Why REX ‘Shuttering’ doesn’t matter for real estate

Jay Thompson is a former brokerage firm owner who worked for the Zillow Group for over six years. He is also co-founder of AgentLoop. He “selectively retired” in August 2018 but cannot leave the real estate industry behind. His Inman Pillar appears every Wednesday.

REX, the “discount” brokerage that shuns MLS while filing lawsuits left and right, has reportedly done so closure of the brokerage business.

Maybe. Or maybe not? The company is unusually quiet, although in a way it makes sense not to issue a press release about her impending death. So much for transparency.

While executives hide in silence in a room with a view, agents and support staff are actively looking for jobs several Sources.

REX has often made headlines, although not so much for things brokers tend to covet – sales volume, transaction pages, and number of agents.

Instead, REX drew attention by suing them National Association of Real Estate Agents, Zilovand the State of Oregon. You may also be involved in other legal disputes. To be honest, it’s difficult to keep up with what appears to be the most active legal department in real estate. The number of lawsuits, counterclaims and appeals REX Legal is involved in is overwhelming.

Throw in some click-bait glory for calling out “the real estate cartel” and Blame Zillow for “hiding” listings, and you have a brokerage firm that many brokers hate. I mean, there were actually agents defend Zillow on some of REX’s claims!

REX’s business model appears to be not listing on the MLS and avoiding paying buyer agent co-broke fees while trading on behalf of “changing the way people buy and sell homes.”

Aside from former agents and employees looking for work, the only hard evidence that REX has ceased brokerage operations is the fact that it is a business Texas broker license is in an inactive state. (Arizona, Colorado, and Nevada licenses still show as active in those states’ real estate license databases.)

You cannot broker any real estate without an active license. The fact that REX is carry zero listings also provides strong evidence that his brokerage business has gone out of business. Aside from that blank listing page, there is absolutely no indication on their website that they are no longer helping consumers buy and sell real estate.

Given REX’s proclamations that they’re all-in for the consumer, that’s the irony meter. When are you going to let those consumers know you can’t help them?

REX still has money

In an interesting twist, just a few weeks ago, “Pioneer of insured technology financing” PIUS announced that Securing $10 million in funding REX, with an accordion feature giving REX an option for an additional $35 million. After news broke that REX’s brokerages could be forgotten, Inmann reports that Joe Agiato, CEO of PIUS, told Inman, “PIUS conducts an in-depth assessment of a company’s technology and IP portfolio and, based on this, PIUS insures the value of the loan to provide larger amounts of capital at lower interest rates.”

Agiato said that REX “is still operational, albeit on a smaller scale. PIUS continues to rely on REX technology, which is the foundation of our financial relationship.”

Reading between the lines here, it sounds like this funding round is based on REX’s tech stack and not actual brokerage. Good thing, because all signs point to these brokerage shops no longer being in operation.

What does this mean for the real estate industry?

Assuming that REX has truly ceased its brokerage activities (and it appears that it has), the impact on the industry is negligible to non-existent. Another mediation failed. So what? Not to sound callous, but it happens all the time. This isn’t an easy industry, and profit margins are typically razor-thin. Success is never a guarantee.

While I’m not at all a fan of finding your way to growth and profitability through litigation – and let’s face it, litigation seems to be a top priority at REX – I don’t like it when a company fails. People need jobs, industry needs competition and new business models.

But overall, one less broker in the mix isn’t going to have a significant impact on the industry. The REX agents, who I am sure excel at, can literally hang up their license with another brokerage firm in minutes.

The only thing REX has admitted to this news cycle is that their antitrust prosecution of NAR and Zillow is continuing. They have hired high-profile attorney David Boies carry that torch on. I have no idea what Boies is asking for, but I bet he’s not cheap, nor does he volunteer.

Only time will tell what impact these legal fluctuations could have.

Should REX switch from direct brokerage to providing some sort of technical solution to brokers (or consumers), then maybe that matters? Or maybe not.

It all depends on what this technology offers and what problem it addresses. Since everything anyone seems to know about REX comes from numerous legal documents, we can’t tell what their tech stack has to offer.

I am sure that one day we will hear more from and about REX. If history is any indication, that will be limited to a claim, counterclaim, or appeal. Who knows or really cares what else is in store for them.

But wait! Fresh off the press…

Less than an hour after I submitted this column to the Inman editors, more news came out about REX. And it wasn’t another lawsuit!

See Inman’s take under “REX moves to the rental market for single-family homes as Hail Maryand Real Trends Breaking Story, REX survives as an intermediary for business owners. It looks like REX has shifted its focus to institutional buyers in the single-family home rental market.

Lynley Sides, Co-Founder and COO of REX, and Michael Toth, General Counsel of REX, blame Zillow head-on for their mediation failures, taking #BlameZillow to a whole new level.

NAR must also be at fault as they are co-defendants in REX’s lawsuit. I think when in doubt, point your finger at everyone except the one looking at you in the mirror.

Focusing on helping institutional/corporate rental property buyers is certainly not going to endear agents to REX. I suspect those piloting the REX ship through the storm don’t give a damn what the agents think of this move.

There is still nothing about the collapse of the brokerage business or this new direction mentioned on REX’s consumer-facing website. I figured they must have put out a press release about this business model and the shift in customer base, and clicked the press page of his websiteand got a 404 page not found error.

Ditto for the blog page. However, you can still buy many REX brand swag. Maybe the employee with the password to edit the site was fired? Maybe REX thinks it’s okay to give consumers a false facade. Maybe they’re just tired. At some point, REX will surely let the consumer know that they can’t help them anymore. Only time can tell.

Will this pivot to help business landlords impact the real estate industry? Hardly. Institutional investors have been around since day 1. They will still be around whether REX succeeds with this new model or whether it suffers the same fate as its brokerages.

Jay Thompson is a real estate veteran and co-founder of AgentLoop based in Texas Coastal Bend. Keep following him Facebook, Instagram and Twitter. He holds an active Arizona brokerage license with eXp Realty. Dubbed the founder of “The Hardest Working Retiree Ever”. Jay Life, He writes, speaks and advises on all aspects of real estate.

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