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Windsor Ontario Real Estate News


Dispelling the Myths of Canada's MLS Changes

By Jim Adair - RealtyTimes.com – November 23, 2010

Despite what you may have read or heard, consumers do not now have unlimited access to Canada's Multiple Listing Service (MLS ® ) system. You can't list your home on MLS ® without a using a Realtor ® . And the public website operated by the Canadian Real Estate Association (CREA), is not the same as the MLS ® system that Realtors use.

There have been a lot of misconceptions about the MLS ® system and how it works, as the news media struggled to figure out the implications of a recent dispute between CREA and the Competition Bureau, a federal government agency. After the bureau filed a complaint stating that CREA's MLS ® rules were too restrictive, the two organizations came to an agreement that now allows real estate brokerages to post "mere listings" on the MLS ® .

A "mere listing" is just that – a Realtor ® can place your house on the MLS ® system but there is no requirement for him to do anything else to help in the sale of your home. This means homes that are for sale by owner (FSBO) can be listed on the MLS ® by a Realtor ® for a flat fee (as little as one cent) and everything else is the owner's responsibility, from setting a price to preparing the home, showing it to prospective purchasers and negotiating a deal.

CREA has said all along that there were no minimum service rules in place previously, but the Competition Bureau disagreed. The new Consent Agreement says that CREA members "should not deny or discriminate against Realtors ® wishing to offer mere posting services."

Why would a real estate brokerage offer to list your house for sale for very little money? They are hoping that, like most sellers, you'll want more from them. FSBOs represent a very small percentage of the marketplace.

Several real estate companies have sprung up to offer flat-fee and a la carte real estate services – essentially a menu of services from which the seller can choose. The more services they pick, the more they pay. For example, SellerInvite.com in Edmonton has a flat fee of $999 that includes a free market evaluation and assessment of the home's value, signage and feature sheets. It also provides customers with a licensed "selling coach" while the home is on the market, the company says. The FSBO handles everything else themselves. SellerInvite.com broker Rod Thompson says he is "concerned there will be agents just providing access (to the MLS ® ) with no service, which is not our intent at all." He says the firm "is a full-service brokerage and committed to educating sellers and providing them with ongoing assistance at no additional cost throughout the selling process."

When the changes were announced, at first the news media proclaimed that it represented a huge change to the way real estate would be bought and sold. Some said consumers would be able to save the all commission fees paid to real estate professionals.

However, soon the headlines softened, with some noting that not much has really changed.

Consumers have always had the option of selling their homes without the use of a Realtor. Now they can place the home on MLS ® , if they can find a local agent to list it for little money. However, the MLS ® system is designed to share information with other Realtors ® who can bring potential buyers to the home – and if the seller isn't interested in paying the Realtor ® to bring buyers, there's no incentive to show that home.

Placing a house on the MLS ® system means they can also get a listing on Realtor.ca, the public website owned and operated by CREA. For buyers, the website is great tool for exploring the real estate market, finding out what's for sale in particular a neighbourhood. But Realtor.ca is not the MLS ® system – it's just an advertising site. The MLS ® system, which is available only to Realtors, contains much more information about each property than any public website, including private mortgage information, how long the house has been on the market, historic sale prices and more. The seller also has an option to block things from Realtor.ca if they wish. Perhaps most importantly, Realtor.ca is not as up-to-date as the MLS ® system. One Realtor compares it to sitting down on Tuesday to look at the real estate listings in Saturday's paper. A property may be sold long before it's taken off Realtor.ca, where the information does not get updated.

Several major real estate companies have announced that they don't intend to change their business models, because they have found that most people are willing to pay for professional real estate services that they can trust. Paying for services a la carte may have some benefits if you believe you can make a quick sale, but if the house doesn't sell and you end up buying more and more services, it could end up costing more in the long run.

Nonetheless, competition is a good thing and the biggest result of the MLS ® changes and the publicity is that to be successful, agents and brokers will have to offer greater value and quality to their clients.


CREA Ratifies Competition Consent Agreement for MLS ® Flat Fee

St. John’s NL – October 24, 2010 - The President of the Canadian Real Estate Association (CREA), Georges Pahud, today welcomed the decision of delegates to its Special General Meeting to approve CREA’s consent agreement with the Commissioner of Competition regarding the case before the Competition Tribunal.

"We are pleased that after careful consideration and reflection, real estate Boards and Associations from across Canada have endorsed the agreement," says Pahud.

