Why REX vs. the State of Oregon is flawed

Rebate bans artificially inflate the cost of real estate services.

Attn: Citizen Complaint Center, Antitrust Division
Department of Justice
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530

Attn: Office of Policy and Coordination
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave. NW Room CC-5422
Washington, DC 20580

REX — Real Estate Exchange, Inc. is a licensed real estate brokerage that operates in multiple states across the United States, one being the State of Oregon. This is a VC-backed product that currently offers savings to sellers with a commission set at 2% and buyers a 50% commission rebate.

In every respect, REX Real Estate offers nothing new over most real estate agents, it simply games a few pieces of the existing process to claim that it has a found a way to replace an outdated MLS. The lack of listing sellers’ homes on the MLS is a major challenge for consumers because their listings are unavailable to agents who utilize these systems. Some consumers have complained that using this service results in a low turn-out and almost no interest from homebuyers.

The MLS process is integral and a necessary element of a functioning real estate market, if the rules are enforced with antitrust regulations in mind. Recent action by the Department of Justice vs. NAR is a definite step forward to a much more competitive real estate process because it addresses the competitive factor of MLS, rather than the mere justification for the existence of MLS.

MLS serves as an important link between consumers and brokers, as long as online MLS aggregators can utilize the system in their efforts to openly publish valuable recently listed home information online, making it easily available to consumers.

Products such as Trulia and Zillow made it possible for consumers to view valuable information for any home anywhere in the United States. This is a positive-sum user experience that has firmly advanced innovation in real estate technology, known as PropTech, or real estate FinTech. Competitive brokerages benefit from MLS and so do consumers as long as MLS aggregators are able to offer this information for free.

My full editor’s review and our users’ reviews for REX Real Estate are available here https://homeopenly.com/Reviews/REX_Real_Estate This information explains that REX Real Estate is a brokerage, just like any other. As a broker, REX Real Estate is unable to claim special treatment from the courts over any other licensed broker in any state.

The State of Oregon currently prohibits buyers from receiving buyer’s refunds (commission rebates.) HomeOpenly is currently unable to allow real estate professionals to advertise savings to buyers anywhere in Oregon.

For example, for this random property address in Oregon where consumers have access to Home Listing Savings, but we do not show any Home Buyer’s Refunds for the benefit of any future or present potential buyers for this home.

In California, on the other hand, consumers have access to savings from buyer’s agents and listing agents because no such ban on rebates currently exists. In California, consumers on both sides of the real estate transaction can take advantage of local competitive agents who offer savings.

In 2017, HomeOpenly has started a petition looking for support “To Amend Oregon Law in Order to Allow Real Estate Agents to Provide Rebates to Consumers.Two people have signed this petition in the last four years.

The reason why? This is the job of the Department of Justice to enforce state laws that do not align with federal antitrust and consumer protection regulations. Consumers have better things to worry about and, rightfully, assume that the FTC and the DOJ are protecting their interests on a daily basis.

The State of Oregon’s rebates ban is, of course, flawed. The buyer’s rebate is the only mechanism for the buyer to negotiate commission savings. Agents that do not offer a rebate as part of their fee schedule, do not financially compete to represent buyers.

The State of Oregon’s law prohibits real estate brokers from paying part of their commission to unlicensed persons. As a result, because consumers do not have real estate licenses, this law prevents them from receiving rebates. The consumers living in the State of Oregon are unable to benefit from rebates that consumers in other states may receive.

All consumers should be able to negotiate savings as part of any service agreement with any service provider. At HomeOpenly, we believes that State of Oregon’s law is currently set to unfairly benefit real estate agencies at the expense of the real estate consumers.

Why REX’s legal action against the State of Oregon is flawed?

REX Real Estate has recently filed a legal action against the State of Oregon to remove the prohibition against buyer rebates.

REX Real Estate is a licensed real estate brokerage the State of Oregon that claims that all brokerages are in collusion via the state law, including itself. Logically, this is the same thing as the Uber driver filing a case against Uber Technologies for the breach of antitrust law on the grounds of “dynamic pricing” to constitute price-fixing.

