CREA, Competition Bureau, and Buyers
March 22nd is coming up fast and it is going to bring excitement to the Canadian real estate market. Unfortunately, the Competition Bureau, while actively “encouraging” CREA to change, is only trying to make changes that help the seller. Why is nobody looking our for the home buyers?
At CREA’s AGM on March 22nd, members are going to vote on proposed rule changes to appease the Competition Bureau. These changes let home sellers choose the services they want to buy from an agent (i.e.: it puts more options in the market.) More openess in a market is a good thing so let’s also open up the data to help home buyers.
Sidenote: I haven’t read any articles regarding real estate agents being 100% commission based. This is an important thing to remember, if they don’t sell a house they don’t get paid…try and find a lawyer who works like that.
Is it too late for the Competition Bureau to think about Open Data?
The Competition Bureau could have, and may still, greatly increase innovation in the Canadian real estate market. Opening access to real estate-related data, which is inevitable, would benefit everyone in the home search process. Major cities in Canada (Toronto, Vancouver, Edmonton, and more) and around the world (such as San Francisco), have opened up their data and the citizens of these cities have benefitted.
Open access to this real estate data would be a great thing:
- Open up access to historical home sale prices
- Reduce barriers to showing listings on 3rd party websites
- Recommend that CREA open up Realtor.ca to 3rd party widgets
Opening access to these three pieces of data are smaller changes than affecting a Realtor’s © commision. And adding innovation to an industry is always a good thing for the consumer.
With access to more information, websites like HomeZilla, Zoocasa, and View Point Realty could provide better research tools to home buyers. Home buyers being able to find a home they love is at the heart of any real estate industry. Helping home buyers would help the entire real estate market.
This is Canada, let’s keep everything fair; if the sellers of a house are getting a benefit then so should the home buyer. Let the innovation accelerate!
How do you feel about Open Data in real estate?
March 12th, 2010 at 7:50 pm
I am, like many, a proponent of open data for all. There are so many great services, applications and innovative ideas that come from access to public data. There are plenty of great open data initiatives including http://outsideindc.com/bikes created after Washington DC opened up it’s data. Or Vancouver’s http://www.transitdb.ca/... Helping commuters find their way.
Real Estate is a strange market, at least to me, and MLS holds on to the data like it’s gold and they make it fairly unpleasant to access (just try using the MLS (realtor.ca) site, ughh).. I think a lot could be done if the MLS data was much more open and people didn’t have to rely on agents for a lot of this data, like how much are the properties around this property selling for, etc…
Free the data!
March 13th, 2010 at 12:21 am
I’m sorry but try as I might, I cannot see where the Competition Bureau is going with this. I think, at best, it is a poorly thought out challenge. That said, and in answer to your question, I cannot see how the goal of Open Data (if it is their goal) can be fully achieved without first doing away with the Privacy Act.
March 14th, 2010 at 12:14 am
@bobrodin: Thanks for the comment. Open Data can be started with a single step. We could open up pieces of data (ex: homes sold in the past 12 months, property lines, or listing data with usage restrictions) that wouldn’t infringe on the Privacy Act. The Bureau could help make that first step happen.
March 14th, 2010 at 12:16 am
Thanks Bill! We appreciate your support on ‘Freeing Data’. No one can predict the innovation that happens when data gets opened. Could you imagine all the potential with Open Real Estate Data;.
Free the data!
March 14th, 2010 at 2:24 pm
Open data is great – very useful…. it has nothing to do with how organized real estate uses their data to do their jobs. Actually, most data is out there – lay people just have to go from agency to agency, pay fees and do some digging – it’s all out there. The MLS system is an interenal system developed, maintained and used by realtors for their industry. Realtor.ca is a whole different product.
Why are realtors getting hung out to dry on wanting to maintain their information, product and systems they have developed? How many other industries / businesses would throw their doors open and allow everyone to come in and use their carefully organized information and systems? Does a mechanic throw open his garage doors and let everyone come in and use his great collection of tools (just because he has taken the time and expense to acquire them)? Do lawyers throw open the doors to their offices and let people come in and use their libraries, secrateries, resources because they happen to have everything so conveniently organized?
