Real estate access: denied
The Toronto Real Estate Board (TREB) defends denying listings to rogue realtor, while realtor claims it did so out of fear
by Tony Wong as published in the Toronto Star:
When Fraser Beach received a call from a Bell Canada subsidiary about starting a new real estate company three years ago, he had no idea the unlikely partnership would land him in a high-stakes court case that could dramatically change the landscape of Toronto's real estate market.
The drama playing out on the seventh-floor courtroom at the Ontario Superior Court of Justice this week has pitted the realtor against Canada's largest real estate board in a landmark battle that some say could open the doors to further competition between realtors in the future and result in lower prices for consumers.
Beach, 65, a long-time Toronto-area broker, has taken the Toronto Real Estate Board to court after the organization cut off his Multiple Listing Service access in May of 2007, three days after he launched his website. The MLS database is a list of properties for sale. The realtor argues that the board shut him down when they learned his website would offer lower prices and that his partner was BNV Real Estate, a subsidiary of telecom giant Bell.
"Instead of embracing change, the Toronto Real Estate Board decided to shut it down," Beach's lawyer Randy Pepper charged this week. "They cut off access to Mr. Beach's MLS system, which is the lifeblood of any realtor."
TREB lawyer Bill Sasso called the new venture "a dramatic event. A significant change in the way business was being conducted," which left the organization with no choice but to shut down the access of a member for the first time in their history. The board is arguing that they didn't block Beach and Bell for competitive reasons, but simply because the realtor did not follow membership rules and, they say, downloaded listings without permission.
"TREB viewed this as a serious breach of security and a singular and unprecedented threat to TREB's most valuable asset," Sasso said in his closing submission. "The decision to suspend Beach's access to the TREB system was a significant decision which TREB took very seriously."
The case wrapped up this week, but both sides are awaiting a decision by Justice David Brown. That decision, expected before the end of summer, is bound to have repercussions on the board and its 28,000 members in the future.
If Beach wins, it might open the doors to other companies who use technology to lower real estate fees. This is already happening in the United States, where realtor associations have been under fire by government authorities for having anti-competitive rules.
In the U.S., Internet-based brokers have historically been blocked from accessing MLS databases associated with the National Association of Realtors. In a September 2005 lawsuit by the Justice Department, government lawyers said the association "adopted policies that restrain competition from innovative real estate brokers."
Sites such as BNV's now-defunct realestateplus.ca (which has since been sold to a division of Torstar Corp., owners of the Toronto Star) allow consumers to peruse listings from home while typically charging discount fees. A settlement south of the border was reached last year as a result of the suit, with a copy of the U.S. District Court decision submitted as evidence by Beach's lawyers.
"Like TREB, the National Association of Realtors did not adopt an enlightened response either, which led to the decision to open up the MLS system," Pepper said to Justice Brown.
Real estate insiders say that it is only a matter of time before technological change forces realtor associations to open their databases, with Canada typically a few years behind the U.S. The fact that the Canadian federal Competition Bureau was monitoring the case over the last two weeks suggests that they are keeping a close eye on developments in Toronto.
The competition bureau already has an ongoing investigation into the Ottawa-based Canadian Real Estate Association for enacting new rules in 2007 that some say are anti-competitive and could hurt consumers.
Certainly, the presence of discounters in the marketplace has been a thorny issue with real estate boards across Canada.
Internet-based realtors are already making inroads into the Canadian market, many offering a low commission structure or a flat fee for services. Beach's lawyers allege their client's website was no different than other realtor websites that allow consumers to request information.
But this is the first time a discount broker has had access blocked. Beach's lawyers say the real reason TREB cut their client off was because they were "frightened" of his partner – a technologically savvy heavyweight intent on lowering commissions.
"Bell posed a huge competitive threat to the status quo," Pepper argued.
TREB president Maureen O'Neill says that's not true. She testified that BNV was in blatant violation of user agreements by having uploaded data without permission.
