There was an interesting article published in the Times Colonist this week which talked about some big changes on the horizon for Canada's real estate market.
To butcher and summarize, it basically says that any discount brokerage (i.e. 1% Realty) or “For Sale by Owner” (FSBO) will be able to use MLS (www.realtor.ca) to list their properties. Also, any agent working with a buyer does not have to talk to a listing agent, but can contact the seller directly to negotiate an offer.
This is big news!
What does it mean for the consumer? You will be able to search MLS and view ALL the properties for sale including the FSBOs or companies who want to pay to use the service! What does it mean for Realtors? We may have to charge our buyers for services!
Let me put this into context. If I were working with a friend who would like to buy a house, in the usual circumstance, I would take them to any property, ensuring that when an offer was placed, I would still get paid for the work I had done. This payment would come from the Seller’s brokerage, making my services essentially free to my buyer. If my buyer wanted to buy from a FSBO, then there would be no selling brokerage and I would need to seek remuneration from my buyer!
All of a sudden FSBOs do not look very appealing if you are a buyer working with a Realtor.
What about sellers? If someone would like to sell their $500,000 house, and they find out they have to pay 3% to their Realtor, listing it themselves seems pretty tempting and worth the savings! If the changes go through, sellers will have the option to list their property on MLS and have way more exposure than ever before!
I think the best thing I’ve heard with regard to FSBOs is “You wouldn’t do your own dental work, would you?...” The fact is, Realtors are professionals and have an amount of expertise when it comes to Real Estate. I think the services Realtors provide are invaluable and their presence in the market will not vary too much, regardless of the changes in CREA policy. If anything, these policies will give the discount brokerages a better chance at survival.
If and when these changes take place, it will definitely stir things up in the real estate market! Bring on change! Nothing else in life is constant!
Check out the full article at: http://www.financialpost.com/story.html?id=2175020
It's interesting to hear a realtor point-of-view. I think the changes would mean realtors were now charging solely for their services, rather than for access to information. This would eliminate a lot of the realtors who enter in to the industry in an up-cycle, make an insane amount of money with limited expertise and skills - just the ability to access the MLS database - and then leave when the market turns again. And, since realtors are charging for a service, it makes sense that a buyer (or seller, should they choose) pay a fee for such. After all, realtors still bring many skills to the table that the average joe doesn't have - negotiation expertise, knowledge of legal contracts and requirements (and also, potentially, good lawyers experienced with real estate contracts), knowledge of strata bylaws and obligations, mortgage details and options, and knowledge of homes themselves (what to look for, what's important, who to contact to check, etc). CREA can still run the MLS as a business - after all, they can still charge a fee for the different services(just not what it is now), like a fee to list on the MLS, and a (larger) fee to access the backend information (and a contract to not misuse the info, as realtors sign now). Overall, I think it could be a positive shake up ... depending how it ends up.
ReplyDeleteSo I went to a course today put on by VREB (Victoria Real Estate Board) which is essentially the "club" that most Realtors pay to belong to and which also give access to the MLS system. They touched on the subjects which the CREA and Competition Bureau are going head to head on which I mentioned above.
ReplyDeleteThey put it in a very interesting light. Most of the reaction to the "anti-competitive" nature is not from the public, but from licensed real estate agents with a different sort of business plan. Let's say I'm one of those Realtors, it would go something like this:
You pay me a fee and I will list your house for sale on MLS. After that, I do not want to hear from you again. Your name and contact information will be listed on Realtor.ca and all of the buyer's agents can contact you if they would like to purchase it.
It is essentially like being a "no service" Realtor, as opposed to a "full service" Realtor.
They are saying MLS is anti competitive because it does not support this type of business model. The only reason it has become such a stink it because majority of people looking for property now, only look at MLS. It has become some-what of a monopolistic machine!
It will be interesting to see what plays out. I think we will find out within a month what the CREA's official stance is. There's only two directions this can go, they agree, or they fight. Fighting can cost upwards of 4 million dollars... ticktocticktoc
I'd have to agree with the stance that it is somehwat monopolistic... but then, it's the right of any club to lock the clubhouse. I think there's a great systems opportunity available to the one who can B2B into the MLS database and supplement it with FSBOs.
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