Globe and Mail Update Published on Tuesday, Nov. 03, 2009 6:36PM EST Last updated on Tuesday, Nov. 03, 2009 6:38PM EST
Real estate agents won’t lose their grip on the listings process as part of the Canadian Real Estate Association’s settlement with the Competition Bureau of Canada, the industry group says.
The association signalled this week that its Multiple Listings System may need to be thrown open to competitors to satisfy the bureau – giving consumers more choices on how to buy and sell homes and lowering costs as discount real estate brokers emerge and cut agents out of the process.
One of the things that concerned the bureau was that sellers couldn’t post a listing on the service without going through a real estate agent, and paying the associated fees. Access to the system is essential for would-be sellers, because it accounts for 90 per cent of residential property sales in Canada each year.
In a statement Tuesday, the association said reports that “a proposed resolution between CREA and the Competition Bureau would result in members of the public being able to access the MLS System to list their homes for sale without involvement of a Realtor member of CREA … is incorrect. The MLS system is a system for Realtor members of CREA.”
The association didn’t say how it would address the bureau’s concerns – which also include clauses that prohibit anyone but an agent from handling transactions that are associated with an MLS listing – but did say it hoped to see a resolution before its December meeting. The bureau can impose changes if it feels its concerns weren’t adequately addressed.
Anyone who has bought a house knows the addictive rush of browsing properties from home, clicking and scrolling through thousands of properties searching for a perfect match.
But the MLS that allows such easy access – paid for by members of the real estate association – was never intended as a public service. Instead, it was meant to provide agents with quick access to a robust database of properties they could offer to their clients.
“The system was set up as a data-sharing service between members,” said Don Lawby, president of Century 21 Canada. “It was not set up to have the industry deal with the consumer. That’s the way it is now, and it’s very difficult to go back. But I don’t know where the middle ground would be.”
MLS – a similar version is used in the United States – was developed in the 1960s, long before computer networks made information sharing simple and efficient. It allows agents from different agencies to co-operate on deals, and ensures that each property is well-exposed to potential buyers.
It has been a gold mine for sales people with exclusive access to the inner workings of the system – historical prices, seller information and an enhanced search engine are closely guarded industry secrets. In the 1960s, about $1-billion of deals were sealed through the system. Last year, sales hit $132-billion, according to CREA, generating about $6.6-billion for real estate agents, assuming a typical 5 per cent commission.
But the Competition Bureau has signalled that the system’s data should be shared with outside companies, which could open the door to discount providers – companies that would help consumers seal a real estate deal for a flat fee, rather than the typical commission structure.
That’s a tough sell for an industry that has funded the database and relies on it for its livelihood.
“The real question is, are we moving to have a for-sale-by-owner service funded by the real estate industry?” Mr. Lawby asks. “I don’t see that happening. This isn’t a public utility – what happens is someone sets up a business for very little money and can just expose consumers to our products.”
Ian Martin, a Vancouver-based consultant who operated a web service that relied on MLS data that was shut down, argued that consumers are paying for the database with each purchase and the data generated with each sale should be part of the public domain. Other sites have also tried to build sites using MLS data, but have also been shut down.
“Basically, CREA purposely provides limited access to the data in order to protect the fat commissions of its agents,” he said. “The data should be public as it was paid for by consumers. This would allow venturous companies to present the data in dynamic ways through various applications. Otherwise, the public is stalemated by a huge bureaucratic monopoly.”