suit filed last March, and to summarize those pages, it’s an outline of denial of all of REX’s claims. Where it gets spicy is page 22 where you’ll find the counterclaim. Last fall, we asked many of the same questions as NAR’s new countersuit, so we’re not surprised.
We’ll give you the highlights below, but it’s worth reading the whole thing from page 22).
First, NAR asserts that REX knowingly deceives consumers by continuing to claim that their sellers don’t pay commissions to buyer’s broker, insinuating that one of their value propositions is widespread savings for consumers, yet, REX CEO Jack Ryan, and REX Counsel Michael Toth have acknowledged in public that it’s negotiable, as does their website.
Second, NAR urges the courts to see through REX’s claims of innovation (they say they use “artificial intelligence” and “data analytics” which is another way they say they lower commissions) to observe that REX relies on Zillow to display their listings and, “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.”
When REX Homes quietly underwent two waves of layoffs last fall, shuttered of two of their major markets, and in a company-wide call said they’d be joining some MLSs, we spoke to several staff about the “innovations” at REX, and one laughed.
When pressed, they told us that one of the only advertising platforms they were using at one time was in-app game advertisements with a click-to-call feature, resulting in numerous children clicking on the ad to immediately (and accidentally) called REX.
“REX says ‘we don’t wait for your perfect buyer to find us, we find them.’ It’s not robot magic, it’s a combination of acts like blindly advertising to scared 9-year-olds. So innovative.”
Third, NAR pushed back on REX’s claims of anti-competition and their claims that participation in the MLS puts consumers in a non-negotiable position with brokers, which NAR disagrees with and that we’ve outlined in the past, long before REX’s lawsuit.
“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. 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 is asking the courts for an injunction to prevent REX from misleading practices while maligning NAR and NAR members, for the standard damages determined at trial, and for reimbursement of all attorneys’ fees and costs.
NAR alleges illegal conduct in a federal case, so they’re also asking for REX Homes’ books to be opened to determine the profits made from this conduct, and they’re seeking treble damages (that’s three times REX’s profits from this alleged illegal behavior).
Zillow was named in the original suit as a Co-Defendant with NAR, but this countersuit is exclusively from NAR. Could Zillow use this roadmap to seek triple monetary damages as part of this ongoing train wreck? We’ll see.
Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.
