The National Association of Realtors (NAR) has filed a counterclaim against a real estate technology company that is accusing the trade association of antitrust violations, according to a release.

REX sued in March, claiming its competitive mode is threatened by the concerted action of NAR and Seattle-based Zillow, along with their multiple listing services (MLS) affiliates. REX asked a judge to award it treble damages and reasonable attorneys’ fees for alleged violations of the Sherman Antitrust Act and Washington Consumer Protection Act (CPA).

REX claimed Zillow’s decision to join NAR and affiliated MLSs to conceal all non-MLS listings on Zillow’s heavily trafficked websites has led to a dramatic loss of traffic to REX’s listings and higher commissions for NAR members. REX then filed an amended complaint acknowledging many NAR MLSs did not require Zillow to make changes to its website.

The two defendants recently asked the court to dismiss the amended complaint, alleging REX’s latest theory meant NAR’s rules apply equally to all NAR-affiliated MLSs—and thus did not require MLSs to prohibit commingling, and, by extension, did not require Zillow to make changes to its website.

U.S. District Judge Thomas Zilly previously concluded the amended complaint plausibly alleges Zillow changed its websites because of NAR’s rules, meaning REX’s antitrust lawsuit against NAR and Zillow Group could move forward. 

After Zilly’s decision, NAR filed a counterclaim alleging its rules have a legitimate business justification.

“The NAR rules and NAR conduct identified in REX’s amended complaint are lawful, justified, procompetitive, pro-consumer; are carried out in NAR’s legitimate business interests; and constitute bona fide competitive activity, the benefits of which outweigh any alleged anticompetitive effects,” NAR attorney Thomas Rubin stated in his answer to the amended complaint. “REX’s claims are barred, in whole or in part, because, to the extent any damages do exist, they were caused by REX’s failure to mitigate its damages, through co-listing, choosing to advertise on platforms other than Zillow, or otherwise.”

In his counterclaim, the NAR attorney argued REX publicly promotes itself as an “innovator” while accusing NAR and its members of engaging in illegal or unfair conduct.

“Yet, REX is a follower that provides the same types of services as thousands of other brokerages have long provided before it, and often in ways that are cheaper and better than REX,” Rubin wrote. “REX’s marketing is therefore likely to mislead or confuse consumers by falsely claiming REX’s clients pay no buyer-agent commissions, that its technology is innovative, and that its seller-side commissions are low. Instead of accurately marketing its services, REX has attacked NAR with falsities in an attempt to mislead or confuse consumers into thinking REX is something that it is not.”

Rubin said sellers who list their homes for sale with REX do, in fact, pay buyer-agent commissions despite advertising claims to the contrary.

“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 homeseller may have to pay some or all of the commission owed to the buyer’s agent to close the sale,” Rubin added. “At best, REX’s business model is premised on offering sellers a discounted commission, but there is nothing novel or innovative about REX’s approach. Beyond REX, there are many other brokerage firms and agents—including members of NAR—that offer sellers commissions that are below 3 percent.”

For example, Redfin, a brokerage firm based in Seattle, publicly advertises a 1.5 percent commission for homesellers. But unlike REX, Redfin simultaneously discloses: “Buyer’s agent fee not included, e.g., if buyer’s agent fee is 2.5 percent, seller will pay a total fee of 3.5 percent.”

NAR also alleged REX’s claims about its technology and its superiority to the MLS system are false.

“If REX’s technology in fact did what it claims—finding buyers using artificial intelligence outside of the multiple listing service—REX could not claim, as it has in this lawsuit, that it must have access to Zillow’s website, on the first tab, to compete,” Rubin stated. “The foregoing false and misleading claims about REX’s technology have been specifically promoted by REX to convince consumers that there is something special about REX’s services that allow it to unlock lower prices without using multiple listing services to find in-market buyers.”

NAR’s counterclaim also alleged its reputation with consumers and its own members have been harmed by REX’s claims.

NAR is seeking an injunction to permanently prevent REX from making false statements about its services and commercial activities. NAR is also seeking unspecified damages and attorneys’ fees.

The case is REX – Real Estate Exchange, Inc. – v. Zillow, Inc.; Trulia, LLC and The National Association of Realtors (U.S. District Court Western District of Washington at Seattle, No. 21-cv-00312).