Freedom of information is one thing…. expecting organized real etate to provide and maintain it for the general public’s use, outside of it’s business model, is ridiculous.
March 14th, 2010 at 7:34 pm
@kartherine: thanks for taking the time to apply. You make a very good point about maintaining data, it can be expensive (the HomeZilla team knows that). What about a first step about releasing listing information to the public AFTER a property is sold. It could be maintained by an outside group and be an ‘as-is’ license.
You didn’t mention the discount brokerages, can I ask, which would you rather the current Competition Bureau change for discount brokerages or opening up some data?
March 15th, 2010 at 7:15 am
Katherine,
There is no debate about who owns the MLS systems and the data, as we members do (I’m a member of a real estate board) but when one provider achieves market dominance, this provider becomes subject to new rules and obligations. I believe the Competition Bureau is suggesting MLS has achieved this position.
Take for example, Microsoft and Intel, who have, for years, been the subject of dozens of anti-trust actions around the world. They are private, shareholder-owned companies. Imagine how their shareholders feel!
For more about abuse of market dominance, see http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/h_00511.html
So, there is no question that individual real estate Boards or Associations own the MLS system and the data, but it seems there is a debate about whether or not they (or CREA via it’s policy making authority) are free to define the access rules as they see fit.
This is a very interesting case because MLS isn’t the realtor and vice-versa, yet when people sell a home using MLS, they get a realtor, and when they use a realtor they usually get MLS, so both are bundled together. The provocative question from me is this: In the typical transaction, how much of the fee is attributable to the value derived from the MLS versus the realtor?
Bill McMullin
CEO
ViewPoint Realty
March 22nd, 2010 at 9:28 pm
I think CREA has let down every Realtor in Canada with their vote to let private people put ads on the site. We as Realtors should go after the Competition Bureau for their gross negligence in not going after the gas companies, letting them slide with their gas price fixing for so many years. It is has always been my opinion and many others that the gas companies has been paying off these Competition people to look the other way. I always say the best defense is an offense, every Realtor in Canada throw $100 in to a pot and hire some real good ass biting lawyers and sue the Competition people. Put flyers with their pictures of the people involved, lets get our side of the story out there. How is this going to help anyone, the MLS system is for Realtors because we can control the system and whats on it. The criminal element will seep on to this site if we cannot control the input and where it comes from, plus all the Realtors have E&O insurance and we work hard for our money. There are today so many sites where people can advertise their homes for sale and not use a Realtor they don’t need to use our site.
March 23rd, 2010 at 4:30 am
It’s pretty simple. Realtors® – their transactios are a matter of public record. However the only database available is the MLS® records…. either we create better public records, or mandate that this monopoly open up its database. Forcing MLS to open itself up seems like a good idea, but its also like making Wal-Mart publish its transaction records to a website.
Government needs to create a public accessable real estate database. MLS has done this, good for them, and I want access of course, but forcing someone to share their forethought is a crime.
Government was short sighted. Start now and lets create an OPEN MLS. Separate from theirs. We can’t force them legally to share info, so lets make them irrelevant.
March 23rd, 2010 at 11:13 am
the realease of data on mls.ca was the begining of the end. I have preached this for years. There is a difference between the public and clients needing access to data. Once mls.ca published all listings they lost control of their data and the need for professional realtors. and we only have ourselves to blame. Allowing realtors that are competetive in nature to try and create rules for each other is ludicrous. we were told just a few weeks ago that nothing would be done until we were consulted (as members). And yesterday they announce sweeping changes to how our industry is run. These idiots at the Director’s level should be removed immediately. they haven’t got a clue as to what they are up against. And they certainly do not understand technolgy and how it should be implemented in our industry. All they’re good at is going around to boards and asking for more money for legal funds so they can fix their own mistakes.
March 23rd, 2010 at 11:36 am
The MLS system is the best real estate website in the world. It is awesome that I can go to this site and see every available mls property in Canada. From St. John’s NL to Vancouver Island BC. I can trust that the information on this site is accurate (realtors get fined for not inputting information properly), and that someone may be accountable if information is passed on negligently. The realtor system is regulated in order to provide consistency and guidelines. I feel the competition bureau is trying to dismantle something built for Canadians and others to appreciate.