Any Uber driver is always part of Uber’s cartel because it takes at least two parties to agree (explicitly or implicitly) to any collusion, except in jurisdictions where Uber is a public utility. However, even then, the question arises if a local Public Utility Commission has a “de facto” control over Uber drivers via Uber? In theory, if Uber is a public utility, a local Public Utility Commission must set a maximum take rake (a commission that a platform charges to facilitate a transaction) on Uber Technologies as a Raked Marketplace, and it must set Uber driver fares (prices charged to consumers for rides) as a separate action, or to allow all Uber drivers to set their fares competitively against one another. The California Court of Appeal, First Appellate District currently holds that:

Indeed, given that the CPUC may, but is not required, to set rates, subsection (2) must focus on whether the CPUC would have the power to regulate rates were the service being provided by a privately-owned public entity corporation and not on whether it would actually exercise that power — as the courts have no such clairvoyance when examining only an analogous context. Accordingly, to ensure that privately-owned and publicly-owned public utility corporations are treated the same under the UPA — that is, to ensure that subsection (1) has the same scope and breadth as subsection (2) — the “pivotal issue” under subsection (1), as it is under subsection (2), must be whether the CPUC has the jurisdiction to establish rates, not whether it has yet chosen to exercise that jurisdiction in a particular case. The answer to that pivotal issue here is undisputed — the CPUC has rate-setting jurisdiction over Uber.

The pivotal issue here that remains disputed is how does the CPUC has rate-setting jurisdiction over Uber drivers?

By what means, without having to issue a license to operate, Uber driver is under the jurisdiction of any government? At best, Uber drivers operate under the jurisdiction of the California Department of Motor Vehicles because it issues California driver’s licenses to Uber drivers.

The connection between REX vs. State of Oregon and a hypothetical case of an Uber driver vs. Uber Technologies is the presence of culpability.

Due to their direct culpability in the price-fixing scheme (other than those Uber drivers presumed to be under the CPUC jurisdiction,) no Uber driver has a claim against Uber Technologies for anticompetitive use of the “dynamic pricing”. Only the United States government, an unscrupulous competitor, or a consumer can originate a case against Uber (or any Uber driver) to claim damages under the Section 1 of the Sherman Antitrust Act because consumers are always harmed by price-fixing.

REX Real Estate is looking for publicity to promote its mixed-results brokerage as a consumer-friendly product. Filing a wrongful case, in any court is illegal, but very difficult to prove because REX Real Estate may not even realize that their legal action has no standing. REX Real Estate is only correct to argue that the problem exists in the State of Oregon’s present real estate regulations.

REX Real Estate, in all practical terms, takes advantage of this flaw because it does not compete with anyone else to pay rebates to consumers it has represented (or currently represents) in the State of Oregon, just like any other broker in that state at this time.

The issue of state bans on rebates is a real problem, and it must be resolved correctly regardless of the outcome of any other civil action.

What Can the Department of Justice and the Federal Trade Commission do?

At some point, the court will be forced to dismiss the legal action originated by REX Real Estate on the lack of merit, lack of standing, lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, failure to state proper claims, complicity, culpability, etc.

The real problem with the rebate bans will remain unsolved.

There is no competition for buyers between brokers in the State of Oregon. There are currently ten other US states that prohibit homebuyers from being able to receive a rebate on that same grounds.

At HomeOpenly, we firmly believe that the resolution to this issue must come from the Department of Justice and the Federal Trade Commission, and not a civil action that originates with some random broker looking for publicity.

The Department of Justice and the Federal Trade Commission already know that

“Rebate bans artificially inflate the cost of real estate services. Consumers are forced to pay thousands of dollars more to buy a home than they would if rebates were allowed. In effect, rebate bans prohibit brokers from competing on price, forcing all brokers to charge — and all consumers to pay — the same inflated price.”

The Department of Justice and the Federal Trade Commission must continue the hard work to remove these barriers to free trade. Ending these regulatory barriers to free trade will help all competitive agents to offer savings, not just REX Real Estate, it will help services like HomeOpenly, designed to serve them as our valued users, and it will help consumers.

At HomeOpenly, we fully support your efforts to bring transparency and the enforcement of competitive business regulations into the housing industry and we support in your efforts to end rebate bans across all of the United States, and not just the State of Oregon.

Author: Litesand

Antitrust, real estate, e-commerce, fintech, proptech, bigtech

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