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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 1 of 48
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
`
`REX – REAL ESTATE EXCHANGE, INC., a
`
`
`Delaware corporation,
`
`
`No. 2:21-cv-00312-TSZ
`
`
`
`AMENDED COMPLAINT FOR
`v.
`
`INJUNCTIVE RELIEF AND FOR
`
`DAMAGES
`ZILLOW, INC., a Washington corporation;
`
`ZILLOW GROUP, INC., a Washington
`DEMAND FOR JURY TRIAL
`
`corporation; ZILLOW HOMES, INC., a
`Delaware corporation; ZILLOW LISTING
`
`SERVICES, INC., a Washington corporation;;
`TRULIA, LLC, a Delaware limited liability
`company; and THE NATIONAL
`ASSOCIATION OF REALTORS, an Illinois
`trade association,
`
`
`
`
`
`Defendants.
`
`Plaintiff,
`
`REX – Real Estate Exchange, Inc. (“REX”) brings this action against Zillow, Inc.,
`1.
`Zillow Group, Inc., Zillow Homes, Inc., Zillow Listing Services, Inc., Trulia, LLC (collectively
`“Zillow”), and the National Association of Realtors (“NAR”) under federal and state antitrust
`laws, the Lanham Act, and deceptive trade laws and alleges as follows:
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 1
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`
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`

`

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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 2 of 48
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`
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`I.
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`NATURE OF THE ACTION
`
`REX brings this lawsuit to keep the digital hubs of the real estate economy open
`2.
`so that consumers have the benefit of innovation and cost savings that come from competition.
`The internet has radically altered how Americans shop for homes. For most consumers, home
`buying begins on a mobile device or laptop. Consumers can search for homes by location, price,
`square footage, numbers of bedrooms and bathrooms, and other categories. In an instant,
`consumers can view images of homes that fit their preferences—and much more. The internet
`continues to evolve to satisfy the needs of home buyers. In addition to finding properties, home
`shoppers can tour properties virtually. Offers are now made online and closing documents are
`notarized on Zoom.
`Websites that aggregate homes for sale are the digital hubs of the new real estate
`3.
`economy. They attract billions of views every year by gathering a vast inventory of homes and
`allowing consumers to customize their searches. Search capabilities allow consumers to find
`individual residences within predefined parameters and then track properties that interest them.
`Consumers can now perform a substantial amount of their home searches online, at their leisure,
`instead of spending weekend after weekend at open houses and showing appointments.
`Aggregator sites facilitate transactions that allow millions of Americans every
`4.
`year to relocate for new personal and professional opportunities. Home sellers know that
`interested buyers flock to aggregator sites and highly value having their homes listed on those
`sites.
`
`This democratization of access to real estate inventory changes the old dynamic.
`5.
`The NAR and Multiple Listing Services (“MLS”) largely controlled access to real estate markets,
`and related brokerage services, because they controlled home inventory information. Direct
`consumer access to available homes—and the ability for non-NAR, non-MLS licensed brokers
`and agents to make homes directly visible to consumers—opens the pathway for new, innovative
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 2
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
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`

`

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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 3 of 48
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`real estate service providers. And, critically, it introduces competition that benefits consumers
`through greater choice and downward pressure on traditionally high commission structures.
`REX co-founders Jack Ryan and Lynley Sides launched REX in 2015 to disrupt
`6.
`the traditional real estate model by putting consumers first. REX’s innovative model uses
`technology to enhance efficiency and drastically reduce brokerage commissions, while
`delivering a full suite of personalized services to clients.
`The legacy real estate industry transfers billions of dollars in commissions every
`7.
`year from home sellers to brokers. In the typical real estate transaction under the traditional
`model, the seller is represented by an agent who collects a commission in the range of 2.5 to 3%
`of the sale price. The thousands of dollars in commissions paid to the seller agent are only part of
`the commission fees. Under rules written by NAR and enforced by its member MLSs, sellers
`must also make what is essentially a non-negotiable offer of compensation to any agent
`representing the ultimate purchaser, generally another 2.5 to 3% of the sale price—with total
`commissions averaging about 5.5%. Total commissions in a REX transaction average 3.3%,
`representing a 40% discount. REX has already returned more than $29 million in commission
`savings to consumers and is on pace to save consumers more than $100 million annually. On
`a $720,000 home sale—the median price in King County, where REX recently opened
`operations—consumers would save $16,000 in commissions using REX's data-driven, direct-to-
`consumer model.
`REX’s innovative and competitive model is now threatened by the concerted
`8.
`action of the NAR and Zillow, along with their MLS affiliates. Zillow recently joined NAR-
`affiliated MLSs and adopted their associational rules to conceal all non-MLS listings on Zillow’s
`heavily trafficked websites. These listing portals, as explained below, are critical channels to
`reaching consumers. Zillow’s recently implemented website changes make non-MLS listings
`accessible only via a recessed, obscured, and deceptive tab that consumers do not see, and even
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 3
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
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`
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`
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`