Try finding a home in the US. Look what the competition bureaus have done to that system. What a mess! From site to site to site.
The competition bureau has done a poor job at defining their goals, visions and expectations to the public of what they want the end result to be and how it will benefit the public. There is nothing but competition in real estate, tons of FSBO companies, lots of home owners sell on their own, and tons of competition within our own industry. If the public wanted a public system as that of realtors then this would have been accomplished quite some time ago. There has been much opportunity to create a public system, many investors would be interested, and there are no rules against doing so. There have been many FSBO companies that have done VERY well off of their public sites and could take it to the next level with an extra bit of effort. The people dictate the need for a market, and if the people were so displeased with the MLS then I am sure the creation of a public listing service would have happened already.
There are many corporations that should be questioned by the competition bureau , then I could justify tax payers dollars being spent. Newspapers (all owned by the same companies), gas companies, telephone companies, oil companies, insurance companies, google, utility companies, cable companies. These companies affect Canadians daily lives and gouge thousands per year from us. The competition bureau would spend tax payers dollars more wisely enforcing everyday companies who price fix, and are anti competitive.
March 25th, 2010 at 4:35 am
I am a former realtor. So I have no real interest now. However, I don’t think that it’s fair to open up MLS data to the public and it’s good for the sake of public and national interest.
Let me tell you why, starting to explain how real estate market has been working so many years. When a seller wants to sell his house, he can sell it by himself without paying anything. A lot of people try to sell this way so called FSBO. Usually they cannot get a buyer. So they come to a realtor and ask him to sell the house for a commission.
Then the realtor let other realtors know about the house for sale. As time goes on, a group of realtors get together and start to publish a list of houses for sale periodically, usually weekly or biweekly and locally. So whenever a realtor has a house to sell, they let the house included in the weekly or biweekly list of houses on sale.
On the other hand, whenever buyers want to buy a house, they can buy by themselves but it’s difficult because they don’t know what’s available on the market. So they go to a realtor and the realtor look up the list of houses for sale and effectively get what the buyer wants.
This is a short history of MLS and how it evolved. And it has been working great and effective for buyers and sellers and realtors. As somebody may see, MLS was a centralized market data organized and managed by a group of local realtors to make their work effective and efficient. Without MLS, realtors are no better than individual buyers and sellers in connecting and making a deal. Without prosper realtors, MLS cannot be maintained effectively and efficiently.
Without well maintained MLS, it is very difficult for buyers and sellers to be connected to each other and the real estate market will go down eventually. If the real estate market goes down, who is the final victim? I think it is the selling and buying public.
Somebody complains the commission is too expensive. But that is a part of how the system works. More than 80% of realtors are making money as a buyer’s agent and most of them barely make ends meet in this business and only a handful of listing or seller’s agents make a big money and prosper. Sometime it looks like that this handful of listing realtors make too much money at the sacrifice of buyers’ realtors and consumers.
However, they paid their fair due in their early career by working hard and building business patiently. And they are the dream of other realtors and without the dream the real estate industry cannot maintain enough number of realtors who are essential in making the system competitive, effective, and efficient. In other words, a small number of high income listing realtors and a lot of buyer’s realtors are a historically proven structure to make the real estate market work and buyers and sellers happy relatively.
Another point is that MLS is a privately owned information system open to members only. If somebody wants to make money by using other person’s property without properly benefiting the owner, it can be called a steal or at least an unfair deal. When a person is approached with that kind of offer, the owner has a right to reject it.
I don’t exactly know what aspects of MLS and CREA’s rules some discount brokers are complaining about. However, as long as I know, it’s not possible for CREA or any local real estate board to put a restriction on a minimum commission because it’s against anti-competition law. Any listing realtors including discount brokers can charge any amount of commission to their clients however low it is.
The problem is that they cannot generate enough business unless they allow buyer’s realtors to earn enough profits by selling their listings. Business is, like life as usual, give and take. Their businesses go out of business not because some rule or policy is against their business model but because their business model is trying to make money at other people’s cost.
