Jay Thompson is a former brokerage proprietor who spent over six years working for Zillow Group. He’s additionally the co-founder of AgentLoop. He “selectively retired” in August 2018, however can’t appear to depart the true property trade behind. His Inman column is printed each Wednesday.
REX, the “low cost” brokerage that shuns the MLS whereas submitting lawsuits left and proper, has allegedly closed down brokerage operations.
Perhaps. Or perhaps not? The corporate is uncharacteristically quiet, although in some methods, it is smart to not hearth out a press launch about your imminent demise. A lot for transparency.
Whereas the executives could also be tucked away silently in a room with a view, the brokers and assist workers are actively searching for jobs based on a number of sources.
REX has typically made headlines, although not a lot for issues brokerages are likely to covet — gross sales quantity, transaction sides, and agent depend.
As an alternative, REX has gained consideration for suing the Nationwide Affiliation of Realtors, Zillow, and the state of Oregon. They could be concerned in different lawsuits as properly. To be sincere, it’s arduous to maintain up with what appears to be probably the most energetic authorized division in the true property house. The variety of lawsuits, countersuits, and appeals REX authorized is wrapped up in is mind-boggling.
Toss in some click-bait fame for calling out “the true property cartel” and blaming Zillow for “hiding” listings, and also you’ve bought a brokerage that many brokers like to hate. I imply, there have been truly brokers defending Zillow over a few of REX’s claims!
REX’s enterprise mannequin appears to comprise not placing listings into the MLS, and avoiding paying purchaser agent co-broke charges, whereas driving the disruption practice within the identify of “altering the way in which individuals purchase and promote houses.”
Apart from former brokers and workers searching for work, the one arduous proof REX has shuttered brokerage operations is the very fact their company dealer’s license in Texas is in an inactive state. (Licenses in Arizona, Colorado and Nevada are nonetheless exhibiting as energetic in these states’ actual property licensing databases.)
You possibly can’t dealer actual property with out an energetic license. The truth that REX is carrying zero listings additionally gives robust proof its brokerage arm has ceased operation. Apart from this empty listings web page, there’s completely no reference on their web site that they’ve ceased serving to shoppers purchase and promote actual property.
This pegs the irony meter given REX’s proclamations that they’re all-in for the patron. When do you intend on letting these shoppers know you’ll be able to’t assist them?
REX nonetheless has cash
In an fascinating twist, only a few weeks in the past, “Insured know-how financing pioneer” PIUS introduced the securing of $10 million in funding for REX, with an accordion function that gives REX an choice for a further $35 million. After the information that REX’s brokerage operations is perhaps spinning into oblivion surfaced, Inman reported that Joe Agiato, PIUS’s CEO, advised Inman, “PIUS performs an in-depth evaluation of an organization’s know-how and IP portfolio, and primarily based on this, PIUS insures the worth of the mortgage to offer better quantities of capital at decrease charges.”
Agiato mentioned REX “remains to be working, albeit on a smaller scale. PIUS stays assured in REX’s know-how, which is the premise of our monetary relationship.”
Studying between the traces right here, it seems like this funding spherical is predicated on REX’s tech stack, and never its precise brokerage operations. A superb factor as a result of all indicators are pointing to these brokerage operations now not being in service.
What does this imply to the true property trade?
Assuming REX actually has shuttered its brokerage operations (and it could seem it has), the impression of that on the trade is negligible to non-existent. One other brokerage failed. So what? To not sound callous, nevertheless it occurs on a regular basis. This isn’t a easy trade, and revenue margins are usually razor-thin. Success isn’t a assure.
Though I’m under no circumstances a fan of litigating your technique to progress and profitability — and let’s face it, litigation appears to be a high precedence with REX — I don’t like seeing any enterprise fail. Folks want jobs, and the trade wants competitors and new enterprise fashions.
However within the grand scheme of issues, one much less brokerage within the combine gained’t have any important impact on the trade. The REX brokers, lots of whom I’m certain are stellar performers, can grasp their license with one other brokerage actually in minutes.
The one factor REX has fessed as much as throughout this information cycle is that their antitrust authorized pursuit of NAR and Zillow will proceed. They’ve employed high-profile legal professional David Boies to proceed carrying that torch. I do not know what Boies fees, however I guess he’s not low-cost, neither is he doing this professional bono.
Solely time will inform what, if any, impression these authorized gyrations could have.
Ought to REX be shifting from direct brokerage operations to offering some form of tech answer for brokerages (or shoppers) then perhaps that issues? Or perhaps not.
All of it relies on what that know-how gives and what drawback it addresses. Given that each one anybody appears to learn about REX is gleaned from copious authorized filings, we are able to’t say what their tech stack could provide.
I’m certain sometime we’ll be listening to extra from and about REX. If historical past is any indication, that will likely be restricted to some lawsuit, countersuit or attraction. Who actually is aware of, or cares, what else could lie forward for them.
However wait! Scorching off the press …
Lower than an hour after I submitted this column to the Inman editors, extra information broke about REX. And it wasn’t one other lawsuit!
See Inman’s take at “REX pivots to single-family rental market as its Hail Mary,” and Actual Developments breaking story, REX survives as facilitator for company landlords. Appears to be like like REX has adjusted its focus to institutional patrons within the single-family rental market.
REX co-founder and COO Lynley Sides, and REX Normal Counsel Michael Toth are laying the fault of their brokerage failure straight on Zillow, taking #BlameZillow to complete new ranges.
NAR should be responsible as properly given they’re co-defendants in REX’s lawsuit. I assume when unsure, level fingers at anybody besides who’s wanting again at you within the mirror.
Pivoting to serving to institutional/company patrons of rental properties definitely gained’t endear any brokers to REX. I believe these steering the REX’s ship via the storm couldn’t care much less what brokers consider this transfer.
There’s nonetheless nothing in regards to the collapse of the brokerage enterprise or this new route talked about on REX’s consumer-facing web site. Pondering they should have issued a press launch about this enterprise mannequin and buyer base shift, I clicked on its website’s press web page, and bought a 404 Web page Not Discovered error.
Ditto for the weblog web page. You possibly can, nonetheless, nonetheless purchase loads of REX branded swag. Perhaps the worker with the password to edit the web site bought laid off? Perhaps REX thinks presenting a false entrance to shoppers is OK. Perhaps they’re simply drained. Certainly in some unspecified time in the future, REX will let the patron know they will’t assist them anymore. Solely time will inform.
Will this pivot to assist company landlords impression the true property trade? Hardly. Institutional traders have been round since Day 1. They’ll nonetheless be round whether or not REX is profitable with this new mannequin or whether or not it meets the identical destiny as its brokerage operations.
Jay Thompson is an actual property veteran and co-founder of AgentLoop dwelling within the Texas Coastal Bend. Observe him on Fb, Instagram and Twitter. He holds an energetic Arizona dealer’s license with eXp Realty. Referred to as “the toughest working retiree ever,” because the founding father of Jay.Life, he writes, speaks and consults on all issues actual property.