John Woods
A fresh fight is brewing in the home sales industry, as the associations that represent real estate agents try to enforce restrictions on new, lower-cost competitors in an effort to prevent them from doing business across provincial boundaries.
The competitors offer low-cost, flat-fee listings on Realtor.ca, and were under the impression they would be able to accept clients from across the country after the real estate industry settled a case with the Competition Bureau last year that allowed them entry to the market.
Several of the companies say they are being forced out of business by real estate boards who are interpreting provincial legislation in a way that prevents them from competing with commission-based agents, and they are calling on Competition Commissioner Melanie Aitken to step back into the fray.
"You had to know that the real estate industry would try and find a way to shut this down completely," said Joe William, an Ottawa-based broker who posts listings on the Multiple Listing Service for $100 and has previously accepted listings from several provinces. "I'm getting requests from people all over the country everyday, but I'm holding off until the rules are clarified."
The complaints illustrate there are still some issues to work out after the Canadian Real Estate Association and the Competition Bureau hammered out a deal last year that made it easier for real estate agents to create alternative business models.
At the centre of the fight is a deceptively complex question - are flat-fee agents trading in real estate, or simply posting a listing to an online forum? If they are indeed trading, provincial regulators require them to be licensed in a province before accepting a listing.
But they insist that what they are doing is no different than taking out a newspaper ad or posting on Craigslist. Once the posting is made, the homeowners are handling the sales themselves.
Mr. William said he received a $50,000 fine from the Quebec regulator two weeks ago, with a note stating that he was contravening the province's rules and would be required to pull his Quebec listings posted from his Ottawa-based Best Value Real Estate. He plans to fight the fine, but has pulled his listings from the province.
He was also recently chased out of Manitoba, with an e-mail from the Manitoba Securities Commission that read: "Brokers or individuals registered in other jurisdictions wishing to transact in real estate in Manitoba must obtain a license in order to so. This process involves several steps including passing a challenge exam based on provincial law."
"I did hundreds of these listings before they became a problem," Mr. William said. "All we do is post the listings online. Why would we need a licence to do that?"
A handful of flat-fee companies appeared after an October agreement between CREA and the Competition Bureau that allowed brokers to post listings on the MLS on behalf of people selling their own homes.
Prior to the agreement, anyone who wanted a listing on the Realtor.ca hub needed to hire a real estate agent and pay them to handle all portions of the deal - from the initial listing through to final negotiations and sale. It's estimated that 90 per cent of all home sales go through the listings site, making a posting an integral marketing tool for anyone looking to sell.
The flat-fee companies operated on the assumption that they could suddenly post listings from anywhere in Canada. So a homeowner in Winnipeg who wanted to handle their own sale could contact a flat-fee company in Ottawa to have their house listed on the national MLS.
But real estate is regulated provincially and there are more than 100 local real estate boards who are allowed to set their own rules as well, leaving flat-fee brokerages with a mish-mash of rules and interpretations to try and understand.
Allan Johnston, the registrar of the Real Estate Council of Ontario, said nothing changed when CREA settled with the Competition Bureau - agents have never been allowed to place listings from one province to another, but the system runs on a complaints basis so it wasn't likely a big issue prior to the introduction of flat-fee brokerages.
"In that sense this is business as usual and nothing has changed," he said. "Some people may have thought this would open the door to a national system, but it did not."
Harvey Real Estate Co. Ltd. is a Hamilton, Ont., brokerage that handles listings for the for-sale-by-owner company PropertyGuys.com. It was told Thursday by the Realtors Association of Hamilton Burlington to remove 100 listings in Prince Edward Island and Alberta within 24 hours.
The brokerage sent a letter to Ms. Aitken asking her to intervene.
"They created the illusion of allowing mere listings and every time we try to do something we get letters from lawyers telling us we can't," said Propertyguys.com director of partnerships Walter Melanson. "Now we're stuck pulling down all these listings on 24-hours notice, and these listings are from normal people who just want to sell their houses. It's not right."
While Ms. Aitken wouldn't comment on the case specifically, her office said it would investigate any complaint that arrives on her desk.
"We take all allegations seriously, including those that a consent agreement has been breached. Breach of a consent agreement is a criminal offence. If we find any evidence that this has occurred, we will not hesitate to take appropriate action," the office said in a statement.