Third point is about the problem and unfairness of allowing the public to a full access to MLS. As I mentioned earlier, MLS is principally and originally a private information system owned by a group of realtors to facilitate their business. I have never seen a knowledgeable and experienced realtor being successful without using MLS. But I have seen a lot of less knowledgeable and inexperienced new realtor with aggressive sales effort and MLS becoming successful over the years.
In other words, even though some realtors try to provide various services to their clients or customers, the main reason the public choose realtors is because they have an exclusive access to MLS. The public can get other information or advices from other sources such as lawyer, home inspector or some self- help books. But currently they cannot get market information and access to market without realtors. If the public have access to information and market and start to realize the opportunity of saving a large amount of money, a lot of realtors have to leave the business.
Then the question is who is going to organize and maintain the MLS at what cost? If everything goes well, a government branch or a private company may manage to get the job done. However, is it really fair to force a private organization to let go of its essential business tool and eventually let them go out of business? Probably and reluctantly yes if the society and general public get more benefit than damage?
However, nobody can be certain about what the real outcome will be.
Another possible outcome of fully opening MLS can be a significant loss of jobs in Canada. Current estimation for the number of realtors in Canada is about 75,000 and it’s not a small number. What’s the implication of this size of job loss in national economy? I guess economy is not just about wealth. It’s also about the distribution of wealth. Distribution and economic equality has been a major Canadian issue so far. And that makes Canadian proud of themselves compare to U.S.A. Probably 75,000 people having job has bigger long term positive impact on Canadian economic and political stability than sellers and buyers having a better deals occasionally.
Who know? But the real point is that the issue of opening up MLS data to the public is not so simple as it looks.
I like a Russian engineering practice. They never try to fix something unless a real problem occurs. I think that’s very practical and well deserve some kind of respect when we consider they are the first nation which went to the space even though their socialism experiment failed.
My last point is toward real estate industry, especially industry leaders and top dog realtors.
As I mentioned before, original MLS was intended for realtors. And it doesn’t have to be available on the net. But top dog realtors who are usually listing or seller’s agent and have more power in local board and national association started to see the net as a means to reduce advertising cost and increase profit by selling to buyers directly. In that way, they don’t have to share the commission with buyer’s agent so that they can make more money per deal.
As a result, more detail and relevant information was revealed to the public to the point that buyers felt they didn’t need a buyer’s realtor and they were right. For a while top dogs were happy because they made better money at the expense of buyer’s realtors. However, it backfired against themselves. The public start to feel they don’t need the listing realtors either if they can access to MLS by themselves. Besides the short-sighted competition bureau officials started to think it is an unfair monopoly.
People! This is a modern example of Greed breeds disaster and crisis. Do you agree?
March 25th, 2010 at 12:32 pm
After reading many of the comments i think there is a general consenses that many agents will not agree with the CREA allowing private sellers listings on mls. with this is mind i thought of something, would it not be possible for there to be 2 different sections of the mls site one for agents and realtors and one for “private sellers”? could the services of the agents not still be just the way it is on the site now with everything being free to see and use, and then down on the left there is a link for the private sellers you click on that link to see all the listings by private sellers and then…..low and behold to see those listings you have to be a member? oh and look at that there is a 119.99 membership fee one time good for the year. Would that not deter the P selllers from wanting to advertise due to the high membership cost
March 25th, 2010 at 12:47 pm
Open MLS. Huh. Goodluck. Try to sell you house and the potential Buyer knows how much and when you bought it, do you think she’ll buy it for the price you asked for? You will just be subject to insult and your knowledge and experience in Real Estate will be tested. That is why many FSBO still hire a REALTOR after trying to sell it themselves.
REALTOR helps you make that transaction as painless as possible. We are worth that hard earned commission. We bring value to the table. (After the mess) You would want that MLS system back to were it was.
