April 23, 2010

Mark Weisleder

Special to the Star

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.