John Woods
Canadian homeowners will be able to list their homes on the Multiple Listing Service for a flat fee, but they'll still have to compensate any real estate agent who brings a buyer to their doorstep, according to the confidential terms of a deal between the industry and Ottawa's competition watchdog.
That compromise is the cornerstone of a landmark settlement between the Canadian Real Estate Association and the Competition Bureau of Canada, say people briefed on the matter. That settlement is intended to bring peace in a months-long battle between CREA and Competition Commissioner Melanie Aitken, who had accused the real estate association of blocking its members from offering services that would lower costs and commissions for people who are buying and selling homes.
The key issue in the dispute has been MLS, the popular website and listing service through which the majority of Canadian homes are done. Conventional real estate agents, who usually charge a commission of between 4 and 5 per cent of the selling price of the home, have been the gatekeepers of that system, locking out alternative providers of less-expensive real estate services. Ms. Aitken saw that as anti-competitive and took the case to court.
The tentative deal reached by the two sides on Sept. 30 allows sellers to hire an agent to post their property on the MLS and then conduct the rest of the sale on their own, if they choose.
But details of the settlement make it clear it won't be a completely free ride, as sellers will be expected to tell real estate agents up front what they will be paid if they find a buyer.
The deal also makes it clear that the system isn't being thrown open to the public. As always, only licensed agents will be able to post listings. Sellers who pay a flat fee for a listing won't have their contact information posted on Realtor.ca, the public hub for MLS listings, although the listing can provide links to other sites that contain contact information.
CREA wouldn't comment on the proposed settlement, the details of which haven't been made public. Instead, it has been cloistering the leaders of its 101 local boards and briefing them ahead of the Oct. 24 vote.
The Competition Bureau has also refused comment, citing the impending vote.
The settlement also states that listing agents will be responsible for the integrity of each listing, which means they could be held legally responsible for any errors or problems that arise later. This is seen as an essential requirement by those in the industry, because it will prevent the system from being flooded with erroneous postings and misleading information.
"We've said since this conversation started earlier this year that the MLS is a robust platform that allows users to access the most listings in Canada," said Gino Romanese, a senior vice-president at Royal LePage. "The key is that information must be vetted, and people stake their reputations on the accuracy of that information. There have to be consequences if it's not right."
While the settlement has been kept quiet, there aren't any sweeping changes that would catch the industry off guard. The two sides were close to a deal earlier this year, when CREA agreed to allow agents to post listings on MLS without handling the rest of the deal. They are also allowed to offer individually priced services, instead of charging a flat commission regardless of which services a client wanted.
Even though a handful of companies started flat-fee listing services within days of the decision, the Competition Bureau felt it needed to move ahead with hearings before the Competition Tribunal because it wasn't confident CREA wouldn't change its rules at a later date.
The deal, if approved, would be binding for 10 years.
The settlement will face its first major test before it's even enacted, however, as the country's largest for-sale-by-owner company nears a deal with a brokerage to post its Ontario listings on the MLS. Moncton, N.B.-based Propertyguys.com has long wanted to place its listings on the site, where 90 per cent of the deals done in Canada take place.
But having for-sale-by-owner properties on the country's premier listings website has long rankled the rank-and-file agents who pay for its upkeep. Many agents suggest it's akin to someone driving their car to a private dealer's lot and slapping a "for sale" sign in the windshield.
The deal hasn't been signed, but already the company has received mail from local agents warning it to stay off of MLS. "Every time we ventured towards any solution that that involved working with agents, we basically got blocked," said president Ken LeBlanc. "We hoped that the anti-competitive behaviour could some day be broken, and it looks like that day may have come."