March 25th, 2010 at 6:21 pm
Katherine, Roger, Fred, Mark, Sandra, Dan, I thought all of you made very good comments and points. This is not about Competition since there is already 98,000 independent contactors making up the CREA who charge anywhere from a few hundred dollars to list a home to several thousand dollars to list a home. What the real issue here is, its all about this Commissioner of the competition bureau hijacking our MLS system that we both own and pay for,and have trademarked and giving it away to the public and at the same time cancelling out all of our services. All under the false guise and accusation that the CREA is anti-competitive and limiting the consumer choices. We are a service industry and our tool is the MLS system which we both own,pay for,and have trademarked and have to be licensed to use. Our livlihood comes from the services we offer, its from our services that we pay our bills which include the MLS system. Is it anti-competitive for any business or industry to refuse allowing someone to use their trademarked system,equipment,tools or what have you, if that same person refuses using your services or doing business with you????The Commissioner of the competition Bureau certainly thinks so. In fact she obviously from her actions and words believes “rights of ownership” mean nothing and that everything belongs to the public. What type of Government believes that everything belongs to the public and no one has “rights of ownership”???Don’t they call that Communism???To show how militant this Commissioner is,even when the CREA made so many concessions this week that they gave away the farm. The Commissioner’s response was “that this was a step in the wrong direction.” I guess no matter what any business or industry owns the public should be able to use and have access to and not have to do business or accept services from that business or industry. Since “rights of ownership” mean nothing and everything belongs to the public. In fact if I want to sell my own car privately, I should be able now to park it at my local car dealership for a small fee and not accept any services or do any business with that dealership.Even though the Dealership owns and pays for the dealership it can’t do anything about it or refuse since this would be limiting choices to the public and be anti-competitive. In fact with this Commissioner no business or Industry is really safe from having what they own being taken away and their services cancelled under the false accusation of being anti-competitive. Unless of course your’e a Bank or an oil company.
March 27th, 2010 at 7:50 pm
Bureaucrats talking about competiveness? Give me a break! Their whole bureaucratic colossus is based upon non-competativeness and self-preservation at great costs to the taxpayer. Real Estate people, don’t give in to the bureaucrats! This is your business and your system. Nobody is there to stop private sellers or anyone, to organize and set-up their own system in competion with the MLS system!
My advice to the Realtors? If it gets to the point that new rules are going to be legislated with free and unlimited access to their MLS system, dismantle it, modern technologies allows for instant sharing of listing information between offices.
March 28th, 2010 at 12:58 pm
It is my opinion that under REBBA, a property owner who lists their property with a realtor for a flat fee, paid up front, and if the realtor does nothing else except put the property on MLS, and tranfers his duties to the property owner,then the property owner would have agreed to act on behalf of the realtor as far as agency duties are concerned, i.e., showings, offers, trade records, etc, and as such, under REBBA, the property owner would need to be licenced “to trade in real estate”, since by virtue of the listing agreement, the realtor is “a party to the transaction”.
REBBA states under “exemptions for licencing”, Sched C, para. (h):
-a person, on the person’s own account, in respect of the person’s interest in real estate, UNLESS
(i) the trade results from an offer of the person to act or a request that the person act in connection with the trade or any other trade for or on behalf of the other party or one of the other parties to the trade.
If the realtor is a “party to the trade”, then selling your house yourself on mls would be illegal.
Comments??
March 30th, 2010 at 2:00 am
Great discussion everyone. I have been involved in the real estate industry for some time, as well my formal education is one of a financial nature. Though I currently have no personal interest in the matter I would like to throw my qualified two cents into the pot.
So far I have seen many arguments against the opening of information, mostly from Realtors TM who are frightened and possible employees of CREA. While CREA does own the MLS system and the information contained therein, it is not the only source of information. It is the most readily available and current source, but not the only source. Some of the other sources are land registry records, Teranet, Geo-warehouse and others. Some of which are publicly held records, other publicly mandated and some private. Since many of the records are collected for a public entity or on behalf of a public entity the freedom of information act deem they be made publicly available.
Public records regarding land purchases are collected because, Real property must be registered with the land registry office for an entity to legally own title to the property in question. Furthermore, the land must be officially surveyed and parceled into a tax base to be legally sold to private entities. For matters of simplification it is otherwise crown land or up for dispute. The need to collect and maintain legal public records of Real property are many. The two most important reasons being, to form a proper tax base to collect taxes and deliver services. The second main reason is to settle land disputes that would surely arise and likely become violent.