`

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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 4 of 48
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`professional real estate agents find deceiving. The result is that REX’s listings are losing
`significant traffic, severely impacting REX’s reputation, its ability to execute its innovative and
`disruptive business model, and driving consumers away from REX and back into the MLS
`regime, ensuring higher commissions that benefit NAR’s members.
`If the NAR and its MLS partners, which now include Zillow, are allowed to once
`9.
`again close off transparent access to home inventory by entering into agreements among
`themselves that disadvantage all but their own membership, consumers and competition will
`suffer.
`
`
`
`II.
`
`THE PARTIES
`
`Plaintiff REX is a Delaware corporation in good standing, incorporated as REX -
`10.
`Real Estate Exchange, Inc., with its principal place of business at 3300 N Interstate Hwy 35,
`Suite 149, in the City of Austin and State of Texas.
`Defendant National Association of Realtors is a trade association organized and
`11.
`existing as a non-profit corporation under the laws of the State of Illinois with its principal place
`of business at 430 N Michigan Avenue in the City of Chicago and State of Illinois. NAR has
`members residing in the State of Washington and within this District. NAR may be served
`through its registered agent.
`Defendant Zillow, Inc. is an online real estate marketplace company. Zillow, Inc.
`12.
`is a general corporation organized and existing under the laws of the State of Washington with
`its principal place of business at 1301 Second Avenue, FL 31, in the City of Seattle and State of
`Washington. Zillow, Inc. maintains real estate brokerage licenses in a number of states. It may
`be served through its registered agent.
`Zillow Group, Inc. offers online real estate services and is a general corporation
`13.
`organized and existing under the laws of the State of Washington with its principal place of
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 4
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`
`
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`

`

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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 5 of 48
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`business at 1301 Second Avenue, FL 31, in the City of Seattle and State of Washington. It may
`be served through its registered agent.
`Zillow Homes, Inc., is organized and existing under the laws of the State of
`14.
`Delaware, with its principal place of business at 1301 Second Avenue, FL 31, in the City of
`Seattle and State of Washington. It maintains real estate brokerage licenses in a number of states.
`It may be served through its registered agent.
`Zillow Listing Services, Inc. offers miscellaneous real estate services. It
`15.
`maintains real estate brokerage licenses in a number of states. It is a general corporation
`organized and existing under the laws of the State of Washington with its principal place of
`business at 1301 Second Avenue, FL 31, in the City of Seattle and State of Washington. It may
`be served through its registered agent.
`Trulia, LLC is a limited liability company organized and existing under the laws
`16.
`of the State of Delaware with its principal place of business at 1301 Second Avenue, FL 31, in
`the City of Seattle and State of Washington and its sole governor is Zillow, Inc. It is a real estate
`website. It may be served through its registered agent.
`
`
`III.
`
`JURISDICTION AND VENUE
`
`Plaintiff REX brings this action seeking injunctive relief, damages, treble
`17.
`damages, cost of suit, and reasonable attorneys’ fees, arising from Defendants’ violations of
`Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 and Section 1125 of the Lanham Act, 15
`U.S.C. § 1125. This Court has subject matter jurisdiction of Plaintiff’s federal law claims
`pursuant to 28 U.S.C. § 1331 (federal question) and 28 U.S.C. § 1337 (commerce and antitrust
`regulation). Plaintiff has standing to bring this action under Sections 4 and 16 of the Clayton
`Act, 15 U.S.C. §§ 15, 26.
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 5
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`
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`
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`
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`

