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NAR Sues REX, Claims False and Misleading Ads

NAR alleges that REX-Real Estate Exchange’s claims deceive consumers and discourage them from “pro-consumer, pro-competitive benefits” provided by Realtors.

WASHINGTON – The National Association of Realtors® (NAR) filed a lawsuit stating that REX-Real Estate Exchange Inc. has made false and misleading advertisements and statements about its services. NAR says those statements deceive consumers and discourage them from “obtaining the pro-consumer, pro-competitive benefits provided by NAR members and independent, local multiple listing services marketplaces.”

“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,” says NAR President Leslie Rouda Smith.

“The truth is that if homebuyers and sellers are deceived into avoiding multiple listing services (MLS), they would lose the services’ pro-consumer, pro-competitive benefits,” Smith says. “Sellers lose exposure to the largest available pool of buyers, and buyers lose access to the largest available pool of properties for sale. Our goal with this action is to protect consumers.”

NAR’s complaint claims REX misleads consumers by:

  • Advertising that sellers will receive greater proceeds because sellers don’t pay commissions to the buyer’s broker in a REX transaction.
    • But REX admits that, as is customary in the industry, when a homebuyer is represented by an agent, REX’s seller-clients may pay buyer-agent commissions.
  • Claiming it developed innovative and superior technology that can proactively identify the “perfect” buyer for a seller’s property using artificial intelligence and data analytics, allowing it to offer lower commissions.
    • But REX admits it relies on Zillow’s website to display its listings, and that it believes it needs access to aggregators like Zillow to compete effectively. In other words, the viability of REX’s business hinges on its ability to access and use proprietary technology built by Zillow on the exact terms REX wants.
  • Advertising 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 consumers lower transaction fees.
    • But NAR rules and MLS policies have always allowed negotiations between the listing broker and a cooperating broker at any time during the transaction. NAR rules expressly authorize the listing broker and cooperating broker to come to an agreement to change cooperative compensation, and that can happen before a property is shown, after showing or even after an offer has been accepted.

NAR’s lawsuit was filed as part of ongoing litigation between NAR and REX in the U.S. District Court for the Western District of Washington in Seattle. NAR is seeking monetary damages, an injunction preventing REX from continuing its false and misleading practices, and reimbursement of costs and attorneys’ fees.

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