Competition Bureau and Consumers VS Organized Real Esate

The Competition Bureau has been outspoken about Real Estate practices and access to data.  The solution of a VOW may not bring the intended effects.  The Toronto Real Estate Board went for the Hail Mary pass with a procedural Charter Challenge...

But Vistnes argues more open access would put more information — and power — in the hands of consumers and bring an end to costly and questionable real estate practices.
Making commission agreements public, for instance, might discourage realtors who now refuse to take potential buyers through homes where the owner has negotiated a lower commission, pushing them instead to other homes that may be less ideal but have better payoff.
It would also be more obvious when an agent is engaging in “gaming” — removing a property that’s been languishing on MLS for weeks and reposting it a day later to create the illusion of a new listing, says the report. That can be a red flag to buyers that a home is overpriced.
Consumers would also be able to tell when a realtor has acted as both the listing and the buying agent, a “conflict of interest” that occurs in about 10 per cent of all GTA transactions, says Vistnes, who analyzed several years of TREB’s MLS data.
By denying a new generation of Internet-savvy homeowners and buyers access to information, as travel agents did years ago, realtors remain the only real “gateway” to critical property details, says Vistnes.
“VOWs are not simply a vehicle by which consumers can access raw MLS data and conduct searches. Brokers can also offer VOW-based tools through which consumers can then analyze those data,” says the report.
“VOWs often attract buyers by offering a convenient means to search listings, to learn details about individual listings, to learn how home prices differ by neighbourhood, to see how quickly homes are selling and the extent to which final prices differ from the list prices and, in some cases, by offering a commission rebate.”

There are some glaring inaccuracies;

Realtors acting for both parties are indeed in a conflict of interest. You sign for and specifically acknowledge whether you are receiving Customer Service or Buyer Representation.  The solution is to  Bring your own agent!   Yet, Consumers, feel they will SAVE by using only the Listing Agent. Client or Customer? 

Posting and reposting listings to the MLS system is easily solved when you use your own agent to search the property history and provide an impartial CMA when purchasing the home.

Undisclosed  closing costs are dealt with in a detailed summary of costs, expenses and proposed funding costs available here.  This is used with each transaction.

Commission rebates sound wonderful;  What about those listings posted by REALTORS who post one penny or one dollar to selling broker?  The Sellers set the commission payable to selling broker when they list the house.  Listing agents do not necessarily "SPLIT" listing fees equally. No. They may discount their fees to induce you [listings] into a transaction. 

Lenders will not permit you to add your purchase expenses, surveys, loan application fees, appraisals,  lawyers fees, land transfer taxes, taxes on CMHC insurance to the purchase price of the  house in addition to Real Estate fees that you committed to in the Buyers Representation Agreement. What do we do when the commission is ZERO? *

* It is not my responsibility to explain your options to you as an unrepresented Seller or Mere Listing.  My duty is to get the best deal for my client. 

VOWs will permit; an out of Territory Agent to post your home for sale  IE  Windsor or London or Burlington Posted to MLS.ca.  They then field those inquiries.  That listing may or may not appear on the Toronto System.  Are all potential Buyers viewing your home? 

More power into the hands of the consumers Yes!  I am in favour of the VOW's.  I am also favour of real Brick and Mortar offices where complaints or disputes can be aired, meetings take place, and  live telephone answering occurs.  Those appointment front desks are the lifeblood of getting your listing seen and showings booked.  What services will I continue to provide? 

Personally I think it permits Brokerages /Agents to provide a lower level of service under the pretense of SAVINGS.   More data requires context.   Context needs insight and experience.  That's what I provide.  Add your comments...

Competition Bureau misguided about MLS

Buying a home is a lot different than buying an airline ticket. Yet if you read the complaint by the Competition Bureau against the Canadian Real Estate Association (CREA), you would think it is that simple to buy or sell a home in Canada, by just using the Internet for support. Unfortunately, it is not that easy.

According to the Bureau, CREA and its member real estate boards effectively control the market in Canada, since 90 per cent of all residential home sales are completed using the Multiple Listing Service (MLS) systems, and consumers thus have no real choice in paying commissions, which, according to the bureau, is usually five per cent of the sale price. It is further claimed that the rules passed by CREA regarding use of these systems prevent anyone from offering different service models, thus eliminating choice for consumers. They would like every seller and buyer to have access to the MLS system, and be able to sell and buy properties themselves, without the services of a real estate salesperson.

No statistics are introduced by the bureau to support any of these claims. The fact is that there are other alternatives for Canadian consumers today, both within the MLS systems and outside it. There are many “For Sale by Owner” websites gaining market share across Canada, offering a flat fee service to sell your home. These include Com Free in Western Canada, Grape Vine in Ottawa and many others who participate in the National FSBO network.

Even within MLS, there is no set commission and consumers can negotiate directly with their salesperson. There are many examples across Canada where salespeople and brokerage companies charge less than five per cent commission, including flat fees.

