There is an absolutely fascinating discussion going on about the people who sell real estate and the MLS system in Canada. Recently the Canadian Competition Bureau decided to investigate the Canadian Real Estate Association (CREA) for what they called “anti competitive” practices by CREA. The Bureau wants to open access of the MLS system to everyone, not just people listing through an agent. Canadian Capitalist had a good piece on the situation here.
CREA’s stance is simple. They built it, it’s theirs. People shouldn’t be able to have access to MLS unless they pay a licensed agent for the right to do so. In exchange for that, a Realtor provides insight, negotiation skills, access to information on past solds and a network of related professionals that can be drawn upon to offer additional input on a specific issue, ranging from mortgage financing to foundation supports. CREA believes that a consumer needs to pay for the privilege of getting a professional.
On the other side, the Competition Bureau feels that the MLS system should be open to everybody, not just sellers with Realtor representation. They feel that CREA’s members have colluded to keep commissions high, and that discounters are not really welcome. CREA’s official stance is that discounters are welcome, yet this guy’s experience would tell you otherwise.
If the bureau wins, it’ll spell an interesting decision for full priced agents. Discounting revolutionized the investment business, and it’s very conceivable that it could do the same in the real estate industry. Consumers would be faced with a choice: either a low fixed fee plus specific fees for specific things or a large commission based fee that only gets paid if the agent actually sells the place. The difference in these prices could potentially be in the tens of thousands of dollars if somebody has an expensive home. It’s going to be tough for agents to try to justify the difference in fees.
One lap around the PF blog world is all it takes to see that there is a growing part of the population that believes that agents are paid too much for what they do. There are people who are ready and willing to embrace this change. Just think about public opinion. How many of you believe that real estate agents are overpaid? I rest my case.
What happens if the bureau wins? I’ve heard rumblings that the big brokerages would just abandon MLS together. They all have their own corporate sites, they’d just use them from now on. The problem with that is that is takes away the one stop stop aspect of MLS. People go to MLS because they know they get to view every listing from every company there. It would be like if Walmart decided to divide into 4 stores. No, I don’t think the big companies are going to abandon MLS.
The travel industry and the investment industry were changed forever by the discount model. Real estate could very well be next. Stay tuned folks, this is gonna get downright interesting.