The Facts about CREA vs Competition Bureau:
“Business as usual” or “Let’s wait and see”
There has been a lot of media coverage of this and a lot of this coverage as usual has been incorrectly presented.
This all started about 10 years ago as a result of a real estate brokerage. This brokerage decided to offer a “No Frills” service for listings on MLS and charged a fee of $299 to sellers to do so. Members of TREB were upset with this especially when they started advertising full page ads in TREB’s newspaper, REN (Real Estate News) along side of other members’ ads. As a result TREB’s Board of Directors suspended certain privileges for this company. This was in hindsight a mistake and resulted in a complaint to the Competition Bureau which started an investigation of not only TREB but CREA. The current commissioner (then and now) Melanie Atkin has been relentless in pursuing CREA’s policies ever since and in her opinion some of them were indirectly anti-competitive. In her application, on February 8, 2010 she alleges “CREA has rules that limit the consumers’ choice and prevent innovation in the market for residential real estate brokerage services to home sellers in Canada”.
Discussions between CREA and her to settle the dispute via a mutual agreement failed and a judicial hearing was scheduled for April of 2011 to let a Competition Bureau Tribunal decide what new rules CREA should operate under.
This placed a “dark cloud” over all of us in organized real estate. Those with litigation experience know that decisions under these circumstances are not always happy endings for either side. That is why Canadian law allows for settlement agreements. A settlement agreement was reached early last October and ratified by an overwhelming majority vote at CREA’s annual conference at the end of October.
In my opinion this was good news! At least now we know where we are going (at least for the next 10 years) and the results were not all that bad.
Unfortunately the media coverage has been very one sided and we will just have to “ wait and see” how the public reacts.
The new results really have not changed anything (at least in the GTA and surrounding areas) because many brokerages and sales representatives have already been operating under similar business models for more than the past 25 years!
MAIN POINTS OF THE AGREEMENT
- MLS SYSTEM
Consumers can still only access our MLS system through a real estate brokerage. They must list their property thru a realtor to take advantage of this system.
This is only fair since many years and millions of dollars have gone into creating the MLS system (all paid for by members of each real estate board that has MLS) therefore it should remain in their (our) ownership. This agreement is for ten years therefore we have assurance of this for the next decade.
- MERE POSTINGS
No member/Real Estate Board of CREA (such as TREB) can restrict its members (brokerages) from offering “Mere Postings” to be listed on MLS. (A “Mere Posting” is a listing that a member offers NO service to the seller). TREB already has allowed this as we all know. Most sellers still prefer a professional experienced realtor with support of a FULL service brokerage (one that makes and confirm appointments, provides internet services, virtual tours, feature sheets, 24/7 TAS, etc) to list and sell their properties. They know that at the end of a transaction with this support and a skilled negotiator on their side they will have more dollars “in their pockets” and less exposure to potential legal problems and future lawsuits as well as having a professional providing guidance and consultation during the listing period and during an offer presentation and full follow up service after the properties are sold.
I have my doubts as to how a “Mere Posting” will sell with no service, appointments, etc. being supplied. Most likely they will be quickly converted to a minimal or full service listing agreement.
Again this is nothing new. Currently and for years listing brokerages (usually small offices with no receptionists or appointment services) have asked for and received permission to include the sellers contact information and instructions to “Call Direct” on the MLS listings.
- CONTACTING THE SELLERS DIRECTLY
For these “Mere Postings”, selling agents will be allowed to contact the sellers directly to negotiate a selling commission. I doubt if very many selling agents will do this if a similar property is available that offers a full or fair selling commission.
However for “one of a kind” properties or properties located in “hot” areas and during a “hot” market (assuming there are any “Mere Postings”) a selling agent has a duty to show all the properties that match the criteria of the buyer.
A grey area is can a selling agent re-negotiate a higher selling commission? This may be very appropriate for a “slow” market or a “hard to sell” property. Another is what if they connect with the seller and the seller decides they like them…
WHAT’S NEXT? THERE ARE MORE QUESTIONS THAN ANSWERS
- TREB has already created a new form 202 called “Seller Commission Agreement with Co-operating Brokerage for a Listed Property”. Of course this form (as recommended by TREB) is to be used before you introduce your buyer to the property and conduct a showing or bring an offer! Please read it and be familiar how to use it. This will also make Buyer Representation Agreements all the most important.
- Other new forms may be available as required as TREB and CREA amend their Rules and Regulations to accommodate the Competition Bureau’s requests.
Unfortunately the Media continues to paint a picture of “if you want to save money you can now sell your own property via the MLS for free”. So far from true and so far from reality in many transactions? The sellers may save some dollars on the listing commission but could also lose far more dollars by having no proper marketing, no representation during an offer, no professional CMA, no one to negotiate fair market value (or in many cases even higher) during an offer plus now the seller has potential legal problems if there is improper information on the MLS listing, the agreement, or via their personal comments directly to the buyer. It goes on and on. Why the major newspapers continue to line up with discount brokerages baffles me!
Most reputable brokerages are going to do their utmost to provide full services to their clients (both sellers and buyers). We owe that to them.
To justify the commissions for the sale of a client’s property you definitely are going to have to look at your menu of services, your marketing plans and your listing and buyer presentations. They have to be the best possible and you have to take advantage of all the technology and marketing tools available.
I know in most cases I am preaching to the choir because Re/Max Crossroads has the best of sales representatives. We have a 30 years proven track record and top market share to prove it!
Plus Re/Max Crossroads and Re/Max Ontario Atlantic-Canada always try to assist and support you in these areas. As a matter of fact I cannot imagine any brokerage anywhere having more technology available, better administration and reception/appointment staff.
This plus a broker who does not have expansion and profits as his main priority but instead developing the skills and expertise of his sales staff! We are and always will be one step ahead. That’s our Mission Statement! This agreement in my opinion is good for the industry and will force other members of CREA to try and reach the standards of offices such as ours.
Quote of the month:
“You see things, and you say ‘Why?’ But I dream things that never were, and say ‘Why not?’.”
George Bernard Shaw