An antitrust suit against Zillow over how it displays real estate listings could cripple the platform, the company said in court filings Friday, warning that the case may ruin the nation’s most popular website to search for homes for sale.
Real estate startup REX has asked a federal court to force Zillow and its subsidiary Trulia to stop separating homes for sale into two groups — those listed by brokers who belong to the National Association of Realtors and those listed by others. But contractual restrictions require Zillow to segregate the listings, the company said.
“REX’s proposed injunction creates a substantial risk that Zillow’s online platforms would lose access to listings data in markets across the country,” Zillow said in court documents, adding that that “runs the risk that Zillow could lose access to the data entirely, irreparably damaging its business.”
Better data: Zillow changed how it displays listings in January after gaining access to the Multiple Listing Services Internet Data Exchange feeds, whose rules are established by the NAR. Those rules prohibit websites that use the data feeds from combining NAR listings with those offered by non-NAR agents.
Zillow said it believes the rules restricting commingling are outdated, but had no choice but to agree to licenses to get access to the IDX data, which is more reliable and up-to-date that the previous data sources the company used.
After switching to the IDX feeds, Zillow was able to add 3,000 more home listings in Seattle — the city where the company’s headquarters is located. Losing access to those feeds would eliminate tens of thousands of listings now on Zillow and Trulia’s platforms, the company said.
Why it matters: The pandemic has led to a spike in homebuyer interest as white-collar employees transitioned to working from home and an all-time high number of adults moved back in with parents or grandparents. In December, Zillow predicted that 2021 is likely to see the highest home sales growth since the 1980s.
The suit: REX sued Zillow in federal court last month over a change it alleges favors listings by brokers who belong to the NAR, the largest U.S. real estate trade association.
The January change that Zillow and its subsidiary Trulia made to their platforms relegates all non-NAR listings to a “hidden tab,” REX said, making it more difficult for consumers to find those homes for sale. In an April 15 filing, REX said listings that moved from the hidden tab to Zillow’s main listings tab saw as much as a 500 percent increase in views.
The startup — which seeks to make real estate agent fees more transparent by leaving them to the homebuyer to negotiate — asked the court for an injunction that would block Zillow from segregating listings and favoring those by 1.3 million real estate agents associated with NAR.
Zillow and Trulia control 75 percent of the online home search market.
What’s next: REX will have a chance to respond to Zillow’s filing next month. U.S. District Judge Thomas S. Zilly hasn’t said yet whether he wants to hold a hearing on REX’s injunction request or will rule based on the filings already submitted.