Tag Archives: commission structures
The Canadian Real Estate Association and the Competition Tribunal
At CENTURY 21 Canada, acting in the best interest of home buyers and sellers is a pillar of our business. We believe that the MLS system protects the standards and integrity of the real estate industry and the safety of Canadian consumers, for whom buying or selling a home is likely the most significant transaction they will make in their lifetimes.
The real estate market in Canada is and will continue to be highly competitive. Canadians selling their homes today can choose from a variety of business models, listing options and compensation/commission structures. CENTURY 21 Canada advocates that consumers should remain protected by real estate industry standards of conduct and ethics, which is at the cornerstone of what the current MLS system offers.
I support the rules amendments accepted by CREA members on Monday, March 22, and believe they satisfy concerns expressed by the Competition Bureau while preserving the integrity of our industry. False or misleading information has found its way onto many well-intended publicly accessible information and advertising sites, with little recourse for consumers.
CENTURY 21 Canada Key Messages
1. Canadian consumers have always been free to choose from different service and advertising options when selling their homes.
CENTURY 21 sales representatives pride themselves on providing full service to clients through the selling process. CENTURY 21 sales representatives are not opposed to posting listing information on MLS on behalf of clients, for a fee, but believe that most clients will continue to want a more comprehensive range of services to assist them in selling their homes.
2. The MLS System is trusted by CENTURY 21 sales representatives as a source for accurate and reliable listing information for clients.
Our biggest concern is the preservation of the integrity of this System. MLS was created for use by Realtors, who are bound by ethical and legal standards set forth by their licensing bodies. The MLS System’s integrity is maintained because sales professionals who upload misleading or false information to the System can lose their livelihoods or, at minimum, their reputations. It is impossible to enforce these standards on non-licensed sales professionals and the public, to protect what is likely the largest financial transaction a person will make in a lifetime.
3. CENTURY 21 Canada supports CREA’s defence that MLS Rules in no way limit consumers’ options or bind them to full-service fee models.
There are many commission and compensation structures in the industry, but CREA has never dictated what Realtors can charge their clients, or for what services. CENTURY 21 sales representatives are free, like all Realtors, to negotiate fees and service options with individual clients. It is also a myth that discount real estate service providers are prohibited access to the MLS System.
Questions and Answers for Consumers
1. What is MLS and why am I not able to access it?
The Multiple Listing Service (MLS) is an online business tool developed for Realtors, including CENTURY 21 sales representatives, to upload and share listing information on properties and collect market data. There are multitudes of MLS sites across the country, each operated by different Real Estate Boards. Generally, a local Realtor includes the MLS as part of his or her overall service contract. The Canadian Real Estate Association created an advertising website, www.realtor.ca, so that consumers and real estate sales representatives could view all MLS listings in one place and contact agents associated with those listings.
CENTURY 21 Canada also has agreements with Real Estate Boards across Canada to collect MLS data. That data enables us to provide detailed and accurate property information on all our sales representatives’ sites at Century21.ca.
2. With the new CREA rules, can I now post my home on the MLS system without going through a Realtor?
No. The MLS was developed as a member-to-member platform for licensed Realtors. Like all Realtors, CENTURY 21 sales representatives are bound by ethical and legal standards of conduct, which applies to listing information published on the MLS. The MLS has become such a strong brand because of the integrity of its information. While CENTURY 21 Canada isn’t opposed to posting listings to the MLS for a fee, allowing direct public access to the MLS risks undermining industry standards, as well as the security of potential home buyers – virtually every public advertising site runs the risk of exposing its customers to scam artists and unscrupulous sellers.
3. So, when will I be able to pay you just to list my home on the MLS?
You have always had that choice. All real estate service fees are negotiable between Realtors and their clients. As well, a consumer has the option to list their property for sale on a range of websites that don’t require the assistance of a licensed real estate agent. CENTURY 21 sales representatives aren’t going to prevent clients from choosing this option; however, we would discourage individual home owners from publishing their properties online
without a clear plan as to how they are going to manage the sales process, qualify prospective buyers and complete the required documentation for closure.
4. Why do Realtors charge so much commission for providing services that I could just as easily do myself?
Realtors receive extensive training to be licensed to operate in Canada and work hard for the commissions they earn. The vast majority of Realtors are not getting rich on commission fees. According to the National Real Estate Association 2009 Profile of Home Buyers and Sellers, 69% of homeowners who chose to go the ‘for sale by owner’ route indicated that they did so to avoid paying commission fees; and 74% of those reported having difficulty with the selling process. Getting the price right, preparing a home for sale, understanding and completing paperwork and selling within the length of time planned were common difficulties expressed by survey respondents. Buyers are aware of the value of commission fees, and will often offer less than market value on ‘for sale by owner’ listings. There is value in hiring an agent with superior sales skills and knowledge of your market.
5. Why is the Canadian Real Estate Association trying to stop consumers from being able to choose the services they want to sell their homes?
This is a myth that has gained momentum because of the Competition Bureau issue. The MLS was created by CREA for its members to post their listings and share data. Like with any competitive business landscape, there is an array of online advertising choices other than the MLS for independent home sellers, including social media sites, Craigslist and Kijiji. As well, Canadians have always had the option to compare and negotiate real estate service fees offered by different business models.
6. When do the new rules come in? Should I wait until then to list my property for sale?
The new MLS rules voted on by members of the Canadian Real Estate Association on March 22 are now in the process of being ratified by provincially-based real estate boards. The process could take a few months to complete, as some Boards will have to call general meetings to revise their rules. It may take up to a year for a decision to be made by the Competition Tribunal of Canada, and that could be followed by an appeals process. With interest rates anticipated to rise by mid-2010, coupled with the introduction of the HST in BC and Ontario on July 1st, waiting to sell your home – with or without a Realtors – might net you a lower selling price or increase the time it takes to sell your home. In addition, the rules and regulations that are in the process of being amended reflect service options that are already available today.
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