The process could change the way online real estate platforms – now one of the first stops for American home buyers – operate and opens the door for more buyers to negotiate the hefty commissions that real estate agents often charge.
Key context: Zillow, the # 1 real estate ad site, has recently expanded beyond its advertising roots to help home buyers and sellers more directly – and get a bigger share of potential commissions for real estate services – through “instant purchase” launched 2018, and starting in January, offering its own real estate agents in selected cities.
About 52% of buyers said they found their homes through an Internet search in 2019, according to the NAR. The pandemic – which has led to an increase in the interest of home buyers as administrative workers have started to work from home and a record number of adults returning to their parents ‘or grandparents’ homes – has further accelerated this trend. In December, Zillow predicted that 2021 is likely to see the biggest growth in home sales since the 1980s.
At issue in the process: A change that Zillow and Trulia made on their websites on January 12. Before that, the sites – which control 75 percent of the online home search market, according to the company’s securities records – allowed users to easily view all homes for sale, regardless of whether a listing was posted by an agent.
But starting this year, Zillow and Trulia started to segregate listings, giving preferential treatment to the 1.3 million real estate agents who belong to the NAR, claims Rex. Other listings, including those posted by brokers not affiliated with NAR, foreclosures and homes listed for sale by owners without agents, are now relegated to a separate tab, says the startup. He is asking the court to block Zillow and Trulia from segregating listings.
NAR’s own real estate ad site, Realtor.com, is the second most visited site and already shows only houses for sale by NAR agents. The move from Zillow and Trulia means that three of the four most popular platforms for viewing real estate ads now direct consumers to homes with NAR agents, Toth said.
These listings can be more expensive, as they require the seller to pay a commission, usually 6% of the sale price of a home, which is divided between the seller’s and buyer’s brokers. Rex – who operates in Washington, DC, and 25 other major cities – says he makes realtor fees more transparent, leaving them for the buyer to negotiate.
Rex also raised antitrust concerns about Zillow’s changes to the Justice Department and 35 state attorney generals, Toth said. A previous complaint by Rex led the DOJ last year to sue and make a deal with NAR over some of its rules related to the display of listings
Zillow side: Viet Shelton, a spokesman for Zillow, said the company made the change in January after becoming a participant in the data exchange feeds for multiple listing services operated by NAR. Membership rules for IDX feeds require participants to segregate listings, he said.
“Zillow is committed to providing consumers with the most up-to-date information about homes with as many listings as possible on a single platform,” said Shelton. “We made changes to how some listings appear on the site to comply with MLS rules.”
NAR did not immediately respond to a request for comment.