"There was a concern of a potential liability for TREB and our members because our clients did not give permission for the use of their listings other than on the TREB website and the Multiple Listing Service," O'Neill said.
When Bell first contacted Beach more than three years ago the Ajax realtor was operating an obscure Internet-based discount brokerage that offered total commissions as low as 0.5 per cent, compared with the standard 2.5 per cent for a listing broker. The buyer's agent would typically get their piece of the cut, or 2.5 per cent, meaning the total commissions through Beach's operations would be about 3 per cent, compared with an industry standard of 5 per cent.
The lowball pricing on the website attracted the attention of Bell, who wanted in on the real estate sector, seeing opportunity in a business that could potentially be worth more than a billion dollars in revenue annually.
According to BNV's business plan, the telecom company intended to invest $29 million in start-up costs with a "lower cost offering" service that would charge consumers 25 per cent less than the standard commission rate currently offered by realtors.
Bell saw synergies in real estate, and hoped to partner content and traffic from its Sympatico/MSN real estate website while using mapping technology from partner Microsoft and editorial from their Bell Globemedia division to create a major enterprise to compete against traditional brokerages.
BNV saw an opportunity to make money because the realtor's "service remained essentially the same, but the prices paid for them by Canadians have soared," according to the company's business plan, entered as evidence in the lawsuit. In its plan, BNV said standard real estate company operating profits were as high as 35 per cent, with annual fees and commissions in Canada nearing $8 billion annually because of the "anti-competitive policies of a cartel."
However, TREB's Sasso noted that BNV may already have known it was crossing the line with an "aggressive" business plan that anticipated the possibility that regulatory agencies may try to block Bell from becoming licensed due to a "perceived" violation of MLS rules.
"TREB takes no position or interest in the business models of its members, provided that members abide by various TREB agreements," Sasso said. "TREB does not set the amount of commissions or the manner in which they are charged. TREB's policy is that this should be left entirely up to the market."
Key to TREB's argument is that, under the membership agreement, "members shall not question or dispute any of TREB's right, title, ownership, licence, intellectual property and or other interests in the MLS database," something that Justice Brown will have to consider in his final deliberation.
The telecom company is not a plaintiff in the suit and declined to comment. A spokesperson said the company decided to divest itself of BNV because it "didn't fit with the core business."
Beach isn't asking for monetary damages, but simply wants his access to the MLS system reinstated and a declaration that TREB was not entitled to terminate his access.
The case has an interesting back story – one of the lawyers representing Beach, Lawrence Dale, was also a principal in discount brokerage Realtysellers Ltd. Realtysellers closed its doors in 2006 after arguing that the TREB was being anti-competitive by keeping their ads out of a board-owned newspaper. The board settled out of court for an undisclosed sum believed to be in the millions.
July 4, 2009 in Toronto Real Estate Board | Permalink | Comments (1) | TrackBack (0)
Frank Lloyd Wright-designed home sells
A Phoenix home that famed architect Frank Lloyd Wright designed for his son has been sold for $2.8 million. Realtor Cionne McCarthy says escrow on the spiral-shaped home of about 2,250 square feet closed last week.
She says the undisclosed buyer plans to restore the home, built in 1951, to its original condition and live in it.
The 2-acre property includes a guesthouse, pool and a spiral ramp leading to the home's second-level living space with a rooftop deck offering views of nearby Camelback Mountain.
It was one of two homes Wright designed for his children and it was occupied by David Wright and his wife, Gladys.
They were the only owners. David Wright died in 1997 and his wife died last year.
It is one of eight Phoenix-area houses and about 500 worldwide that sprang directly from the designs of Frank Lloyd Wright, who died in 1959.
Source: The Arizona Republic »
July 3, 2009 | Permalink | Comments (0) | TrackBack (0)
Industry minister 'Gets It'
Bolder and more inclusive digital future embraced by Canadian federal cabinet ministers.
