Deborah Baic/The Globe and Mail
Wesley Brown was so sure his Calgary home - with its "spacious working kitchen and extremely large yard with soothing pond focal point" - would sell itself that he didn't bother to hire a real estate agent.
Two quiet weeks later, he realized he'd made a mistake using only a "for-sale-by-owner" website. Without an agent, the property couldn't appear on the Multiple Listing Service - an Internet service owned by the Canadian Real Estate Association that is responsible for about 90 per cent of all home sales in Canada.
The four-bedroom house is now for sale through an agent, with an asking price set at $529,000. It's close to what he was asking, but he'll make less since he'll pay a commission to his agent. With a typical 5-per-cent fee, it means $26,460 less in his pocket.
"It's a real numbers game, and that listing becomes really important if you're going to get the eyeballs you need to get near your price," he said. "It's really hard if you're not on MLS."
The numbers game is about to change a lot more.
After a two-year investigation from the Competition Bureau of Canada, CREA is planning a major overhaul of its listing system in order to satisfy the Bureau's concerns that the real estate association is discouraging competition. CREA is under pressure to give more access to MLS to small real estate services and individuals looking to sell their properties. The move would give consumers more choices on how to buy and sell homes and lower costs as discount realtors emerge and cut traditional agents out of the process.
"The Bureau is concerned that CREA's rules have restricted consumer choice and limited the scope of alternative business models," CREA president Dale Ripplinger wrote in a weekend memo to his association's members. "Unfortunately, the Bureau seems to believe that CREA's rules ... create restrictions and barriers."
What's at stake is a decades-old way of doing business in real estate, and a lot of money. In 2008, sales on the system hit $132-billion, according to the CREA, generating about $6.6-billion for real estate agents assuming a typical 5-per-cent commission.
Critics maintain the realtors hold a monopoly on the market and its data, and are discouraging innovative new services from forming. Industry insiders maintain it's a system they've paid to develop and maintain - not a public utility - so they should be allowed to do what they want.
CREA declined to comment. A spokesperson for the Competition Bureau said it "has had concerns since 2007 about restrictions to the Multiple Listing Service system imposed by the Canadian Real Estate Association," but wouldn't comment further on Mr. Ripplinger's memo or any deadlines or requirements it may impose.
The memo makes it clear that CREA disagrees with the Competition Bureau but indicates the organization will "pursue a settlement" before its December board meeting. It said access to the MLS system could be broadened substantially.
Currently, an individual is prohibited from putting their own contact information on an MLS listing. Instead, a professional agent must handle every aspect of the sale if a property is listed on the system - from the wording of the original listing to the delivery of offers. If non-realtors are allowed to post on the system, they could abandon commissions altogether in favour of flat fees.
"I should be able to offer my professional services for a flat fee of $5,000 on a sale," said Nawel Seph, a broker of record at Coldwell Banker Trail Blazers Realty in Markham, Ont. "Right now, if you sell a million-dollar home with a realtor it will cost you about $50,000. That's based on the old world model, but technology has changed everything, and even real estate agents have to face that fact."
Any change to the way MLS operates would also reopen the market to discount realtors, Web-based companies that take basic data generated by the realtors to fuel their sites. Canadian sites Realtysellers Ltd. and Realestateplus.ca, have been shut down in the past three years.
It's a story that has already played out in the United States, as that country's MLS offering has lost ground to sites such as Yahoo Real Estate, Redfin and Zillow, which take MLS listings and beef them up with data on crime rates, school zones and video tours.