Real Estate in Prince George and Abroad – MLS and the CREA
This post is in response to some questions that I have received from both friends and random people browsing my site regarding the Canadian Real Estate Association and the recent ruling of the competition bureau. There appears to be a little bit of confusion about what has changed with respect to content allowed on the MLS here in Canada.
In the past, as in before October of last year, home owners who wanted their house on MLS went through a full service agent, as they were (and still are) the gatekeepers who as a group pay for the maintenance of the system and determine its content. Any seller who wanted to post a house for sale on the MLS hired a real estate brokerage to represent them throughout the home selling transaction. The Competition Bureau felt the CREA was forcing consumers to accept services they may not want just to get their house listed on the MLS database and on CREA’s Realtor.ca website. (MLS is individually owned by local real estate boards while CREA owns the national MLS brand.) Also, because home owners pay agent commissions, the argument was made that MLS was an inadvertent publicly funded system profiting private interests, augmenting the case for the CB.
The Competition Bureau’s solution was to allow brokerages to charge sellers a flat fee to post houses for sale on the MLS without requiring the seller to work with an agent for the rest of the transaction. Under this option, the seller is responsible for preparing their house for sale, doing market research, holding open houses and negotiating the sale price directly with buyers and their agents. You may have noticed some different looking signs going up in town from new discount brokerages. These offer package deals where the home owner can determine what services they want from a licensed agent, effectively building their own service package.
So What Does This Mean for Buyers/Sellers of Real Estate?
A couple of things. First, it means more options. Now you as a home owner can choose your level of service based on your budget and your own level of comfort dealing with the complex documentation etc. If you are a lawyer who specializes in conveyances, you might just pay for access to MLS, but if legal jargon and sales unnerve you, perhaps you’d best consider hiring a full service agent to look after things. The bottom line is that the environment has become more friendly to the consumer, although one thing worth considering is the seller’s agents. There are some in the industry, both in Canada and abroad, who refuse to show their clients homes listed with these package deals, because often the commissions are so low that it simply isn’t worth their time (Sometimes as low as one dollar). If you are planning on selling your home using a flat rate package, consider modifying it to entice full service agents to bring their buyers to your home. Adding a few thousand dollar bonus to any full service agent will absolutely bring more traffic to your listing. This way, you as a home seller still get the benefit of building your own service package, and you save significantly on the sellers half of the commission while still encouraging as many buyers to come to your door as possible. It’s a win-win!
Real Estate in the US – A Look at Things to Come
Canada has always taken cues from the American markets (except for the practice of granting subprime mortgages, ouch) and real estate marketing is certainly no different. The United States relaxed their data protection laws a long time ago, allowing private listing sites to use the same data as MLS. This has been a great boon for the industry, allowing for great listing sites like Trulia, Zillow, and Redfin to emerge as top listing sites in their area. All three of these examples are light years ahead of our national MLS in terms of functionality, data availability, user-friendliness, and cool factor, which is a result of competition driving them to excel. Canada has sites like Obeo and a few others but data protection laws limit them to basic details and images.
In the years ahead, expect major players such as Trulia and Zillow to lobby the CREA to relax their regulations and allow for market and housing data to be placed on their sites. As an example of open data, check out this listing I just pulled up from Redfin (link). As you can see, there are multiple large images, past sale prices, property taxes, appraisal data, and much much more. Sites such as this are better for the consumer, allowing them to do their own market research and find the properties that interest them the most. I think in this day in age, people, especially young first time home buyers, are so technically savvy that they have become accustomed to finding whatever data they are looking for rapidly and successfully, and MLS is an unfortunate throwback that for now disappoints, but will change in time.
Have a good week!