Now that CREA has introduced changes that permit sellers to post their listings onto MLS through a realtor and not use an agent for any other service, we will see even more business models introduced by salespeople going forward, again offering more choice for consumers.

In my opinion, there is a real danger to consumers in trying to buy or sell their homes without the advice of a real estate professional. Sellers will not know how to qualify buyers who attempt to tour their home, will not understand how to properly price their home for sale and will not appreciate their obligations of disclosure of defects to unwary buyers. This will result in sellers not obtaining the maximum sale price for their homes and potentially involve them in unnecessary lawsuits from buyers.

Buyers will not know if the seller has any authority to sell the home, or whether the property is in fact in the process of being taken over by the bank. Deposits could thus be fraudulently misappropriated.

To try and understand the bureau’s position, let’s say a company bought a 100-acre lot and started selling cars, each one inspected by their certified technicians and advertised across Canada. The company was very successful. Buyers trusted them. Now a private car seller finds out that they cannot get nearly the price or exposure by selling by themselves. Should that person be able to go to the government and demand that he be put on the successful seller’s car lot, with the private seller’s name in the windshield, selling his own uncertified car to the public?

In a sense, this is what the bureau is asking regarding the MLS system, which has been built, paid for and maintained by realtors, to provide Canadians with the widest exposure, security and protection when buying or selling their home across Canada.

When you buy an airline ticket on the Internet, it costs you about $100 if you change your mind. If you make a mistake in the largest purchase decision of your life, it may cost you tens of thousands, and unnecessary legal headaches.

Now that there are new MLS rules in place, my advice to the bureau and CREA is to take some time to monitor developments over the next year, before rushing to trial, where only the lawyers win. I would be pleased to hear your own views on this very important subject.

Mark Weisleder is a lawyer, author, course developer and public speaker for the real estate industry who is an occasional contributor to Real Estate News. Visit him online at www.markweisleder.com.

Feel free to post your comment here;

I hate commissions too

Flat Fee Commissions are here to stay. Well maybe, Kinda sorta. There are Brokers that have jumped on the limited liability listing concept with enthusiasm. The Bulletin Boards are ripe with very polarized perspectives.

The Globe and Mail weighed in with Discount Days

The new rules allow agents to post listings on the MLS without seeing a deal through to its end. Before then, anyone who wanted to list a property needed an agent to see through the entire process and pay a commission that could run into the tens of thousands of dollars. http://www.theglobeandmail.com/report-on-business/discount-days-hit-property-sellers-market/article1528229/

Not far behind is the MacLeans Article that talks about the Realtor Racket. It is a conspiracy!

When it comes to Canada’s other favourite pastime, real estate, griping about realtors is right up there with gossiping about house prices at cocktail parties and picking out marble countertops. But in recent weeks, the backlash against real estate commissions has taken on a more urgent tone. The Canadian Competition Bureau has set its sights on the way realtors have, for decades, operated and charged for their services, and in February it filed charges with the Competition Tribunal claiming realtors are engaged in anti-competitive behaviour. http://www2.macleans.ca/2010/04/01/the-realtor-racket/

The newspapers can write whatever they like; That is the business they are in, Finding readers. If You have some time to spend, read the comments that flow from the articles. Whether we like it or not, the comments are bitter.

No one is talking about the banks and how much profit they made; How much they charge for interest on your visa or mortgage vs their gathering costs and Cost of Funds (paid on deposits) or the fact that when you pay a bill on line the money disappears instantly but the payment is posted effective 3 days later, Does anyone question the car insurance renewal? What does that industry pay?

Has the Travel Industry been rendered obsolete? Have stock brokers disappeared? No. Ok, so here is the real skinny, some Brokers have decided that marketing in addition to the MLS system is ineffective, so why bother. They are not spending any money on print and do not understand video syndication, or internet marketing, so they will list your house for a small fee. These have been around for years.

One particular Brokerage wants to list and handle 5,000 sales. Our TEAM (RE/MAX Realty Specialists Inc.,) did 4,713 plus transactions last year with 450 agents. Its not that I do not want to show their listings, Its that now I will need to contact the owner directly to book an appointment, or ask property details, I do not want to negotiate with an owner during the showing about how well they made the built in shelving under the stairs in the basement. I do not want to explain the offer clauses to you because you chose the cheapest forum for promoting your home. I will not assume liability in the negotiating process for my "explaining" things to you vs being the advocate of my Buyers, I do not want to call and ask the owner permission for a follow up visit. I do not want your client calling me for FEED BACK!

OOPS I slipped, I called them your client. And Limited Liability or not the courts will find you proportionately liable. I do not want an envelope addressed to me that is titled Govern Yourself Accordingly or Without Prejudice.

