Here’s a tale of misinformation and ambition, the perfect combination for a hot news article and the story has hit the press with vigor. The Press reports that the Competition Bureau will save consumers from an alledged real estate cartel in CREA, who they claim have been restricting business models to the detriment of consumers. To prove their case they will be taking CREA to a tribunal. That’s the spin, but the reality of this story is much different than what’s been reported by the media. Now here’s the rest of the story:
Canada is fortunate to have a national listing website where the consumer can view all properties listed by members of organized real estate (or Realtors ©). This is a boon to consumers who also have access to many other listing sites such as Kijiji, WeList, Craigslist, Google, Point2 and countless others. In countries such as the USA, regional sites exist because of the absence of a unified national site sponsored by Realtors© and these third party sites add another layer of cost to the home selling process as they compete to obtain listings from local boards. Realtors© in Canada have access to cooperating listings via their local boards MLS system from which they can decide where to advertise the listing on any other site such as Realtor.ca and a host of others. Independent homeowners can list on many of these sites as well, with the exception of Realtor.ca© which is owned and paid for by members of CREA.
The success of Canada’s MLS system has been a great service to consumers who need only visit one site to obtain all Realtor © listings across the country. This is perceived as market dominance by the Competition Bureau who erroneously believes that access to this system is restricted for consumers who wish for minimal services and a nominal fee. In response, CREA has explained that many low cost business models, as well as every other creative business model, are allowed without restriction (except those rules which exist for the protection of the consumer and integrity of data). For the intrepid Seller there exists a plethora of available models from sell-it-yourself to minimal listing services existing within organized real estate (on Realtor.ca©) and some on other stand-alone sites. While the consumer has a wide variety of choice, many consumers choose the professional services of a Realtor© to ensure they obtain the best price and to save them the inconvenience and hours of work that are required to sell a home in today’s marketplace.
So what is the media saying about this story? First, the repeated misrepresentation of a 5% commission on every real estate transaction. This has led to the misconception that there are tens of thousands of dollars to be saved by eliminating a Realtor’s© services, but what hasn’t been said is that all Realtors© work for fees that are established independently, and negotiated with the Seller at the time, and every time they are engaged. Second, the Media has mistakenly reported that the Competition Bureau will open up access to Realtor.ca© for all consumers to list their home themselves. Even the Bureau knows this is a flawed solution, but they are not disputing the spin because this can only bolster their case in the court of public opinion. What will likely happen will be a continuation of what is already available today. The public may list through the services of any Realtor© at their negotiated price to advertise their home on Realtor.ca© and may exercise their option to use the remainder of an Realtor’s© services and experience to facilitate one of the largest personal transactions they will encounter in their lifetime.
And why has CREA been so quiet about setting the record straight? CREA has been simply factual in their statements, for which a good news story does not make, so the media instead opts to spin a David & Goliath story (controversy sells papers). When this case goes to the tribunal CREA’s expectation is to win the case, however the media bias I have witnessed on this story has not served the interests of the public or industry.