A real estate startup sues Seattle-Based Zillow, alleging that new updates to the company's home-search platform unlawfully mask those listings, reducing their accessibility to prospective homebuyers and that competition among real estate brokers.
Rex, an internet brokerage headquartered in Austin, Texas, lodged a lawsuit in federal court in Seattle on Tuesday. According to the complaint, Zillow and the National Association of Realtors are accused of breaching state and federal antitrust rules. Zillow affiliate Trulia is also included in the lawsuit.
Zillow, listed on NASDAQ as Zillow Group, is a real estate marketplace company that generates revenue with the ads posted on the website. It co-brands the sites by reaching the local markets with the newspapers. Trulia LLC, a subsidiary of Zillow, is listed on NYSE.
The dispute derives from Zillow's recent decision to establish a brokerage to employ agents instead of only selling homes for rent. Last fall, the firm revealed that it would hire agents in many states for Zillow Offers, a house-flipping service, and join the National Association of Realtors.
Zillow updated the way it gathers lists of houses for rent as part of this transfer. It also receives listings directly from various listing providers, which are backed by real-estate brokers' listings. One such example is of the Northwest Multiple Listing Service catalogs listings in over two dozen Washington counties.
On January 12, Zillow and Trulia made an update on their websites. Previously, the portals — which, according to company filings, dominate 75 percent of the online home search market — permitted consumers to quickly access all homes for sale, regardless of whether an agent submitted a listing.
However, Zillow and Trulia started segregating listings starting from this year. They are offering preferential treatment to the National Association of Realtors (NAR) real estate agents which are around 1.3 million in number.
According to Rex, other lists, such as those placed by non-NAR brokers, foreclosures, and homes advertised for sale by owners without agents, have been relegated to a different page.
Rex sells homes without using a multiple listing program, which the company calls "an antiquated mechanism" on its website.
Instead, the firm uses direct online advertising and listings on Zillow to pitch homes to prospective customers.
Rex claims that the switch to a "unflattering and misleading" tab on the website of Zillow has lost its consumers and killed access to its listings.