With attention mounting on the need for a national digital strategy, Industry Minister Tony Clement brought together 150 leaders from across the country last week for a major conference called Canada's Digital Economy: Moving Forward. The conference was designed to provide the government with expert feedback on the issue. While Clement got plenty of advice, it was his response, along with one from Canadian Heritage Minister James Moore, that left attendees with the sense that the government is at long last serious about prioritizing digital issues.
The ministers' comments came after a day of repeated requests for a bolder, more inclusive Canadian vision. Terry Matthews, one of Canada's most successful technology entrepreneurs, lamented how the country seemed to be "standing at the side of the information highway while other nations pass us by." He outlined dozens of possible reforms along with a warning against mimicking what the United States has done on intellectual property, which he said "has become so extreme that it inhibits creativity and innovation."
See the full story at TheTyee.ca »
July 2, 2009 | Permalink | Comments (0) | TrackBack (0)
US Housing Market: Good & Bad
Home price declines are stabilizing, but delinquent mortgages and foreclosures are getting worse despite efforts to modify unaffordable loans.
The rate of decline in U.S. home prices has slowed, but the foreclosure problem is getting worse despite strengthened efforts to modify unaffordable loans, so any recovery in the housing market is still a ways off. That's the upshot from a pair of reports released on June 30.
In April the seasonally adjusted S&P/Case-Shiller 20-City Composite Home Price Index fell by just 0.9% from the month before, making it the smallest monthly decline since August 2007. That's according to a BusinessWeek calculation using data from Standard & Poor's (MHP). The index in April fell 18.1% from a year earlier, down from an 18.7% year-over-year decline in March, as reported in the S&P press release. (S&P, like BusinessWeek, is a unit of The McGraw-Hill Cos.) The monthly changes ranged widely from declines of 3.7% in Las Vegas, 2.8% in Phoenix, and 1.9% in Miami, to increases of 0.7% each in Dallas and Denver.
Meanwhile, a government report contained conflicting signals on the damage being done by foreclosures. The bad part is that foreclosures are eating upward into prime mortgages—the safest kind. Some 2.9% of prime loans were 60 or more days past due in the first quarter, nearly triple the rate of 1.1% in the year-earlier quarter, the Office of the Comptroller of the Currency and the Office of Thrift Supervision announced jointly. Comptroller John Dugan said in a statement that he was "very concerned about the rise in delinquent mortgages and foreclosure actions."
Loan Modifications Increase Sharply
On the other hand, Dugan said he is hopeful that the Obama Administration's efforts to stem foreclosures will be successful, pointing to evidence that loan servicers are working harder to modify unaffordable loans in a way that reduces payments. There was a 55% increase between the fourth quarter of last year and the first quarter of this year in the number of loan modifications. What's more, 29% of them reduced monthly payments by one-fifth or more, up from only 19% that did so in the fourth quarter. In an interview, National Community Reinvestment Coalition CEO John Taylor hailed the progress but said the government should buy troubled loans and order servicers to modify their terms in order to make a real dent in the foreclosure problem. "It can't be this light-touch modification," Taylor says.
The bottom line is that the fall in home prices to date has been big enough that the market is no longer significantly overvalued by many measures. However, prices are still under pressure because of the recession, tight bank lending standards, and the overhang of properties that are in foreclosure or likely to enter foreclosure in coming months.
Experts differed on what to make of the housing reports. Patrick Newport, an economist with IHS Global Insight, wrote: "House prices are no longer in a free fall, as they were late last year. They are still falling at a steady clip, however, and will fall further, since foreclosures are still rising. Indeed, all evidence indicates that the foreclosure problem is getting worse."
In a Bloomberg Television interview, Yale University's Robert Shiller, one of the fathers of the S&P/Case-Shiller index, said, "My guess would be that home prices are going to level off—they're not going to keep falling." But he added that it's hard to predict a speculative market, and said, "I am not optimistic that we're going to see any sharp rebound."
