Changes to MLS Foretell More Options, Better Prices in Real Estate Future

Changes to the rules of MLS listings will now mean more options for home sellers as well as for agents, and if Canada’s Competition Bureau wins its case, it may be just the beginning.

The Canadian Real Estate Association (CREA) announced changes to its Multiple Listing Service last month, the Canada-wide online property listing used by registered real estate agents to market the properties they represent and find potential homes for their buyers.

Where previously agents could only list properties that they would represent from start to finish, the new changes now allow an agent to charge a flat fee just to list a property on MLS, a massive database of properties for sale and a major part of the Canadian real estate market.

The new rules are a tiny aperture in what was a very strictly regulated service, one so tightly regulated that it caught the attention of Canada’s Competition Bureau. Last month the bureau accused the CREA of squelching competition among its members and demanded it make changes to its system that would allow agents to offer a wider range of services to their clients.

“The Bureau has concluded that these rules restrict the ability of consumers to choose the real estate services they want, forcing them to pay for services they do not need,” stated the Bureau in a press release.

Ideally, the Bureau would see the restrictions removed altogether, allowing agents to put together flexible packages and pricing of services for clients to pick and choose the services they want and are willing to pay for.

This would revolutionize the industry, giving agents a great deal more control over the kinds of services they offer and fostering competition on new levels. For example, a realtor could offer to help a seller price their home and prepare it for sale for a flat fee, allowing the seller to conclude the negotiations on their own, all at a much lower cost than the typical 5-6% commission fee that is currently paid out.

It is this scenario the Competition Bureau is seeking to force on the CREA by taking its case to the Competition Tribunal, despite the token gesture of change to its more restrictive regulations.

“The amendments do not remove the existing roadblocks to real estate agents who list properties on the MLS from offering innovative services and pricing options to consumers,” stated the Competition Bureau in a new press release.

Being able to pay just to list a property on the MLS database is nevertheless a huge boon to those who opt to sell their homes themselves, or ‘for sale by owner’. FSBO, as it is also known, has gained significant headway in recent years, as sellers try to maximize profits in a tight economy by eliminating the often exorbitant commission fees paid to agents.

While several online databases currently exist catering to the FSBO market, MLS.ca is by far the largest listing service, responsible for an estimated 90 per cent of Canadian real estate transactions.

Being able to list a property on MLS without having to engage the services of a realtor for the entire process will create unprecedented exposure to FSBO homes, improving consumer choices and allowing realtors to capture a portion of the profits from this growing trend.

Agents are also realizing that FSBO property listings are becoming valuable resources in their own rights. Some FSBO sites, like PropertySold.ca, are now actively catering to realtors, allowing them to create online profiles with their own property listings, for which they can negotiate flat fees or smaller commission to lure buyers that are looking for a better deal.

By being able to customize their own sales packages, agents can also capitalize on aspects of the home selling (or home buying) process that are most lucrative for them. With competition so fierce in the real estate sales market, many agents may use their experience and savvy to focus on home staging for clients, even those who opt to do without a sales agent.

Should the Competition Bureau wins its case, the MLS will go from being a largely closed industry database to a valuable public resource in the national real estate market, creating better earning options for agents and more competitive choices for consumers.

According to Melanie Aitken, Commissioner of Competition “Selling a home is one of the largest financial transactions that most Canadians make in their lifetime.”

“Consumers should be able to choose which services they want to buy in order to facilitate that transaction, including lower-cost options.”