Tuesday, March 23, 2010

CREA announces new rules to appease the Competition Bureau March 22 2010

In a nutshell, these are the changes announced by CREA regarding the MLS system and how they came about:

* the competition bureau thinks that CREA is restricting trade in real estate in Canada by not allowing private sellers or flat fee real estate brokers to upload listings on their mls (multiple listing service) system

* to answer and address this issue, CREA announced March 22, 2010 that flat fee real estate companies may list their properties on the mls.

CREA feels that this essentially allows sellers to list their homes for a small fee through a registered real estate broker on the mls and have the seller's name appear on the listing so other brokers and buyers may contact the owner directly for showings and negotiating the offer

* CREA thinks that the changes make it possible for homeowners to pay a one-time fee to list a property on the MLS -- which would ensure maximum exposure -- and have prospective buyers contact them directly by phone.

* The Competition bureau does not think this announcement opens the mls system, and they believe it actually goes in the wrong direction

Who is right?

I feel that the announcement will allow more open access to the mls system.

I don't think it will change the mls system and the way we do business overnight, but this is just another option that sellers have when it comes to selling their home. The vast majority will continue to sell their homes through agents through the mls.

There will always be sellers who want to sell privately and allowing a flat fee access to the mls facilitates these private sellers access to the mls system.

Most feel that there will continue to be the need for the middlemen between home buyers and home sellers: you will still need a place to advertise your property, a place to compile market information, and you may even want some well-compensated expert guidance.

This will continue to be a very high profile issue with no simple or easy final answer on the horizon.

Other thoughts and issues are as follows:

* the competition bureau does not think this is satisfactory because it still allows for limitations and not a completely 100% open mls system

CREA owns the Multiple Listing Service, which includes the public websites MLS.ca and Realtor.ca.

The menu of services offered by real estate brokers may even grow, but some prices will fall and customers will be able to choose what level of service they want.

CREA is an industry group that represents more than 98,000 real estate agents across the country.

* extreme discount brokers that offer low or nearly non existent services to clients to list properties on the mls

There are many issues regarding opening up the mls system to flat fee brokers and sellers who want little or no representation in a real estate transaction

* The Canadian Real Estate Association approved changes Monday that will give those who buy or sell their homes on its listing service more power to handle portions of the transaction on their own, but it was not enough to satisfy the Competition Commissioner.

* In a move to cut off a challenge by the Competition Bureau, which feels the current system is too restrictive because anyone listing on the Multiple Listing Service must employ an agent through the entire process, the association's members voted at its annual general meeting in Ottawa to loosen its own rules.

* Now, a consumer will be able to pay an agent a flat fee - zero is not an option - to list on the MLS, where about 90 per cent of all home sales are done. Agents must now pass along a seller's home phone number, if the seller chooses, directly to an interested buyer if asked.

* "Through the proactive clarifications of the existing rules, CREA believes the concerns raised by the Competition Bureau are fully addressed," the organization said in a news release. "At the same time, these amendments ensure the continued integrity of MLS systems and the accuracy of information on board MLS systems that Canadians have come to trust."

* The bureau disagreed, saying the change didn't go far enough because CREA could still change the rules at any point and place more restrictions on anyone who tried to offer innovative services.

* CREA wouldn't provide further comment, with its legal counsel stating it would rather wait for the case to go before the Competition Tribunal. The association's president, Dale Ripplinger, said the changes "wouldn't make sense to anyone who wasn't a real estate agent," before abruptly calling off a news conference.

* The vote was seen as a way for Canada's real estate sales industry to satisfy concerns raised by the Competition Bureau, which has filed charges with the Competition Tribunal alleging the real estate association makes it impossible for any of its members to offer consumers fee-based services for particular portions of a transaction, such as listing on the MLS or negotiating a sale price.

* This leads to higher prices for consumers, the Bureau says.

* The proposed changes were a key pillar in the real estate organization's defence before the Tribunal. The association must submit its response to the charges by March 25 and the organization hoped a strong vote from its members on the key issues troubling the Competition Bureau would be enough to have the charges set aside.

* The MLS has operated for more than 50 years and only registered agents are allowed to list homes on the service. The MLS trademark is owned by CREA, and each real estate board operates the service in its region.

While anyone can sell their home on their own, having a listing on the service is seen as an integral part of achieving the best sales price.

* A CREA spokesperson said the changes would be implemented "as soon as it is reasonable at each local board."

The Internet has changed the way prospective homebuyers shop for properties and has raised questions about whether real estate services in Canada are overvalued.

A 2007 court decision in the U.S. opened up similar data to Americans, leading to lower real estate fees as well as a wide range of innovative web-based real estate services.

Opening up the MLS would put downward pressure on real estate fees, the Bureau has said

It will be a very interesting few months ahead as these issues are addressed and solutions are reached.

If you have questions, please don't hesitate to contact me.

All the best!


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