Real EstateBrokerage

NAR fires back in countersuit against discount brokerage

The suit alleges that REX use false advertising and misleading claims to deceive consumers

The National Association of Realtors (NAR) filed a federal lawsuit on Thursday alleging that REX Homes (Real Estate Exchange, Inc.) makes false and misleading claims to deceive consumers, “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 between NAR and REX in the U.S. District Court for the Western District of Washington in Seattle.

The discount brokerage filed an anti-trust lawsuit against NAR and Zillow last March, however this countersuit is exclusively from NAR.

In the first 21 pages of the suit, NAR responds to the allegations in REX’s suit filed last March and denies all of the claims. The filing then gets into NAR’s counterclaims.

In the lawsuit, the NAR outlines its three chief complaints against REX. The first is that REX “misleads” consumers by advertising that sellers will receive greater proceeds because in a REX transactions, sellers don’t pay commissions to the buyers broker, when in fact REX has admitted that, when a home buyer is represented by an agent, REX’s seller-clients may pay the buyer-agent commission, the suit claims.

NAR also said that REX has falsely claimed that is has developed superior technology that can identify the “perfect” buyer for a seller’s property using artificial intelligence and data analytics, allowing it to offer lower commissions. According to the NAR, REX has admitted to relying upon Zillow’s website to display its listing and that the brokerage believes that it needs access to aggregators like Zillow to compete effectively. In NAR’s words, “the viability to REX’s business hinges on its ability to access and use proprietary technology that was built by Zillow on the exact terms REX wants.”

The final complaint NAR lodged is that REX has “falsely advertised” that NAR has enacted a series of anti-competitive policies, including making agent commissions non-negotiable to brokers who want to put their listings on the MLS, to prevent competitors from offering lower transaction fees. In actuality, the trade group argues, its rules and MLS policies allow for negotiations between the listing broker and the buyer’s broker, and NAR rules expressly authorize the listing broker and the buyer’s broker to come to an agreement to change cooperative compensation at any time during the transaction.

NAR is seeking an injunction preventing REX from continuing its false and misleading practices, the monetary damages determined at the trial and the reimbursement of costs and attorneys’ fees.