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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 6 of 48
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`18.
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`Plaintiff’s state law claims, including under the Washington Consumer Protection
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`Act, RCW Ch. 19.86, arise out of the same factual nucleus as Plaintiff’s federal law claims. This
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`Court has subject matter jurisdiction of Plaintiff’s pendent state law claims pursuant to 28 U.S.C.
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`§ 1367, which should be exercised in the interests of judicial economy, convenience, and
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`fairness.
`
`19.
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`This Court has personal jurisdiction over Zillow and NAR and venue is proper
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`here pursuant to 28 U.S.C. § 1391(b)(2). Zillow Defendants are headquartered and/or organized
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`in Washington and have engaged in acts in furtherance of an unlawful restraint of trade within
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`the state and this District. Zillow’s own Terms of Service specify exclusive venue in state or
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`federal court in King County, Washington.
`
`20.
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`NAR regularly transacts business within Washington and this District. In 1908,
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`the predecessor to Seattle King County Realtors became one of “19 charter members” of the
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`NAR, with which they are still affiliated, noting that local members enjoy the “added security of
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`a team of advocates standing with them and for them, to protect their interests, from Seattle to
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`Olympia to D.C.” This Seattle/King County affiliate of NAR is headquartered in Bellevue,
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`Washington. NAR has also committed substantial acts in furtherance of its illegal restraint of
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`trade within the state and this District.
`
`REX employs licensed real estate agents and has real estate listings in this District
`21.
`and in other locations across the country, all of which have been affected by Zillow’s change in
`web display. Zillow operates its website, including the new web display, within this District.
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 6
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 7 of 48
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`
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`IV.
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`FACTS
`
`A.
`
`22.
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`Traditional NAR/MLS Residential Real Estate Brokerage Services
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`Brokers, agents, and REALTORS® participate in the marketplace for residential
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`real estate brokerage services in local markets throughout the United States. Brokers and agents
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`are licensed by the state through education programs and successful completion of a real estate
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`exam. Brokers can work independently or employ other agents through their own brokerage.
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`Agents work for a supervising broker to facilitate real estate transactions, bring buyers and sellers
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`together, and are paid a commission. Some agents are also REALTORS®. REALTORS® are
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`members of the NAR.
`
`23.
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`NAR is the nation’s largest trade association, boasting 1.45 million members, 54
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`state and territory associations, and approximately 1,130 local associations. The mission of the
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`NAR, as stated by the organization’s CEO Bob Goldberg, is to advance the interests of its
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`members. In a recent speech, Goldberg explained the NAR’s top priorities: “First and foremost,
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`it’s imperative that we are not just the National Association OF REALTORS®, we are also the
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`National Association FOR REALTORS®.” (emphasis in original).1
`
`24.
`
`The NAR controls a large portion of MLSs through local associations of realtors,
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`which are members of and governed by the NAR. The reach of NAR is extensive, as
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`demonstrated by NAR’s map of affiliated MLSs.2
`
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`1 CEO Update – 2017 Board of Directors, https://www.nar.realtor/ceo-update-2017-board-of-directors (last visited
`Mar. 6, 2021).
`2 MLS Map of the National Association of Realtors®, NAR, https://www.nar.realtor/mls-map-ofthe-national-
`association-of-realtors (last visited Mar. 6, 2021).
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 7
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`
`
`
`
`
`
`

