Zillow and the National Association of Realtors are locked in a legal fight with a Texas startup, which accuses them of anti-competitive practices

• Zillow and the National Association of Realtors were accused of anti-competitive practices by REX.
• REX filed a federal lawsuit saying the two hid property listings that weren’t from Realtors.
• The Texas startup said Zillow and NAR provided “virtually no visibility” into those listings.

REX, a real-estate startup, has accused Zillow and the National Association of Realtors (NAR) of anticompetitive practices, saying in a lawsuit that the two work together to suppress listings from real estate agents who aren’t Realtors.

“Through horizontal agreements, three of the most highly visited hubs – Zillow, NAR-licensed Realtor.com, and Trulia – now provide virtually no visibility to homes listed by brokers outside the market dominant cartel,” the startup’s lawyers wrote in an amended complaint filed in late September. (Trulia is owned by Zillow.)

REX filed its original complaint in US District Court in Washington in March, a move that amounts to another attack on NAR’s practices and rules. The Department of Justice last year opened a separate investigation into what it said were anticompetitive practices at NAR.

On Friday, NAR filed a motion seeking to dismiss REX’s lawsuit, saying the company’s amended complaint failed to connect NAR with the changes made to Zillow’s app.

REX’s new complaint fell “well short of establishing a plausible agency relationship between NAR and Zillow – or NAR and any MLS – with respect to the design of Zillow’s website. REX’s amended allegations therefore show that REX’s claimed injuries were not caused by NAR,” the filing said.

About 70% of US real estate agents are Realtors, meaning they’re members of NAR. That organization’s Multiple Listings Service (MLS), has long been the standard for Realtor listings. And many of those MLS listings are now posted on Zillow’s family of apps.

While NAR is a trade organization with extensive reach, real estate agents don’t have to join it. REX – its name is an acronym for Real Estate Exchange – isn’t part of NAR. As such, REX’s listings on Zillow are put in a different category, non-MLS listings.

There’s a toggle in Zillow’s search results to switch between MLS and non-MLS listings. In the app they’re called either “Agent Listings” and “Other Listings.”

“The new web display creates a separate page, concealed behind the primary results, where REX homes are now funneled,” REX said in its complaint. It added: “The label is incorrect: the tab is not all agent listings, but exclusively MLS agent listings.” (The lawyers added the emphasis.)

REX says they’re able to sell homes with lower commission by not being NAR members. The details are laid out in the lawsuit: Realtors charge about 2.5% to 3% commission on sales, plus other non-negotiable Realtor fees that bump the total up to about 5.5%, according to REX’s lawsuit. REX’s total commission is more than 2 points lower, averaging about 3.3%, the company said.

Zillow said the claims made in REX’s lawsuit are “without merit.” The company’s hands are tied, a spokesperson said, because NAR rules require MLS listings to be separate from non-MLS listings.

“REX voluntarily chooses to use Zillow’s services to advertise their for-sale properties on Zillow for free,” Viet Shelton, a spokesperson, said via email on Friday. “We encourage REX to join Zillow in advocating for industry rule changes that would allow their for-sale listings displayed on Zillow to appear the way they were last year.”

Both Zillow and NAR sought to dismiss the case earlier this year. NAR and REX didn’t immediately respond to requests for comment.