Monday, October 25, 2010

CREA to allow flat-rate listings

Homeowners will soon have a new and potentially less expensive way to sell their properties, according to the details of a recent agreement between the Canadian Real Estate Association and the Competition Tribunal.

Under the agreement, agents will be able to list a seller’s property on the CREA’s Multiple Listing System for a mutually-agreed upon flat fee, as long as it’s not zero.

The agreement, ratified by CREA on Sunday, also means interested buyers can contact the seller directly using information posted alongside the listing. A link to additional property information can also be added.

Until now, homeowners have been forced to pay agents for the full suite of realtor services if they wanted their property to be listed on the MLS – through which 90% of properties in the country are bought and sold.

Competition commissioner Melanie Aitken first took issue with this in February by filing a complaint with the Competition Tribunal alleging the CREA rules limit consumer choice and prevent innovation in the market.

Phil Soper, president and chief executive of Royal LePage, said the changes will bring more choice, especially to the approximately 15% of consumers shopping for a discount service, usually in the low end of the market.

But Alberta-based broker Rod Thompson and founder of says Aitken took the entirely wrong approach to boost competition in the industry by giving people yet another for-sale-by-owner option.

“Nobody can save money if they don’t sell their home,” he said.

Instead, commission fees to the buying agent should be scrapped altogether, he said.

Traditionally, sellers pay two commission fees, one to the listing agent and one to agent who brings a buyer.

That’s created prejudice within the system towards discount agents who charge flat rates.

There are realtors who won’t show certain properties because there are no fees being offered, Thompson said.

“It’s a big complaint within the industry,” he said. “And it’s ultimately the consumer who is paying for it.”

Sunday’s changes could also give sellers a false sense of confidence, Thompson said.

“Sellers aren’t going to automatically go on MLS and sell their home. Right now there’s thousands of homes that haven’t sold on MLS, there’s thousands that have expired.”

Realtors are legally responsible for the transaction throughout the entire process, they know the market and draw up documents including important clauses. Lawyers won’t negotiate on your behalf, Thomspon said.

“At the end of the day, people like the MLS system, they like working with a realtor. It’s the cost of the access that’s an issue,” he said.

CREA has always been of the view its rules do not in any way prevent or restrict a broad range of business models, it said. In CREA’s view, the consent agreement reflects this reality and would avoid unnecessary and expensive litigation proceedings.

“This 10-year agreement brings a close to a long process of negotiation with the Competition Bureau and will allow CREA and realtors to do what they do best – help people with the biggest financial decision of their lives, buying and selling a home in these challenging economic times,” CREA president Georges Pahud said in a release.

Source: By Stefania Moretti, QMI Agency (Toronto Sun)