Austin real estate tech firm targets Zillow

A battery of former Texas attorney general Ken Paxton is behind an antitrust lawsuit against Zillow.

The big picture: Zillow is the go-to site for real estate listing searches, but REX, an Austin-based real estate broker, alleges that Zillow unfairly marginalized his listings, harming his business, buyers and sellers.

  • REX listings, as well as others that are not listed with a real estate agent, such as owner’s sale, can now be found in an obscure “other listings” tab on Zillow’s website, rather than in the default tab.

  • Zillow officials say they are following National Association of Realtors rules that call for the separation of houses listed by agents from those not represented by agents. The NAR is also a defendant in the REX lawsuit.

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Why is this important: REX says its approach, which automates the work traditionally done by realtors using data to match sellers to potential buyers, cuts commission fees from around 6% to almost 2%.

Michel toth, a former special advocate for Paxton, is the general counsel for REX and told Axios that the “agent registrations” to other registrations ratio was 9: 1 when Zillow began to separate the two in January. The ratio in some areas is now closer to 100: 1 as sellers find it increasingly difficult to sell outside listing agents.

  • He hired two former AG colleagues, Darren McCarty and former Texas Attorney General Scott Keller, as part of his “motley team” of lawyers, Toth told Axios.

  • McCarty and Toth worked on a Texas antitrust case against Google before each left Paxton’s office – Toth for a short-term state judge job before losing an election to a Democrat, and McCarty in connection with ‘a mass exodus of assistants who accused the attorney general of a pattern of corruption.

  • Keller, like Toth, is active in Republican politics and has represented Texas in battles against the Obama administration over immigration, environmental regulations, and voter identification laws.

  • The AP reported earlier this year that Paxton is now seeking $ 43 million in public funds to replace some of its assistants with outside lawyers to lead this Google antitrust effort.

  • Other former students of Paxton who are working on the case.

  • Former State Solicitor General Kyle Hawkins – who fought to overturn the Affordable Care Act and gained notoriety for failing to sign Paxton’s lawsuit last year asking the Supreme Court to undo the victory of President-elect Biden – also worked briefly on the case.

What they say : Toth says what happened on Zillow was the “scanning of a cartel”.

“We’ve cut our teeth on Google and are reveling in Zillow’s decision to make collusion a business model. The days of Big Tech’s brazen damage to consumers are numbered.”

Toth tells Axios

The other side: Zillow officials said REX’s claims were “baseless” and the company would continue to “empower real estate consumers.”

  • “We are actively advocating for up-to-date industry rules that encourage transparency and enable a seamless search experience that displays all types of listing information,” Zillow spokesperson, Viet told Axios. Shelton, calling the rules that led to the separate tabs “obsolete.”

“REX chooses voluntarily to use Zillow’s services to advertise their properties for sale on Zillow for free, ”Shelton said. “We encourage REX to join Zillow in advocating for changes in industry rules that would allow their ads for sale displayed on Zillow to appear as they were. Last year.”

And after: Last month, a Seattle federal judge dismissed Zillow’s motion to dismiss REX’s antitrust and false advertising claims, allowing the case to continue.

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Adam Gray

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