Canada's Housing Bubble

Feb 10, 2010 Vito Pilieci National Post

Ottawa - The Canadian Real Estate Association will ask its members to bow to the demands of the Competition Bureau of Canada and allow easier and possibly cheaper access to its Multiple Listing Service (MLS).

Association president Dale Ripplinger said Wednesday its 98,000 members will be asked to allow agents to list a home on MLS without forcing customers to accept a bundle of other real estate-related services, such as the agent presenting all offers.

Mr. Ripplinger said he has had intense discussions with the bureau to address its claims that the real estate industry has become anti-competitive. The changes to MLS are among “the rule clarifications that the commissioner had identified, and we agreed with the commissioner that we would take steps to clarify that rule,” he said.

Earlier this week, the Competition Bureau said CREA’s control of access to MLS “limits consumer choice” and prevents real estate agents from being more “innovative” in their services.

After a lengthy investigation, the bureau announced it would proceed with its case and haul CREA before the federal Competition Tribunal to force an end to the practices.

CREA will ask its members to make changes to rules governing MLS at their annual general meeting March 22 in Ottawa.

If accepted by the membership, a home seller would be able to pay a flat fee to a real estate agent for an MLS listing, without having to sign an agreement for further services from the agent.

“If that rule change is accepted at our AGM in March, which I expect it will, then the answer would be yes (sellers can do that),” said Mr. Ripplinger. “We have clarified our rules and told the commissioner that would no longer be an issue.”

The news was welcomed by Donald Hewie, a discount broker from Ottawa, who is one of a handful of agents who has been fighting for the ability to simply list homes on MLS on behalf of customers who do not want to enter into an agreement with a real estate agent.

Mr. Hewie said if the rule change is approved, he estimated it could allow home sellers to pay between $400 and $800 for an MLS listing, big savings over the 5% of the selling price, sometimes split between agents of the seller and buyer, which many brokers charge.

CREA’s Mr. Ripplinger said intense competition ensures that there is no such thing as a standard commission within the real estate industry, and he urged home sellers to shop around for an agent.

“I don’t know why it is, but we hear a lot of reports of the fictitious or mythical 5%,” he said. “We’ve got all kinds of business models and all kinds of choice. The reality is there is no such thing as a normal commission. Right now we are one of the most competitive industries in Canada.”