The big fall in prices has begun to attract investors, who figure they can rent houses for a profit even after a 20% or 25% down payment, says Brad Geisen, CEO of Foreclosure.com of Boca Raton, Fla., which supplies foreclosure data. These investors are playing a safer game than those earlier in the decade because they make money every month as long as rents stay where they are. In contrast, investors in the 2005-2007 period couldn't make enough money on rents to pay the mortgage, but were betting on price appreciation to make the investments worthwhile, Geisen says.
Source: BusinessWeek
July 1, 2009 in World View [of real estate] | Permalink | Comments (2) | TrackBack (0)
A Miraculous Resurrection?
It looks like a miraculous resurrection for the Toronto real estate market — or does it?
In the midst of recession, the average national price of Canadian resale homes hit a record level in May, and sales activity increased for the fourth consecutive month. While U.S. residential real estate prices have been falling for almost three years, Canada seems to have stumbled and picked itself up again in a span of 12 months.
"It's all happening because of the crack cocaine of housing, which is rock-bottom interest rates," said Garth Turner, author of Greater Fool: The Troubled Future of Real Estate. "They're so irresistible, especially to inexperienced first-time buyers. That's what's propelling the market."
See the full story in the Toronto Globe and Mail »
June 29, 2009 in Toronto Real Estate Trends | Permalink | Comments (0) | TrackBack (0)
Architectural Landmark For Sale
Frank Lloyd Wright’s famed ‘Ennis House’ is to be sold.
Frank Lloyd Wright’s famed, long-endangered Ennis House, which served as a location for films such as “Blade Runner,” is putting out a “for sale” sign with a $15 million asking price, Christie’s said on Friday.
The 6,000-square-foot Los Angeles estate is being sold by the Ennis House Foundation, which recently completed the initial phase of a stabilization and restoration project after years of decay and damage from earthquakes and torrential rains. In March 2005, it was placed on the National Trust for Historic Preservation’s most-endangered list.
June 20, 2009 in Toronto Landmarks | Permalink | Comments (0) | TrackBack (0)
Toronto Real Estate Board:
GTA Resale Housing Sales Up 19% in the First Half of June
Greater Toronto Realtors reported 5,185 transactions in the first half of June - an increase of 19 per cent compared to the same period last year. "Households in the GTA have become more confident in purchasing a home over the past three months," said TREB President Maureen O'Neill. "Affordability, due in part to very low borrowing costs, has played a key role."
The average price for MLS® sales was $407,716, up by two per cent compared to last year. "Heightened interest in ownership housing this spring has solidified resale home prices," according to Jason Mercer, TREB's Senior Manager of Market Analysis. "The number of home buyers has been high relative to the number of listings, pushing the average price above last year's level."
See the Toronto Real Estate Board's Market Watch Report »
Source: The Toronto Real Estate Board
June 17, 2009 in Toronto Real Estate Update | Permalink | Comments (10) | TrackBack (0)
Toronto Real Estate Board:
Over 600,000 Square Feet Leased in May
Toronto Real Estate Board Commercial Members reported 644,130 square feet of space leased in May through the TorontoMLS® system, reported Commercial Council Chair Garry Lander. "While still below 2008 levels, this figure represents an improvement over the first four months of the year," said Mr. Lander.
Prices declined for Industrial and Commercial space in May. Industrial space (all size categories) traded at $5.34 sfn, down 12 per cent from May of 2008 when the price was $6.08 sfn. Commercial space traded for $11.27 sfn, a 22 per cent decline from the same month last year.
Sales Market Highlights
Of the 50 IC&I sales recorded through TorontoMLS® last month, 28 were industrial properties, which averaged $69.20 per square foot. Non-MLS®.
See a complete copy of the Commercial Realty Watch for May »
June 17, 2009 in Toronto Real Estate Update | Permalink | Comments (1) | TrackBack (0)
