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Real estate association faces probe

Competition board is asking if CREA is restricting trade

By Tony Wong – Toronto Star
(reprinted for the purposes of proper rebuttal)

The Federal Competition Bureau has launched an investigation into whether the Canadian Real Estate Association is being anti-competitive by making it difficult for discount brokerages to operate, and making it potentially more expensive for consumers to buy homes.

On March 16 the bureau hit the Ottawa-based organization, which has 85,000 members and represents the majority of realtors across Canada, with a court order requesting extensive records detailing how it and related boards operate.

“Information obtained from industry participants indicates that rules enacted by the Canadian Real Estate Association and proposed interpretations of those rules have restricted, and will further restrict, access to the MLS database, and have prevented and limited, and will further prevent and limit the entry and expansion of potential competitors in the residential real estate brokerage industry in Canada” said a statement from senior competition law officer Jean-Pierre Bornais in Federal Court court records obtained by the Star.

Bornais said he interviewed 13 real estate brokers across Canada in a preliminary probe before filing the court order.

Last November, Realtysellers Ltd., one of Canada’s largest discount brokers, announced it was shutting down because it could no longer operate in the face of proposed changes to the Multiple Listing Service, which is owned by the Canadian Real Estate Association. Other low-price agencies have complained about new rules that could bar some of their listings from the MLS, a members-only computerized database responsible for about 90% of all home sales in Canada.

“The commissioner must consider whether the Canadian Real Estate Association has engaged in, or is engaging in, a practice of anti-competitive acts, or has committed, or is about to commit an offence by restricting access to the MLS database,” said the court filing.

The Canadian Real Estate Association‘s board last year announced a series of proposed changes designed to protect the MLS trademark. One proposed that agents could no longer “merely post” properties on the MLS unless they represented the seller for the term of the contract. Another prohibited the seller’s name from appearing on www.mls.ca.

Discounters argued the rules meant that they could not post new homes for sale on the MLS at a cheaper price to customers who simply wanted access to MLS. Selling a home outside MLS is usually more difficult, since the database is by far the most popular vehicle used by consumers and realtors when accessing housing listings.

A spokesperson for the Canadian Real Estate Association was not available for comment yesterday. But on Saturday, despite the competition bureau investigation, the organization decided to go ahead with the controversial changes to the MLS rules at their Annual General Meeting in Ottawa, in an overwhelming vote of 92% in favour of the new guidelines, according to one source.

In a letter given to members at the meeting and obtained by the Star, the organization tells members, “If the Canadian Real Estate Association lost control over the use of MLS trademarks, the public would suffer, because the public would no longer be able to depend on the integrity of brokers using MLS trademarks to identify their services, or on the accuracy, completeness and uniformity of MLS data.”

In an earlier letter, the Canadian Real Estate Association president Alan Tennant said the board is consulting with their lawyers. “Some of the information that the Canadian Real Estate Association has been asked to provide resides with real estate boards and associations,” said Tennant.

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In regards to the article above, I feel I must speak up. I am a real estate agent and resent the implication that my member organizations make homes more expensive by restricting access to the MLS system. That system was created by and for Realtors. Allowing anyone to use it would be like asking Dell to allow anyone to sell computers on their website.

With the growing popularity of homeowners wanting to sell their own homes, through television shows making it seem easy, or simply wanting to save money, our industry is under constant attack. If MLS were opened to anyone, who would police it? Realtors are held to high ethical and legal standards and are responsible for their words and actions – both to our governing bodies and to the civil courts. Who would respond to a false listing posted by a non-Realtor? The buyer, once they have a binding contract who would have to spend their time and money to pursue the seller through the court system?

When you buy a car, you can go to a dealer and pay a bit more for a car with a warranty and a company behind it to answer to any problems that may arise. Or, you can save money and buy from a private seller where the buyer’s recourse for problems is severely limited.

Discount brokerages are attempting to serve the public’s interest in do-it-yourself real estate and the desire to save money. Having sold my own home through a discount brokerage before I was licensed, I received less customer service for my lower fee. The fact that they cannot survive is testament not to real estate organizations preventing them from operating, but more likely is a result of a flawed business model. The owners of these companies are Realtors and know the rules before they start and want them changed. And when they can’t, some file lawsuits or plant the seeds for articles such as this.

If people want to sell their own homes, that is their choice. But it is not going to offer better options to anyone. A cursory examination of the market will show that sellers who work with real estate agents sell their homes faster and for higher prices than do for-sale-by-owner properties. And for those who want to go it alone, there are a ton of websites and companies out there to help them do so. If Realtors have to let anyone onto MLS, then all of those for-sale-by-owner websites would have to be legislated to allow real estate agents to post their properties in return.

Real estate agents and brokerages are more than able to offer lower prices for their services – many of us do in this highly competitive market. But there must be a contractual agreement between seller and brokerage in order for the property to be on MLS. There must be legal representation so that there is accountability. By changing the rules, CREA is right to say that “… the public would suffer, because the public would no longer be able to depend on the integrity of brokers using MLS trademarks… or on the accuracy, completeness and uniformity of MLS data.”

Buyer beware may be an age old saying, but I think I speak for many of my coworkers in saying that it has absolutely no business in the real estate industry.

Laurin Jeffrey || Sales Representative
Century 21 Regal Realty, Inc, Brokerage
1291 Queen Street West, Toronto ON M6K 1L6
laurin@jeffreyteam.com || www.jeffreyteam.com


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