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Competition Bureau acts on MLS fees
Tony Wong's front page article in the Toronto Star:
Canadians in the housing market will pay less in realty commissions and fees if the federal Competition Bureau has its way. In a landmark investigation, the bureau has concluded the Canadian Real Estate Association has anti-competitive rules and must change its ways, according to documents obtained by the Star.
Details of a settlement have yet to be decided, but the bureau's findings are expected to have a profound impact on the real estate industry – by permitting more innovative discount brokers into the market while allowing sellers to list their properties less expensively on the Multiple Listing Service.
With a membership of more than 96,000, Ottawa-based CREA is the largest real estate organization in Canada and represents the majority of the nation's realtors.
"The Bureau is concerned that CREA's rules have restricted consumer choice and limited the scope of alternative business models," says an internal memo by CREA president Dale Ripplinger. "Unfortunately, the Bureau seems to believe that CREA's rules ... create restrictions and barriers."
The bureau launched its investigation in 2007. Consumers have complained in the past about high realty fees and the need for more affordable services. The vendor of an average-priced $400,000 home in Toronto can pay a commission of as much as 5 per cent, or $20,000.
"This is absolute, total vindication," says Lawrence Dale, an owner of now-defunct Realtysellers, a Toronto-based discount broker that closed in 2006. "Once they've reached their settlement it means that the average guy on the street will be able to choose their real estate services and pay less for them."
CREA executives met with the bureau on Oct. 23 to hear the long-anticipated results, according to the letter. "At that meeting the Bureau set out the conclusions of their inquiry and their proposed remedy," says Ripplinger. "The Bureau's position is that if CREA does not remove these restrictions, the Commissioner of Competiton will initiate an application before the Competition Tribunal."
Ripplinger says CREA decided not to go before the tribunal, which can administer penalties, but is pursuing a settlement.
According to Ripplinger, CREA rules the bureau wants changed include those that say the listing realtor must act as the agent of the seller and receive and present all offers to the seller, and property information cannot be posted on the Multiple Listing Service without an agent representing the seller.
Changes to these rules would mean offers could be sent directly to the seller without the involvement of the listing agent. Consumers could likely have their listings posted on the MLS for a small fee.
Dale and partner Stephen Moranis claim they were forced to shut down their company because of rules implemented in 2007 by the realtor's association. Realtysellers offered services such as allowing consumers to post listings for a few hundred dollars on the MLS website, where more than 90 per cent of all home sales are made. The company is suing CREA and the Toronto Real Estate Board.
CREA owns the rights to the MLS.
In a separate lawsuit against TREB, Fraser Beach, another Toronto realtor, alleges the organization terminated his MLS access because he launched a discount brokerage service. A decision by Ontario Superior Court of Ontario Justice David Brown is expected soon.
TREB has argued it didn't block his access to the MLS for competitive reasons, but simply because he did not follow membership rules.
Both CREA and TREB have denied all allegations. A Toronto Real Estate Board spokesperson says the board does not comment on ongoing legal matters. Officials of the Competition Bureau were not available for comment Sunday.
Although the real estate association has agreed to reach a settlement, Ripplinger stressed "CREA does not agree with the Bureau's findings and conclusions, either as a matter of fact or as a matter of law." The association has called an emergency meeting for all member boards in December to discuss rule changes demanded by the Bureau.
Source: Tony Wong in the Toronto Star »
November 2, 2009 in Save on Comission Fees | Permalink
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In Response to "TrackBack" and the exorbitant Profits... There are certain things buyers and sellers often say... one of them is the pitch "I don't want to pay big fees for something that took a few moments to sell." If you really did your home work you would totally understand this situation. You just finished hitting a Home Run and there you are looking dazed on home plate, too disorganized to run. If you were with a professional and you were fully informed before, during and after your transaction, or do you think you would be jogging or dashing to first base? Did you review all recent sales and consider seasonal adjustments. Do you know the difference between Pent up demand and Spring fever and what those parties are willing to pay over and above fair market demand? Did you even consider the agent you are dealing with is a Giver or a Taker? Does any of this make sense to you or are you just perplex about a good thing... because if you like we could raise the List price and you could sit on the market for 6 months too... Fear and Greed drive a commodity business and guess what, the truth is your dealing in a 3rd party brokerage business and your property is inventory...those 2 intangibles will cost you money if your not fully informed. The only way to reduce your risk is either get hands on experience or hire some one who has. Also any ball players I know this time of year who hits big home runs, get paid well for their services. Oh and while you’re still thinking about Givers and Takers... A Taker is someone who likes to earn medals. The more medals they get the better chance of turning them into Cash. A Giver on the other hand likes Badges. Like the one you get in Brownies and Cubs. Merit Badges, a sign of personal accomplishment and competence to assist others. Perhaps just perhaps there is a lot more to Buying and Selling anything in this world then you think. Now if you really want a good subject…lets talk Common law and The Golden Rule… those two plus the Code of Conduct are all apart of the MLS system.
