Don Cayo
Sun
What began as a spat between a discount broker and Toronto’s real estate establishment has burgeoned into a national issue that could sharply lower the cost of home-buying in B.C. and across the country.
The Competition Bureau of Canada is playing its cards close to its vest, but it confirms it is leaning on the real estate industry nationwide to “voluntarily” ease rules that impose high costs on sellers who use the ubiquitous Multiple Listing Service.
And the bureau has some big sticks to wield if it doesn’t get its way. A spokesman notes it can impose administrative penalties of $10 million to $15 million, or it can directly order a change in the practices that force home-sellers to choose between paying five-figure commissions or having their listing excluded from MLS, which is by far the largest point of contact with potential buyers.
A letter from the Ottawa-based Canadian Real Estate Association to its 100-member associations has been leaked around the southern Ontario media. But, never mind that the horse is gone, the Vancouver Real Estate Board is steadfastly holding the barn door shut, refusing to release or comment on the letter.
But the letter’s contents have been thoroughly reported, and its implications are clear.
A bureau investigation has found the CREA rules to be uncompetitive. And the realtors have been threatened with an order to appear before a competition tribunal, which has the power to invoke those large penalties, if they can’t reach a settlement with the bureau.
If the bureau gets its way, says CREA president Dale Ripplinger in his not-so-secret letter to members, real estate firms will no longer be able to require customers to buy either a full MLS package or nothing. The upshot is likely to be that sellers could simply buy the right to be listed on MLS for a fixed fee, without also paying a realtor to act as the selling agent. Or they might pay a somewhat higher fee — still much less than the commissions that run to $20,000 for the sale of a $400,000 home — for the listing plus some professional advice.
In other words, members of the real estate boards would no longer have the exclusive right to post MLS listings, or to extract hefty commissions when a property sells. Individuals could also post on MLS websites, and the cost could be a fixed fee rather than a commission.
The bureau is as tight-lipped as the Vancouver Real Estate Board, citing privacy concerns to the degree that its spokesman won’t even say if it ever had a complaint in B.C. or Metro Vancouver. But published reports in Toronto make it clear that there was at least one complaint there, and the bureau concedes it was prodded into action by one or more complaints.
The one publicly documented complainant is Lawrence Dale, who used to run a Toronto-based service called Realtysellers.com. It allowed sellers to go through his company to list homes on MLS, for a fee of a few hundred dollars. He says he was forced out of business by CREA rules, and he’s suing both the national organization and the Toronto Real Estate Board for $100 million.
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