Zillow Facing Fresh Lawsuit From Another Upset Brokerage

The legal team at American property portal market-leader Zillow have been busy this week. No sooner had a judge in New Jersey thrown out one anti-trust suit filed against the company on Monday, the Rich Barton-led portal was the target of another suit on Tuesday. This new complaint comes from the Austin, TX-based startup brokerage REX - Real Estate Exchange - and once again claims that the Seattle-headquartered portal is stifling competition, preventing home-hunters from seeing all available listings and driving customers away from REX.

Specifically, the argument against Zillow centres on its recent switch from using feeds from individual local brokerages to a type of feed called an IDX which take listings direct from local MLSs. Having made the switch, the listings that Zillow displays now come from far fewer, more standardised sources and mean a lot fewer headaches for the team looking after the back end of Zillow's portal.

In order to get access to these feeds that come directly from local multiple-listings-services Zillow had to become an agency itself in order to become a member of these MLSs, something which it did back in September (to widespread industry opprobrium) ostensibly to improve the user experience around its iBuying product.

Now that it has a brokerage licence and sells under the Zillow brand all of the properties that its iBuying division has bought, Zillow displays listings for which it is the selling agent on its own portal, a state of affairs that has many in the industry worried that the publicly-traded company may be trying to squeeze them out.

The IDX feeds from MLSs come with their own set of rules; the National Association of Realtors' regulations around the feeds dictate that any portal using IDX feeds to source listings must display all listings which do not come from IDX feeds on a separate page.

As a young VC-backed company looking to disrupt the market by reducing commissions for home sellers, REX works outside of MLSs across the nation with the upshot being that their listings are now shown on a separate page on Zillow along with all FSBO listings. The circumstances were apparently serious enough for REX to take on a company with the clout and legal experience of Zillow, with the company's complaint stating that:

“REX brings this lawsuit to keep the digital hubs of the real estate economy open so that consumers have the benefit of innovation and cost savings that come from competition,”

Tuesday's lawsuit is just the latest in a running battle between brokerages worried about their bottom lines and the big industry players. Last year REX was also party to a Department of Justice case against the National Association of Realtors which argued along similar lines. At this point, it remains unclear if rules around portal listings would have to be drastically changed were REX's latest claim to be upheld by the court.