`

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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 8 of 48
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`Based on statistics cited by the NAR, there are approximately two million active
`25.
`real estate licensees in the United States. At least seventy percent of active licensees are NAR
`members.3
`Despite the size and scope of the NAR and its affiliates, obtaining a state license
`26.
`to represent consumers as a broker or agent is not conditioned on membership in the NAR, MLS,
`or any other private association.
`In other words, licensed real estate professionals can compete outside the NAR
`27.
`and MLS strictures, or could effectively compete, absent anticompetitive interference from the
`NAR and MLSs.
`The NAR is the rare trade association that sets the rules of competition among its
`28.
`members. The rules of the NAR and its member MLSs stray far beyond ethical guidelines. NAR
`and MLS rules specify in detail how listings must be presented. They have mandates governing
`
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`3 National Association Realtors, Quick Real Estate Statistics, nar.com, https://www.nar.realtor/research-and-
`statistics/quick-real-estate-statistics (last visited Feb. 26, 2021).
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 8
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 9 of 48
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`mutual data exchanges and the structure of compensation offers. MLSs even discipline members
`with financial penalties. Because of the size and scope of the NAR and MLSs, these rules have
`become ubiquitous within the marketplace—essentially making consumers subject to them.
`Real estate brokers and agents are compensated through the commissions they
`29.
`earn on transactions. Seller agents represent the homeowner. These agents are often referred to
`as “listing agents” because they place their clients’ properties on one or more lists of available
`homes for sale. Buyer agents represent clients interested in purchasing a home for sale.
`Unlike the standard arrangement in other agency businesses, home sellers and
`30.
`buyers generally do not pay their brokers separately. Instead, under a decades-old NAR rule,
`sellers agree upfront to pay commissions owed to the brokers on both sides of the deal. Under
`the Buyer Agent Commission Rule, which is standard across many MLSs, sellers must make a
`predetermined offer of compensation to the agent representing the buyer. REX is the exception
`to this expensive business practice rife with conflicts of interests.
`31. While sellers can offer any amount of compensation to buyer agents under the
`NAR rule, seller agents instruct their clients that they need to induce buyer agents to bring clients
`who may be interested in their homes. The takeaway is that sellers should offer the highest
`marginal price. A script for seller agents from the brokerage firm Keller Williams illustrates this
`dynamic:
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 9
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 10 of 48
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`As the above script and extensive economic studies demonstrate, buyer agent
`32.
`commissions are not pegged to the amount of work performed or skill displayed by the agent
`representing the home buyer. And it is virtually impossible for buyers to negotiate down buyer
`agent commissions during the transaction. Buyer agents are prohibited from urging the buyer to
`negotiate with the seller directly. And once a seller agent has received an offer on a property, the
`seller agent and the buyer agent are prohibited from attempting to modify the buyer broker agent
`commission unilaterally.
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 10
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`
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`
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`

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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 11 of 48
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`These industry practices, including mandated NAR-endorsed MLS member rules,
`33.
`preserve sky-high real estate fees across the United States. “Essentially, the MLS listing,” one
`commentator explains, “acts as a tool which competing brokers can use to help enforce a near
`uniform commission rate and drive out discounters.”4 Industry insiders agree with this
`assessment. For example, the brokerage firm and MLS-member Keller Williams candidly admits
`in its instructional materials that offering less than 3% in buyer agent commissions on an MLS
`“will reduce the number of willing and qualified buyers that will see your home.” The interbroker
`compensation steers consumers to high-commission properties and stifles price competition in
`the $100 billion market for real estate brokerage services.5 An attorney who has represented
`many MLSs suggests that ending mandatory payments from sellers to buyer brokers would allow
`buyer-side agents to price their services in line with their skill, experience, and the client’s needs.
`There would no longer a “standard” or going rate for buyer agent fees.6
`The largest brokerage firms, including Redfin, Coldwell Banker, RE/MAX,
`34.
`Keller Williams, Compass, and Century 21 are distinguished by their faithful support of NAR
`and willing participation in the MLS. In stark contrast to traditional brokerage firms, REX has
`always maintained its independence from the NAR/MLS chokehold.
`
`
`4 Bradford W. Muller, Encouraging Price Competition Among New Jersey’s Residential Real Estate Brokers, 39
`Seton Hall L. Rev. 665, 683 n.100 (2009).
`5 A Government Accountability Office report describes how steering works: “When choosing among comparable
`homes for sale, brokers have a greater incentive — all else being equal — to first show prospective buyers homes
`that offer other brokers the prevailing commission rate than homes that offer a lower rate.” U.S. Gov’t
`Accountability Office, GAO-05-947, REAL ESTATE BROKERAGE: Factors That May Affect Price Competition,
`13 (2005); see also Panle Barwick, Parag Pathak, and Maisy Wong, Conflicts of Interest and Steering in Residential
`Brokerage, American Economic Journal: Applied Economics 9(3), 191–222 (empirically substantiating the
`concerns that steering explains the general uniformity of commission rates).
`6 Brian N. Larson, The End of the MLS as We Know It, Inman (Aug. 15, 2006).
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 11
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
`
`
`
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`

