REX Homes, which has claimed that a conspiracy between the National Association of Realtors and brokerages prevents true competition in real estate, is perhaps adding evidence to its own legal analysis.
Last Friday, the brokerage that lets home sellers pay less than the 5-6% of the typical home sale price commission, announced over Zoom that the vast majority of its 180 workers would be laid off, according to phone interviews with half-a-dozen current or recently let go employees.
Also, REX announced that its physical offices in Austin, Texas, and Woodland Hills, California, would shut down immediately, according to these employees.
Workers agreed to talk on the condition their names would not be published. Messages left with a REX spokesperson as well as CEO and Co-founder Jack Ryan and Chief Operating Officer and Co-founder Lynley Sides went unreturned.
Michael Toth, REX’s general counsel and an architect in the company’s still pending lawsuits against NAR and Zillow, responded with a written message that described REX in the past tense.
“REX was on path to disrupt the industry for consumers,” Toth stated. “Unfortunately, as alleged in REX’s federal lawsuit, when Zillow and NAR colluded to protect their profits, REX’s innovative business model was sacrificed.”
“The industry could not tolerate consumer choice,” Toth continued. “As a result, we’ve had to make a lot of painful decisions.”
After a round of layoffs both last August and in October, REX stood at approximately 180 workers, according to the employees interviewed. There are now about 40 workers remaining after the layoffs, the employees said, with some of the departures people who quit in the last couple of months.
Workers interviewed were not sure whether REX would regroup or is on the verge of shutting down. These mixed messages were echoed on LinkedIn. One laid off employee, an account manager, messaged that REX had “closed shop.” Another wrote that the “Customer service department dissolved.” These two workers declined interview requests.
Ryan verbally delivered the layoff and office closing message over Zoom, employees said. Employees recall Ryan urging them to quickly clean out their desks, and, if they still had business with clients, to make sure potential homebuyers or sellers had their cell phone numbers.
“It was like what being on the Titanic must have felt like,” one employee still at the company, who works as a real estate agent, grimly remarked.
In an industry where everyone clamors to call themselves a disruptor, REX has offered a truly different business model, though one with echoes of Redfin’s strategy.
Its agents are employees, not independent contractors, and, like Redfin, are paid on salary instead of sales bonuses. Agents interviewed who worked at REX had some positive things to say about their experience. These include competitive compensation, lines of communication with Ryan and Sides, and even a sense they were part of a social movement against the real estate status quo.
But those agents also noted that their salaries and benefits cost the company, particularly amid a recent dip in the housing market and venture capital dollars not recently flowing into REX. The company has raised $145 million in private financing, according to Crunchbase.
“It was hard for us to pivot in the past few months,” an employee said.
As for challenging the status quo, employees cited clashes with NAR and Zillow as an issue that did harm REX’s underlying business. REX is engaged in litigation over Zillow placing its agent listings in the “Other agent” category on Zillow, because the listings do not come from an MLS feed.
REX did, however, grudgingly join NAR in the past year. Previously, Ryan has taken credit for supplying the U.S. Justice Department information about the trade group. Those tips eventually lead to a consent decree between DOJ officials and NAR in November 2020. Last July, the Justice Department withdrew from the consent decree to pursue an investigation into real estate agent commissions.
Not all departing employees saw REX as a principled champion of consumers and agents. One described Ryan as “arrogant” for running a real estate company with no prior experience in the industry. Previously, Ryan was a Goldman Sachs banker and media company entrepreneur, among other roles.
Other employees expressed misgivings about handling of the past week’s events.
“They’ll tell you one thing on Zoom,” said one agent. “And then they’ll call you and tell you something else.”
