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The lawsuit could revolutionize the way online real estate platforms – now one of the first stops for U.S. homebuyers – operate and open the door for more buyers to negotiate the hefty commissions often charged by realtors.
Key context: Zillow, the # 1 real estate listing website, has recently expanded beyond its advertising roots to help buyers and sellers more directly – and take a bigger chunk of potential commissions for real estate services – thanks to the “instant buy”, which it launched in 2018, and from January, offering its own real estate agents in certain cities.
About 52% of buyers said they found their home through an internet search in 2019, according to NAR. The pandemic – which has led to increased interest from home buyers as white-collar workers shifted to working from home and record numbers of adults returning to their parents or grandparents – has accelerated further this trend. In December, Zillow predicted that 2021 would see probably the strongest growth in home sales since the 1980s.
Involved in the costume: A change that Zillow and Trulia made to their sites on January 12. Previously, the sites – which control 75% of the online home search market, according to the company’s securities depositories – allowed users to easily view all homes for sale, whether an ad was posted by an agent.
But from this year, Zillow and Trulia started to separate the ads, giving preferential treatment to the 1.3 million real estate agents owned by NAR, Rex says. Other announcements, including those posted by brokers not affiliated with NAR, foreclosures and homes listed by owners without agents, are now relegated to a separate tab, according to the startup. He asks the court to prevent Zillow and Trulia from separating the lists.
NAR’s own real estate listing site, Realtor.com, is the second most visited site and already only shows homes for sale through NAR agents. Zillow and Trulia’s change means that three of the four most popular platforms for viewing real estate listings are now directing consumers to homes with NAR agents, Toth said.
These listings can be more expensive because they require the seller to pay a commission, often 6% of the selling price of a home, which is split between the seller’s and buyer’s agents. Rex – which operates in Washington, DC and 25 other major cities – says it makes realtor fees more transparent by leaving it up to the buyer to negotiate.
Rex also raised antitrust concerns about Zillow’s changes with the Department of Justice and 35 state attorneys general, Toth said. An earlier complaint from Rex led the DOJ last year to file a lawsuit and settle some of its rules related to posting lists with NAR.
On the Zillow side: Viet Shelton, a spokesperson for Zillow, said the company made the switch in January after becoming a participant in Multiple Listing Services’ internet data exchange feeds, which are managed by NAR. The association’s rules for IDX feeds require participants to separate lists, he said.
“Zillow is committed to providing consumers with the most recent housing information on as many listings as possible on a single platform,” Shelton said. “We have changed the way some ads appear on the site to comply with MLS rules.”
The NAR did not immediately respond to a request for comment.
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