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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 12 of 48
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`Under the NAR/MLS regime, real estate commissions in the United States are
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`two to three times higher than in comparable international markets.7 Americans spend an
`estimated $100 billion annually just on the commissions for buying and selling homes.
`To put these costs in perspective, on a $720,000 sale—currently, the approximate
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`median price for home sales in King County, Washington—consumers surrender upwards of
`$40,000 in real estate brokerage commission fees. Despite the widespread adoption of online
`home searching, which dramatically reduces the labor requirements for agents, brokerage service
`fees remain largely unchanged and untethered to the effort expended.
`NAR rules are currently the target of numerous federal cases alleging illegal
`37.
`restraints on trade. Last year, the United States Department of Justice announced a simultaneous
`lawsuit and settlement with NAR concerning four anticompetitive rules widely enforced across
`NAR-affiliated MLSs: (1) NAR’s Global Commission-Concealment Rules through which MLSs
`prohibit the disclosure of offers of compensation to buyer brokers; (2) NAR’s Free-Service Rule
`through which buyer brokers misrepresent to buyers that their services are free; (3) NAR’s
`Commission-Filter Rules and Practices, which enable buyer brokers to filter listings based on
`the level of buyer broker commissions offered and thereby exclude homes with lower
`commissions from consideration by potential home buyers; and (4) NAR’s Lockbox Policy,
`which limits access to the lockboxes—and therefore access to the homes themselves—to only
`brokers who are members of a NAR-affiliated MLS. According to DOJ’s complaint, these rules
`“reduce price competition among brokers and lead to higher prices and lower quality service for
`American home buyers and sellers.”
`
`
`7 Panle Jia Barwick & Maisy Wong, Competition in the real estate brokerage industry: A critical review, Brookings
`Institute (Dec. 2019) at 8; Moehrl v. Nat’l Ass’n of Realtors, 2020 U.S. Dist. LEXIS 182532, at *28 (N.D. Ill. Oct.
`2. 2020) (stating that U.S. real estate commission rates are “sufficiently higher than in comparable international
`markets.”).
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 12
`Case No.: 2:21-cv-00312-TSZ
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`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 13 of 48
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`Four other pending cases filed by consumers in district courts in Illinois,
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`Missouri, and Massachusetts challenge agent commissions. Plaintiffs in these cases transacted
`through the MLS and allege that they paid inflated prices due to the Buyer Broker Compensation
`Rule. Two of these four cases were filed subsequent to the DOJ action, Bauman v. MLS and
`Leeder v. NAR. The other two, Moehrl v. NAR and Sitzer v. NAR, were filed in 2019, and have
`survived motions to dismiss. As the district court judge presiding over Moehrl noted, “it is easy
`to understand how” the Buyer Broker Commission Rules “could plausibly result in inflated
`commission rates.” Moehrl v. Nat’l Ass’n of Realtors, No. 19-CV-01610, 2020 WL 5878016, at
`*9 (N.D. Ill. Oct. 2, 2020). The arrangement allows for only the “hypothetical possibility” of
`negotiating anything lower than the standard 2.5% to 3% of the total home sale typically paid
`out to buyer brokers.8
`The REX Model
`B.
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`REX is a licensed broker in a number of states nationwide and employs salaried,
`39.
`licensed real estate agents, including in Washington State. REX competes with traditional
`brokers and agents—generally members of the NAR and/or MLSs—to provide residential real
`estate brokerage services to consumers wishing to buy or sell homes. REX routinely represents
`consumers on one side of the transaction while a traditional NAR or MLS member agent
`represents the counterparty.
`But unlike NAR/MLS brokers who market homes through high-dollar
`40.
`commission offers to other brokers, REX uses digital technology to market the home directly to
`
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`8 In Sitzer, the district court similarly ruled that plaintiffs pled a cognizable antitrust claim. The court’s opinion
`denying the motion to dismiss referenced the incentive for buyer agents to steer clients towards homes whose sale
`necessarily results in artificially high commissions: “buyer-brokers can use their access to MLS information
`(unavailable to potential home buyers) to view details about the offered levels of buyer-broker compensation and
`dissuade clients from viewing or purchasing homes with lower buyer-broker commission offers, thus ‘steering’
`them to properties with higher-paying commissions.” Sitzer v. Nat’l Ass’n of Realtors, 420 F. Supp. 3d 903, 915
