Discount realtor closes doors
A Toronto-based discount real estate brokerage has suspended its operations, accusing the Canadian Real Estate Association of working to restrict the company’s ability to use the industry’s computerized listing service.Realtysellers Ltd. has “suspended” business as a result of the association “working to implement rules that would restrict Realtysellers’ access to the MLS systems of local member boards,” the brokerage said in a release yesterday.
The association owns the Multiple Listing Service trademarks for Canada. Talks are underway with members over changes that would determine how agents list homes on the MLS, a computerized directory of homes available only to members of real estate boards for a fee. The group plans a report to members in March.
A Realtysellers spokesperson said company officials would not comment further than the news release because of upcoming litigation.
Realtysellers had about 30 full-time employees at its Bloor St. headquarters and about 400 affiliated agents. The company offered a package for listing a home on the MLS for as little as $399, although services were limited.
One change that has been considered would require an agent to be present to close a deal on a home listed with the MLS, a move Realtysellers says would put it out of business.
Katherine Kay, a lawyer for the real estate association, said in an interview there was “no basis for the allegations … No changes have been made that would impact on any member.”
Kay said the association is consulting members on ways to protect the MLS trademark, but nothing has been decided. “I just find the timing a little curious, that they’re doing this when nothing has happened yet,” said Kay.
Realtysellers is not alone.
British Columbia discounter Erealty.ca, which charges 0.5% commission on a sale, has also said proposed changes will have an impact on the company’s bottom line.
“I think, if their changes go through, it will make it more difficult for us to operate,” Stephen Li, managing broker at Erealty.ca, said from Vancouver.
This is not the first time that Realtysellers has been at odds with the real estate association.
Two years ago, the company settled with the Canadian association and the Toronto Real Estate Board after suing because the two groups tried to “suppress and eliminate” competition by keeping Realtysellers advertising out of newspapers and implementing rules that restricted the company’s ability to operate.
Realtysellers arrived at an undisclosed out of court settlement that is believed to be in the millions of dollars.
“No one should be allowed to interfere with consumer choice,” Stephen Moranis, a co-founder of the company, said in an interview at the time.
Tour Somerville, a professor at the Sauder School of Business and director of the University of British Columbia’s Centre for Urban Economics and Real Estate, said the current issue could be a losing battle for the real estate association in the long run, as technology changes the business landscape.
“Their business model is based on having exclusivity, but what could happen is that you have a rival website pop up that consumers will be able to access,” said Somerville.
“Obviously they are trying to protect their compensation structure,” which runs into difficulty “if someone charges 1% instead of 5%.
“But they have to be careful.
“If you’re the only game in town, you have to be very careful when you start to exclude people.”
The federal Competition Bureau has been monitoring the real estate association’s proposals.
In a letter earlier this year, the bureau said it had concerns over rules that would “restrict the ability of consumers to obtain the variety of relationships that they want with a broker.”
