Redfin, Zillow Sued Over Multifamily Rental Deal; Real Estate Market Faces Competition Challenges
Redfin has been sued by several US states and the federal government over an agreement with Zillow that could limit competition in the multifamily rental market. The deal, worth $100 million, gives Zillow exclusive rights to list multifamily rentals on Redfin's platforms. The plaintiffs argue this could result in reduced choice, higher prices, and lower quality for customers.
The lawsuit notes that internet listing services (ILS) are crucial for renters to search for available rentals, and the market is highly concentrated with Redfin and Zillow being two of the three leading rental ILS networks. The agreement requires Redfin to eliminate its advertising contracts with multifamily rental property managers and only display listings that are also on Zillow's website. The plaintiffs believe this will lead to anticompetitive effects, violating the Sherman and Clayton Acts.
Meanwhile, in a separate but related case, the National Association of Realtors (NAR), along with major real estate companies like Realogy, HomeServices of America, RE/MAX, and Keller Williams, are being sued for allegedly restricting competition in the housing market. The plaintiffs argue that the defendants have used market rules to foster a lack of transparency and competition, specifically regarding how real estate agent commissions are paid and communicated.
The lawsuits aim to block the Redfin-Zillow deal and force the companies to divest from each other. In the real estate market case, the plaintiffs hope to change the way commissions are handled, potentially leading to more competition, transparency, and innovation. These legal challenges could significantly reshape the multifamily rental and real estate markets in the US.