A further point is CREA or MLS data is the most used and cited source for information pertaining to home sales and real estate in general. So, if CREA is going to be the information supplier to the media government and beyond the information should be publicly available. Even if for nothing more than to independently verify the accuracy of the data.
While the data is available elsewhere it would not be an efficient use of tax dollars to gather and collect the information when it is already readily available. Especially since it is available through other means for tremendously more effort and cost to the general public. Also since CREA chooses to supply major public entities information gleaned from the MLS system, it could reasonably argued that opening the source data could not possibly cause damage. It is for these reasons that the MLS information should be made public.
Some of the Realtors TM with their postings on this board have also demonstrated why the competition bureau has target the real estate industry. The economic definition of a monopoly is to have exclusive control or possession of an entity or market, or a condition in which there are many consumer and one supplier. By many of your own words you have pointed out that consumers may try to sell their own homes but will ultimately fail (for the most part of course). Therefore, they must go to a Realtor TM as their only option once the FSBO option has been exhausted. To further the point to trade in Real property one must be a licensed Realtor TM which is governed by a single entity in CREA, which owns the trademark. Economically that is the very definition of a monopoly where consumers essentially have no effective alternatives and one body essentially controls the market. What this causes is the industry as a whole to set the price regardless of market forces or demand. This causes consumers to pay far more than is necessary and artificially drives the price of the good beyond what is reasonable. Given that a staggeringly high percentage of Canadians and economists feel that home prices are too high (in need of a correction) it would seem that more competitive pricing for both housing and services relating to housing would be a welcome change.
Opening the MLS would be a start to making FSBO listings a more effective offering thus offering competition. If the MLS was actually proven to be “the effective” tool then it could be forced to be made available for the public to use. Alternatively public funds could be granted to a competing start up or an outright publicly managed could be made. Other solutions could be to allow non Realtors TM to trade Real property. Various barriers to entry such as licensing exams or formal education could be instituted to ensure the quality of service to the public. So, if all you are being asked is to provide information that is available through other means you should feel fairly lucky. Will it change the way the industry operates, probably. It will also most likely cause competitive pressure, but that is the point. A side effect is it will cause the industry to be more efficient and effective as a whole and it will build public trust.
So far I see no downside. My two cents for what it is worth.
April 24th, 2010 at 1:21 pm
Most of us now pay an average of $25,000 plus GST/HST on real estate commission when we sell. That is a lot of money from our pockets. If you wondered what the Competition Bureau thinks is unfair and damaging about the way real estate boards run MLS, you should read the basic legal complaint and reply at this government of Canada web site. These MLS issues are worth several billion in annual real estate commission paid by the public. 70% of Canadians own homes plus most business owners own commercial property. So this debate is about whether we continue to pay out $25,000 each when we sell properties or use competitive alternatives. http://bit.ly/bDtE4b Share your views at http://www.ILoveCommission.com –experience, views, jokes and video. Paul@proertyplace.ca
April 25th, 2010 at 12:40 pm
I think realtors should leave the MLS website to be run by the federal government and agents who want to create their own website for the sale of houses should be started say the realtor’s club.ca.
I think MLS paid for and was run by realtors……it is like a golf course paid for and run by its members. The FSBO’s should pay the 2500$ initiation fee to join MLS and a yearly membership payment to use like everyone else.
August 23rd, 2010 at 7:08 pm
Hey just wanted to pop on here and say, I agree with alan. I’m not usually explicitly against FSBO, I’ve actually admitted that it’s the right choice for some people, but giving them access to resources that realtors have worked to make available for themselves doesn’t make a whole lot of sense.
October 19th, 2010 at 12:21 pm
Hey Alan
Do you also think that McDonalds should let Burger King sell their burgers at McDonalds. Realtor own the MLS system and all of the historical information contained within. Including photos and data. So we should just let the government have all of our information that we have paid to maintain for years. Yep and Home Depot should let Lowes put products in their store too. Good luck on that!
October 19th, 2011 at 9:59 am
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