Wait, wait it gets better. Stan Gelman a seasoned Mississauga real estate lawyer and I discussed this briefly today and he mentioned, "very rare for a lawyer to draft a real estate contract usually we just fulfill the agreed terms." Stan remarked that he expects an absolute surge in lawsuits when all this cleverness and attempts to avoid the HST clutter the MLS system. We will be meeting later this week and I will have an update for you. Stay tuned.

Your comments are invited,

Competition Bureau VS MLS Toronto

Yes, WE, have right to the lowest commission!

The Competition Bureau has been in the news lately about their quest to CRUSH the CREA (Canadian Real Estate Association’s) MLS.ca site or REALTOR.ca

You should have the right to post your information. And SAVE!

Save what?

Realtors are required to have proof of ownership, Take detailed Identification, Birth Certificate, Driver’s License, Passport Details. (FINTRAC) We have searched on MPAC and on our own REALnet systems that you indeed are the registered owner and not the tenant in hostile possession. A general list of services can be made available /printed/sent to you.

There is one ingredient that is being overlooked. Glossed over maybe. Possibly, I am too in touch and aware of the legal side of real estate transactions.

The new Small Claims Court limits for lawsuits has been increased to $ 25,000.00 The newest form of licensing is for paralegals to make the law more available to the common people. The first graduates are now licensed and out looking for business.

Think about that for a moment; and let’s generate a scenario. A willing buyer and a willing seller agree on a price, contract is drawn by a paralegal/ lawyer/ friend/ bought a program at Chapters; the deal doesn’t close because there are contract errors? or The contract contained an avoidance of land transfer tax that the buyer and seller thought they were the first to invent? or The financing did not follow through? or The Buyer’s was a straw buyer trying to FLIP because he saw it on TV, there could be a variety of reasons, nevertheless now you are in litigation.

Paralegal can sue for Breach of Contract, You need a Lawyer for Superior Court for Specific Performance, You just want them to close. There were no costs or damages from not closing or for the sale but have you lost? Who gets the deposit? Was it forfeited as a breach of contract? Has the market changed? When did your case get to trial? Now you need a lawyer to clean up the mess. Lawyers normally enforce or apply the agreement of purchase and sale, generally they do not draft original contracts, Now, IF you need a real estate and litigation law specialist.... I can recommend a few.

Everyone has the right to conduct their business model in the fashion they see fit. If a broker licensed in Ontario wishes to provide flat fee MLS services it is their right to do so. Some Sellers can be very well served by this model. The general public has no idea other than a sign goes onto the front lawn; then it changes to SOLD. You are now the seller, you have signed a waiver of liability from the Listing Broker that says you are not his client; [he] is only providing MLS access for you. On the offer, you are forcing me to act as the default dual agent and explain all these issues and clauses to you, possibly to the negotiating detriment of my BUYER! You are now opening yourself to be negotiated out of your money without representation.

While all the Agents and Brokers are howling about these potential changes, the general public has no concept of the dreaded Miller Land Tax (Toronto LTT) in addition to the Ontario LTT. They are unaware of the HST model being added, July 1^st 2010. How does this MLS.ca change anything? Florida has used this flat rate broker fee for years. It has not changed anything. You are out living your life; earning and providing for your family. We look after selling your home and finding your new one.

Lets take a different tact. You have the right to drive on the highways; The 401 was built by the taxpayers. You need a car, any car, a license, insurance, valid plates and the daring to drive at 100 KM per hour. There are police and a legal system in place to deal with the consequences. The 407 is a toll road and you need to pay. The MLS is a pay for play system. You need to find a broker who will list at a flat fee.

The MLS system and the rules and regulations that govern Broker and Agent conduct are built over decades of precedent law and legal decisions. The computer system and the MLS.ca has grown because of technology and the internet has speeded up the process. The MLS could be made prettier and more effective but adding clutter that is unverified is not a value added item. Real estate offices are brick and stick locations that have live answering staff for a reason, not voicemail on a phone que. I am obliged to follow the rules as provided by my broker.

My clients are receiving daily emails through the LIVE MARKET TRACKER earlier than those postings to MLS.ca. My marketing is done online in this fashion. Why limit myself to 9 photo’s if I can have Video Streaming and a Flickr photo array that is enhanced by the street view mapping from Google? My Online Marketing; Video Presence, will generate showings and offers. That is called marketing.

If the MLS is proven to be public and EVERYONE has the right to use it; Then the government also has the right TAX IT, to impose a small user fee of lets say $250 per listing nationally? Is it possible that one arm of the government is at cross purpose with another? Will it become more litigious with more people having access? Are these the changes we want?

Do not throw organized real estate away so quickly. And, Yes, We can take your services ala carte, But do you know what that means? Now, what if ala carte is more expensive? The concept, I am trying to provide is termed shopTOism, by creating and giving value to your family and real estate transaction, I earn a living and feed mine. Paying less commission does not necessarily mean that you will net more.

Your comments are invited.