The agreement was approved by CREA's Board of Directors and the Commissioner of Competition on September 30th and was in escrow pending today’s vote. It confirms CREA’s commitment to a competitive real estate services market.

The Commissioner and CREA have agreed that its rules as well as those of its members should not deny or discriminate against REALTORS ® wishing to offer mere posting services. CREA does not believe that such rules exist today, but if they do, they must be repealed or Boards will lose their license to operate under the MLS ® trademarks. Board MLS ® Systems remain a member to member service designed to provide accurate and timely information critical to the delivery of professional real estate services to Canadians.

"This 10-year agreement brings a close to a long process of negotiation with the Competition Bureau and will allow CREA and REALTORS ® to do what they do best – help people with the biggest financial decision of their lives, buying and selling a home in these challenging economic times," says Pahud.

CREA believes the agreement reflects both current practices and intent regarding posting to Board MLS ® Systems. Buying and selling homes is an incredibly competitive business, with 100,000 REALTORS ® working through thousands of brokerages. Business models are diverse and CREA members offer a variety of services.

MLS ® Systems are co-operative marketing systems used only by Canada's real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada's largest single-industry trade Associations, representing more than 100,000 REALTORS ® working through more than 100 real estate Boards and Associations.


CREA President Georges Pahud Comments on Competition Consent Agreement for MLS FLAT FEE Commission

St. John’s, NL – October 24, 2010

Thank you all for coming.

Before I start let me say what a pleasure it is to be here in St. John's, it's a really beautiful setting with some of the most outgoing people in Canada.

I am pleased to inform you that representatives from nearly 100 member Boards and Associations voted to ratify our negotiated settlement with the Commissioner of Competition. The next step is for the consent agreement to be filed with Competition Tribunal.

Organized real estate in Canada is incredibly competitive, it always has been and always will be – just look at the numbers. There are 100,000 REALTORS ® in Canada and thousands of brokerages. They compete for business every day by offering a myriad of services and business models. Media coverage since February is testament to this reality, with examples of REALTORS ® who charge fees to list on Board MLS ® Systems to those who charge a commission for marketing, advertising, negotiation and a whole host of additional services.

The Commissioner and CREA have agreed that its rules as well as those of its members should not deny or discriminate against REALTORS ® wishing to offer mere posting services. CREA does not believe that such rules exist today, but if they do, they must be repealed or Boards will lose their license to operate under the MLS ® trademarks. Board MLS ® Systems remain a member to member service designed to provide accurate and timely information critical to the delivery of professional real estate services to Canadians.

We are pleased this agreement lets us get back to doing what we do best. In these uncertain and challenging economic times REALTORS ® are a key part of buying and selling homes, but they are more than simple sales professionals. They are there when people make the biggest financial decision of their lives. They can help with financial literacy, explaining the ins and outs of financing and mortgages. They can explain municipal by-laws and zoning. They can find the right neighbourhood, with the right schools and services. They also help consumers find effective legal representation.

To do all these things and to be called REALTORS ® they have to be trusted and they are, because:

- They are licensed.
- They are insured.
- They follow a code of ethics.

Consumers can count on these things when they hire a REALTOR ® . Board MLS ® Systems stand for quality. Consumers know the information they see on websites like REALTOR.ca is accurate because of our high standards.

When you hire a REALTOR ® this is what you get, a licensed professional working in your interests, with access to the most accurate and up-to-date information about home buying and selling.


Sellers skip Realtors ® for MLS ® flat fee listings

Homeowners cut price with commission savings to sell

Lena Sin, The Province

Published: Monday, November 01, 2010 - After three months of watching his Victoria condo sit stagnant on the market, James Morton decided it was time for a change of plan.

The commercial salesman traded the conventional realtor for a discount broker, whom he paid a flat fee to list his property on the Multiple Listing Service (MLS ® ), and handled the rest of the sale himself.

"I sold it in two or three days, after my 90-day listing had expired with the previous realtor. We went the full route with the market price and not a single peep of an offer. Waited 30 days, went with [discount brokerage] One Flat Fee and it was sold in days," says Morton.

By saving on the commission he'd normally pay a selling agent, Morton was able to reduce the list price, undercutting the competition without sacrificing profit.

Calling it the "way of the future," Morton is among a new breed of home sellers circumventing the traditional full-service Realtor ® thanks to new rules governing MLS ® .