Posted by: Doug MacCallum | Nov 16, 2009 10:17:28 AM
Hi Doug - I think the question is going to be how much profit.
I certainly don't mind paying for a Realtor that works hard for the sale of a home. But I absolutely hate the fact that in my experience a Realtor puts a sign on the lawn and because of access to the MLS the house sells itself in a 48 hours. Paying a $15-20,000 commission for the privilage of using the MLS is DISGUSTING. And is most certainly not a reasonable. I want more choice.
Posted by: qmanrei | Nov 10, 2009 9:59:29 AM
There's a major Car dealership in my area that sells thousands of new and used vehicles each year due to it's prime exposure due to location.
Even though for many years it has cost the owners of this dealership a ton of money in expenses as well as business licences to stay in business and THEY OWN this successful dealership.
My question is: Are the owners of this successful dealership beng anti-competitive in not allowing everyone to park their vehicle at this successful dealership for a small fee and directly sell their own car or truck to the buyers that come to this dealership?
The Competition Bureau obviously would think so, since there's NO DIFFERENCE on what they are trying to pull on the Canadian Real estate association who owns the MLS system that all licensed Realtors have had to pay for, for years.
Posted by: Bill Lafferty | Nov 4, 2009 1:25:13 AM
I totally agree with Doug MacCallum's comments.
Posted by: Eliza Cheung | Nov 3, 2009 11:52:06 PM
Landsmiths Consulting provides a wide range of consulting services in India to landowners, developers, investors, occupiers and public sector organizations in relation to all aspects of property development, ownership, investment and occupation. The scope of services offered by Landsmiths Consulting includes Development Consultancy, Retail Consultancy, Corporate Consulting, Fund Management, Fund Placement and Investment Consulting.
Posted by: TheLandsmiths.com is an India's largest real estate group. | Nov 3, 2009 11:05:18 AM
Interesting that you manage to jump to the conclusion a change in CREA Rules automatically transforms into a drastically reduced competitive commissions throughout the communities of Canada. Certainly sensationalism journalism. Perhaps CREA’s rules need amending from time to time, in fact all regulatory and statutory rules need amending from time to time in order to stay current. Medicare constantly needs amending but no one would dare touch the sacred cow, they may loose votes. We live in an ever changing universe, changes will occur, that’s life. One should before writing an article understand that in order to be a “Realtor” you must join the Canadian Real Estate Association, plus your local Provincial Regulator and your local MLS system. So you need at least 3 licenses to become a Realtor other wise you can opt out and you can still get your “Real Estate Agent” license from your Provincial Regulator in order to trade in real estate in your province, but you are not a Realtor. “ Realtor” is a licensed trademark registered only to CREA.
So I would not blow a lot of false hope in lower competitve commission fees. There will always be companies that offer less for less and consumers who will demand premium services for discounted rates. So be it. But the bottom line is businesses need to make a profit and everywhere you go there are different commissions charged. A company can legally set their own rate or fees… and they still have to compete against every other MLS Brokerage, Non MLS individual real estate companies, Auctioneers, professional traders and For Sale by owner kiosks on the internet, (who in my opinion should at least be licensed by the Regulators) and lawyers and anyone else exempted by your provincial authority. They also compete against builders who take trade-ins.
It’s never mentioned that the vast majority of Realtors who enter the Industry ever last 5 years. It takes 5-10 years, full time real estating, based on my personal experience to just catch on to how the dynamics of how everything work. And now in this ever changing Regulatory Agency malfunction, we are here to help unconfused the lonely consumer who just wants to buy or sell a home with the fewest problems possible for a reasonable price.
Posted by: Doug MacCallum | Nov 2, 2009 6:06:34 PM