`n.4 (W.D. Mo. 2019).
`
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`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 13
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 14 of 48
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`consumers looking to buy, sell, and manage their home. According to industry data, ninety
`percent of consumers search online for a home. Seventy-three percent of consumers reported
`using a mobile/tablet device or app for their home search. And sixty-eight percent of online
`buyers find their home without an agent. REX’s platform allows direct-to-consumer reach and
`reduces customer acquisition costs. Through REX’s proprietary technology, consumers can list
`their homes from their smartphones and see their listing go live within two days with ads
`specifically targeting interested buyers. REX’s ad generation algorithms generate personalized
`ads targeting online home shoppers. Through REX’s end-to-end customer service experience,
`consumers can easily search, shop, transact, manage, and move into the home of their dreams.
`REX’s model is working. Rather than the average national brokerage
`41.
`commission rate of roughly 5.5%, which includes listing and buyer agents’ commissions, REX’s
`clients spend, on average, only 3.3% in total commissions with the anticipation of driving the
`costs still lower.
`Using its model over the past five years, REX already has saved consumers more
`42.
`than $29 million in commissions. Not surprisingly, REX’s revenues have grown every year.
`REX is now active in markets spanning twenty states and jurisdictions including
`43.
`Arizona, California, Colorado, D.C., Florida, Georgia, Illinois, Massachusetts, Maryland,
`Minnesota, Nevada, New York, New Jersey, North Carolina, Oregon, Pennsylvania, Texas,
`Utah, Virginia, and Washington.
`REX is driving real estate commissions down for the same reason that transaction
`44.
`costs have plummeted across the service economy. Over the past several decades, advancements
`in information technology have slashed the fees once captured by middlemen, agents, and
`brokers. Online travel sites have made business and leisure travel costs more transparent and
`competitive. Charles Schwab, Ameritrade, and Robinhood have made no-commission or low-
`commission stock trades the new normal. Uber and Lyft have lowered the cost of transportation.
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 14
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
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`Case 2:21-cv-00312-TSZ Document 99 Filed 09/30/21 Page 15 of 48
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`DoorDash, Grubhub, and Instacart have reduced food delivery costs. Airbnb has made lodging
`more affordable. Even life insurance policies are cheaper due to internet-driven price
`competition. REX’s mission is the same.
`By combining digital technology with an honest approach to every consumer
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`relationship, REX aims to usher in an era of zero-commission home sales where consumers
`would be free to move about the country without the enormous personal expense in brokering a
`home. Americans would enjoy enhanced job mobility and educational advancement and a greater
`chance at wealth creation for middle-class families when the transaction costs of buying a home
`are reduced. The volume of home transactions has been flat over the past two decades, despite a
`more-than-twenty-percent increase in the number of households. The increase in the volume of
`home sales driven by lower transaction costs would spur the creation of new jobs at higher wages
`for electricians, plumbers, carpenters, and other trades whose demand for services clusters
`around the purchase and sale of homes. Moreover, states and municipalities that fund their
`police, fire, and teachers through real estate transfer taxes would benefit from the uptick in sales
`volume.
`C.
`
`The Importance Of Internet Aggregator Sites Like Zillow
`
`Since REX launched in 2015, the company has utilized aggregator sites to market
`46.
`clients’ homes. Because many interested buyers start their home search on aggregator sites,
`these digital hubs are a critical channel for REX. Because REX markets directly to consumers
`interested in buying a home at a lower transaction cost, aggregator sites facilitate REX’s ability
`to reach a large audience of potentially interested buyers. Thus, these aggregator sites help REX,
`and its clients, to maneuver around the NAR/MLS cartel’s high-commission strictures.
`Before aggregator sites like Zillow, information about homes for sale was
`47.
`controlled entirely by Defendant NAR’s broker cartel. Not long ago, consumers went to agents
`who furnished their clients with books or computer print offs of MLS listings. Crucially, the
`
`AMENDED COMPLAINT FOR INJUNCTIVE RELIEF
`AND FOR DAMAGES - 15
`Case No.: 2:21-cv-00312-TSZ
`
`
`
`FOSTER GARVEY PC
`1111 THIRD AVENUE, SUITE 3000
`SEATTLE, WASHINGTON 98101-3292
`PHONE (206) 447-4400
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