An agreement between the federal Competition Bureau and the Canadian Real Estate Association (CREA), which owns the trademark to MLS ® , ensures a Realtor ® can now post a listing for a flat fee without interference for the next 10 years.

The agreement went into effect Oct. 25.

The change effectively paves the way for more alternative real-estate firms to enter the market, offering an "a la carte" menu of services, in much the same way an airline offers first, business and economy classes, says Tsur Somerville, director of the Centre of Urban Economics and Real Estate at the University of B.C.

"By allowing [a Realtor ® ] to just post and not have to represent, then you inherently give your consent for them not to be full-service. It opens up the possibility for consumers to have a clear choice of services for different prices," says Somerville.

Somerville believes the change will have some impact on traditional, commission-based realtors, but won't alter the real-estate industry dramatically. He predicts most home sellers will still choose to go with a full-service realtor because of the complicated nature of real-estate transactions.

Mayur Arora, 34, was propelled to start Surrey-based One Flat Fee because he knew from his experience that there's a demand for a cheaper alternative to selling property.

In 2006, Arora used a full-service realtor to sell his home and felt the commission paid was not commensurate with the work involved in selling that particular property.

"I sold a home and I paid $18,000 in commission and it really, really hurt me," said Arora.

The former owner of Vancouver Indian restaurant Maurya says he was always interested in real estate and decided to sell his restaurant and get licensed earlier this year.

By April, Arora had started One Flat Fee after CREA agreed to amendments that paved the way for discount brokers to start up.

One Flat Fee offers home sellers the option of paying a fee of $649 to have their property listed on MLS ® and handling the rest of the sale themselves. (Commission is still paid if there is a buyer's realtor involved. The fee is negotiated between the seller and agent.)

One Flat Fee also offers a full-service package for about $5,000, but Arora says most clients are interested in just the basic package of posting a property on MLS ® .

As of last week, One Flat Fee had 131 listings, 30 of which signed up in the last month alone. To date, 44 homes have sold.

"People are saving through my services and that's the biggest satisfaction that I get to see," says Arora, whose business model is based on volume.

The properties listed have ranged from a $150,000 home in northern B.C. to a recently sold $2.2-million downtown Vancouver condo.

Clients are mostly working professionals who have sold homes before and are familiar with real-estate transactions, he said.

Arora, however, is the first to admit that the discount service isn't for everyone, notably first-time home sellers who may feel nervous without an experienced realtor and those with limited time to spare.

"There are some people who, frankly, don't have the time for this," he says. "I had a doctor who called me up and decided not to sign up because he couldn't do it. He didn't have the time."

Arora believes the changes to MLS will have a significant impact on how real estate is sold in B.C., predicting the trend will grow to about 25 per cent of home sellers using discount realty firms similar to his.

Jake Moldowan, president of the Greater Vancouver Real Estate Board, disagrees.

"Quite honestly, I think [the impact] is going to be quite minimal," he says.

Moldowan says he believes the majority of home sellers still want the expertise of full-service realtors, especially for vetting contracts.

He says there have never been rules to prevent a realtor from charging a flat fee for listing a property on MLS ® .


Flat-rate MLS ® listings, no strings attached

Homeowners will soon have a new and potentially less expensive way to sell their properties, according to the details of a recent agreement between the Canadian Real Estate Association and the Competition Tribunal.

Under the agreement, agents will be able to list a seller's property on the CREA's Multiple Listing Service for a mutually-agreed upon flat fee while the buying agent can be paid any amount, as long as it's not zero.

The agreement, ratified by CREA on Sunday, also means interested buyers can contact the seller directly using information posted alongside the listing. A link to additional property information can also be added.

Until now, homeowners have been forced to pay agents for the full suite of realtor services if they wanted their property to be listed on the MLS ® – through which 90% of properties in the country are bought and sold.

Competition commissioner Melanie Aitken first took issue with this in February by filing a complaint with the Competition Tribunal alleging the CREA rules limit consumer choice and prevent innovation in the market.

Phil Soper, president and chief executive of Royal LePage, said the changes will bring more choice, especially to the approximately 15% of consumers shopping for a discount service, usually in the low end of the market.

But Alberta-based broker Rod Thompson and founder of SellerInvite.com says Aitken took the entirely wrong approach to boost competition in the industry by giving people yet another for-sale-by-owner option.

