Why We're Taking On Zillow In Its Own Backyard
AP Photo/Ted S. Warren, file
Why We're Taking On Zillow In Its Own Backyard
AP Photo/Ted S. Warren, file
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Zillow made home shopping easier with its ubiquitous search tools. But the Seattle-based company recently broke with its long-time role as an independent platform when it joined the National Association of Realtors (NAR) and agreed to follow the powerful trade group’s rules. Many of those rules prop up the legacy models of NAR’s own members at the expense of consumers who are forced to pay thousands—if not, tens of thousands of dollars—in excessive realtor commissions every time they buy and sell a home.

That’s why our company, REX, is challenging one of those rules in Zillow’s backyard, in Seattle federal court. We founded REX to make home shopping more affordable. Austin, where REX is based, has among the highest average home-buying commissions in the country, but Seattle’s aren’t far behind.

Our company uses technology—predictive analytics and advanced machine learning—to match buyers and sellers, reducing commissions by up to 70 percent from the standard brick and mortar broker rates. For example, we recently helped a customer sell a home in North Seattle at a total commission of 3 percent, delivering nearly $20,000 in savings. 

REX knows that affordable housing is a global issue, so last year we donated a portion of our earnings from every home we sold to build more than 20 homes for needy families in Cambodia. Moreover, one of us, as co-founder and CEO, has pledged his stake in REX to building boarding schools in the U.S. for children who lost their parents. 

Because expanding access to affordable housing is REX’s primary goal, we had no choice but to sue Zillow for adopting NAR’s segregation rule. The rule banishes homes sold by low-commission brokers like REX to a deceptively-labeled tab on Zillow that few people ever notice.  Former United States Department of Justice economist Robert Majure, REX’s expert witness, calculates that the same home receives more than five times more views on Zillow’s new default search page—created to comply with the segregation rule and designed to protect the high commissions of the NAR’s members—than on the hidden search page where REX listings are now found.

In response to REX’s federal lawsuit, Zillow took the unusual step of conceding that the segregation rule is not good for consumers.  That is the rarest of admissions in an antitrust case, but residential real estate is also the rarest of industries. Unlike travel, transportation, insurance, investments, and virtually every other service where fees have dropped due to technology, real estate brokers still collect commissions at pre-Internet levels despite the fact that 97 percent of consumers now shop for homes online.

Time and again, potential disruptors in this industry, including now Zillow, have capitulated to the very rules that protect the legacy industry players they are trying to replace. The simple truth is that technology alone will not make home buying affordable.  Leadership is needed. Real estate professionals need to stand up for their consumers, and not look the other way when old restrictions like NAR’s segregation rule rear their ugly head and bear their fangs.

Unlike Zillow and all the other national brokers in this space, REX has refused to join NAR because its rules forbid the innovative models REX uses to save consumers money. REX is proud to be the true unicorn, a licensed, full-service, tech-based brokerage willing to confront the brazenly anti-consumer policies that make home buying and selling so costly.

Along with challenging the segregation rule, REX is taking on state rules that prohibit consumer rebates in a separate federal lawsuit. The policies we’re fighting, unbelievably, make it illegal for brokers in ten states to reduce fees by giving back thousands of dollars to home buyers at closing.

REX won’t stop until policies like rebate bans and the segregation rule are relics of home shopping history. It’s because we believe that no one should be priced out of the American Dream because of real estate protectionism. And we back our beliefs with action.

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