A lawsuit has been filed against Zillow, Trulia and the National Association of REALTORS® (NAR), alleging that the online real estate marketplaces were giving preferential treatment to NAR broker listings.
Texas-based real estate startup REX filed a federal antitrust lawsuit on Tues., March 9 claiming that recent changes to Zillow’s webpage have been biasedly steering users to listings connected to NAR.
“The result is that REX’s listings are losing significant 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,” reads an excerpt from the filing.
An NAR spokesperson says the claims in the lawsuit have 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,” says Mantill Williams, NAR’s vice president of Communications. “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.”
Since its 2015 launch, REX has utilized aggregator sites—like Zillow—to market clients’ homes directly to consumers. The online real estate brokerage touts an online business model designed to reduce brokerage commissions, among other personalized services for clients.
The issue largely stems from Zillow’s decision to transition from a real estate search portal into its own buying-and-selling entity. Part of the shift included Zillow joining Multiple Listing Services and gathering listing data from the service’s IDX feeds.
The lawsuit claims that recent changes to Zillow’s website “segregate, conceal and demote” listings that aren’t from the MLS.
“If the NAR and its MLS partners, which now include Zillow, are allowed to once again close off transparent access to home inventory by entering into agreements among themselves that disadvantage all but their own membership, consumers and competition will suffer,” reads the lawsuit.
According to Williams, 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,” Williams says. “Because of MLS, 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 commissions options.”
A statement from Zillow, which will also be contesting the lawsuit, said the allegations were “without merit.”
“Zillow is committed to providing consumers with the most complete, up-to-date housing and listing information possible on a single platform,” according to a statement from Zillow. “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 comply with MLS rules.”
As a result, Zillow says buyers searching for a home through its platform may see two options associated with their search, including “Other listings” that include for-sale-by-owner listings or coming soon listings not on the MLS.
“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,” according to a statement from Zillow.
The allegations may only serve as a minor hiccup in Zillow’s growth plans this year.
The company recently announced that it intends to hire more than 2,000 employees nationwide this year. This is roughly a 40% increase to the online real estate company’s workforce.
The majority of the new or coming-soon roles in tech, mortgage and loans, product and software development, and more are categorized as remote and hybrid positions—open to applicants across the country.
Jordan Grice is RISMedia’s associate content editor. Email him your real estate news ideas at email@example.com.