"Nobody can save money if they don't sell their home," he said.

Instead, commission fees to the buying agent should be scrapped altogether, he said.

Traditionally, sellers pay two commission fees, one to the listing agent and one to agent who brings a buyer.

That's created prejudice within the system towards discount agents who charge flat rates.

There are Realtors ® who won't show certain properties because there are no fees being offered, Thompson said.

"It’s a big complaint within the industry," he said. "And it’s ultimately the consumer who is paying for it."

Sunday's changes could also give sellers a false sense of confidence, Thompson said.

"Sellers aren’t going to automatically go on MLS ® and sell their home. Right now there's thousands of homes that haven't sold on MLS ® , there’s thousands that have expired."

Realtors are legally responsible for the transaction throughout the entire process, they know the market and draw up documents including important clauses. Lawyers won’t negotiate on your behalf, Thomspon said.

"At the end of the day, people like the MLS ® system, they like working with a Realtor ® . It’s the cost of the access that’s an issue," he said.

CREA has always been of the view its rules do not in any way prevent or restrict a broad range of business models, it said. In CREA's view, the consent agreement reflects this reality and would avoid unnecessary and expensive litigation proceedings.

"This 10-year agreement brings a close to a long process of negotiation with the Competition Bureau and will allow CREA and Realtors ® to do what they do best – help people with the biggest financial decision of their lives, buying and selling a home in these challenging economic times," CREA president Georges Pahud said in a release.


New fight over MLS ® Flat Fee may be on horizon

A new fight threatens to break out between the country's real estate agents and the Competition Bureau, this time over the way the industry handles the treasure trove of data generated by each sale on its Multiple Listing Service.

The Canadian Real Estate Association recently ratified a deal to open the MLS ® to those who want to pay a flat fee for a listing, and then handle the rest of the sale on their own. But that isn't the end of the bureau's interest; industry sources say it is also examining whether the data agents generate and keep in the password-protected section of the MLS ® should be made available to anyone listing with a flat-fee brokerage.

Access to data is important to those handling their own sale because it helps them decide what their property is worth.

The information includes such items as prior sale prices, comparable sales numbers and days-on-market data. The statistics are vitally important in setting prices, and for gauging the health of a neighborhood's real estate market.

Realtors ® are the gatekeepers of that information, and consumers can only access it by contacting an agent directly. But those who run flat-fee brokerages want that information to be automated, so they don't need to interact with their customers once the listing has been put online.

"You could understand why the Competition Bureau would want to take a hard look at data," said Queen's University real estate professor John Andrew. "The real estate industry still has a stranglehold on the numbers generated with each deal, and they don't share that information easily."

The real estate industry in the United States has already gone through these changes. First, regulators forced agents to allow easier access to MLS ® for those who wanted to post flat-fee listings. Then it compelled real estate boards to automate the way data was disseminated by decreeing that anything that could be given out in person or on the phone could also be distributed electronically.

Lawrence Dale, who said he was forced to shut down his Realtysellers website in 2007 because of anti-competitive rules in the real estate industry, recently relaunched the site and is offering free MLS ® listings and rebate programs for buyers.

Making data available to his customers is key to his business plan, he said, because it helps them study the market without him spending time acting as an intermediary.

"Consumers want to receive this data in the most time-efficient manner and I am determined to be able to give consumers what they want," said Mr. Dale, who said he has met with the bureau "extensively" as part of its investigation.

The Competition Bureau declined to comment because its investigations are confidential. Not all investigations lead to charges.

"We have a number of inquiries ongoing at any time in a number of industries and unfortunately we are required to do those in private," said Competition Commissioner Melanie Aitken.

The Canadian Real Estate Association said it wasn't aware of any further inquiries that would affect its 100,000 members.

"We plan to return to a working relationship with the bureau based on co-operation and consultation, such as we had in the past," the association said in a statement. "We assume they will do the same."

Those in the industry point out that much of the information that is hidden on MLS ® , such as prior sale prices, is available through other channels such as land registry offices.

Phil Soper, chief executive officer of Brookfield Real Estate Services – which operates Royal LePage in Canada and Real Living in the United States – said the American settlement opened up data in a way that small players may not have expected.

"The main challenge is that the data suddenly feeds right into some really good sites," he said. "You’re not only competing against brokerages anymore, you’re competing against eBay and other huge companies that know a thing or two about data. It creates a very big challenge for a small Canadian upstart."