Who says you can’t sue the same folks that are suing you?
The National Association of REALTORS® (NAR) filed a counterclaim on Jan. 28 against REX-Real Estate Exchange Inc., alleging that the Texas-based real estate startup has been deceiving consumers with false advertisements and misleading statements about its services.
“NAR will oppose attempts to mislead consumers, including attempts to mislead consumers about buying or selling a home generally or about the services or cost of using REALTORS®, most of whom are small businesspeople,” said NAR President Leslie Rouda Smith in a Thursday press release.
Rouda Smith noted that independent, local multiple listing services benefit from competition and fair housing.
“The truth is that if home buyers and sellers are deceived into avoiding multiple listing services, they will lose the services’ pro-consumer, pro-competitive benefits,” Smith said.
What’s in the filing?
The NAR argues that REX misled consumers with the way the company promotes its ability to save sellers thousands of dollars by not requiring them to pay buyer-agent commissions.
“Contrary to its marketing, REX is not an innovator. Its marketing and PR campaign is built on outright falsehoods and statements that—at best—are likely to mislead or confuse consumers,” read an excerpt from the case filing.
On the company’s website, it states that “REX charges a low fee by totally eliminating the buy-side agent commission.”
NAR’s attorneys allege REX’s claims are false.
“REX’s advertisements do not adequately disclose that when a home buyer is represented by an agent and refuses to pay her agent’s fee out of her own pocket, the home seller may have to pay some or all of the commission owed to the buyer’s agent to close the sale,” read an excerpt from the claim.
NAR also takes aim at REX’s claims that it developed “innovative and superior technology” to help find the “perfect” buyer for a seller’s property, allowing the company to lower commissions.
The counter claim alleges that REX relies on websites and aggregators like Zillow to display its listings and to compete in the industry.
“In other words, the viability of REX’s business hinges on its ability to access and use proprietary technology that was built by one of its putative competitors on the exact terms that it wants,” NAR’s legal representatives wrote.
NAR also challenges previous REX claims that NAR have enacted a series of anti-competitive policies like making agent commissions non-negotiable to brokers who want to put their listings on a NAR-affiliated multiple listing service (MLS).
NAR’s legal counsel contends that the association’s MLS policies “never prohibit negotiations between the listing broker and a cooperating broker at any time during the transaction.”
That filing also takes issue with previous claims made by REX that refer to NAR and its business model as a “cartel.” The incendiary term was a significant point in a commissioned article published in the UC Berkeley Business Law Journal (BBLJ) in 2021 that the company paid for.
Despite being directed by a U.S. District Court to stop using the term, NAR suggests that REX has continued to use the term when referring to the association and its MLS participants in interviews and press releases.
The counterclaim indicated that NAR has been harmed and continues to be harmed as a result of the alleged claims.
As a result, the association is seeking monetary damages, an injunction preventing REX from continuing its alleged fraudulent and misleading practices, and reimbursement of costs and attorneys’ fees.
NAR’s latest courtroom jab against REX is part of an ongoing legal feud that transpired nearly a year ago, when REX filed a federal antitrust lawsuit in March 2021 against Zillow and NAR.
The issue stemmed mainly from Zillow’s decision earlier to transition from a real estate search portal into its buying-and-selling entity earlier in 2021. Part of the shift included Zillow joining Multiple Listing Services and gathering listing data from the service’s IDX feeds.
REX had claimed that recent changes to Zillow’s website “segregate, conceal and demote” listings that aren’t from the MLS, putting REX at a disadvantage and potentially harming their business.
Both parties have experienced some highs and lows as the case has carried on last year.
On one hand, a U.S. District Court Judge has denied attempts by NAR to dismiss REX’s antitrust lawsuit, but on the other, the same judge shot down several aspects of the brokerage’s side of the dispute including false advertising claims against NAR.
The Volley Continues
REX doesn’t appear to be surprised by NAR’s countersuit, according to a company spokesperson.
“NAR’s when the facts and law are against them is to change the lens in the court of public opinion,” said Michael Toth, SVP and general counsel for REX. “NAR did not file a new lawsuit against REX, it filed a baseless counterclaim in our lawsuit to confuse the court of public opinion.”
Toth then drew a comparison to another legal feud between NAR and the Department of Justice (DOJ) that stems from the DOJ backing out of an antitrust settlement in July 2021.
“NAR claimed it was suing the DOJ when in fact NAR was merely attempting to quash a legitimate request from the Department of Justice for more information about the NAR’s rules and their effect on consumers and competition,” Toth said.
In an email to RISMedia, NAR spokesperson Mantill Williams responded to Toth’s claims stating “NAR’s counterclaim clearly sets forth the ways REX has made false and misleading advertisements and statements about its services, thereby deceiving consumers and discouraging them from obtaining the pro-consumer, pro-competitive benefits provided by NAR members and independent, local multiple listing services marketplaces.
“Unlike REX, NAR and REALTORS® put consumers first,” Williams continued. “Independent local broker marketplaces and REALTORS® ensure consumers have access to accurate, transparent property information, which creates market-driven pricing and a fair and accessible market.”
This story was updated on February 2, 2022, with more details of the court filings, as submitted by the National Association of REALTORS®. This story originally ran on January 28, 2022.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas at email@example.com.