Why would anyone look to the U.S. housing market for guidance or leadership on anything?

Canada's real estate industry has been changing its rules to open up competition. Madame Commissioner, why not do Canadians a favour, and look more closely at the obvious companies that appear to be fixing prices? Last time I checked, the major oil companies were all charging virtually the same price per litre of gasoline, give or take half a cent per litre.



As I read the latest application by the Competition Bureau against organized real estate, I thought of the great line used by Ronald Reagan when he won the debate over Jimmy Carter in 1980. “There he goes again,” or in the commissioner’s case “there she goes again.” Let me start by disclosing that besides being a lawyer, I also educate buyers, sellers and real estate agents on how to safely buy and sell a home.


In the first application, launched in February 2010, the commissioner, Melanie Aitken, decided to go public with a complaint about access to Multiple Listing Service (MLS), even though she was told that the real estate boards across Canada were in fact meeting to clarify their rules to permit access.



The boards clarified their rules in March 2010, permitting access to the MLS system without having to use a real estate firm for the entire transaction. Still the government persisted in their court application, until the matter was settled last October. The settlement was exactly what the boards implemented the previous March. In my opinion, the whole process was a waste of taxpayer money.



Now the competition bureau states that the rules of the Toronto Real Estate Board prevent private brokerages from setting up virtual offices, denying Canadian consumers more choice when buying real estate. They point to selective data from the U.S. on the issue, but conveniently leave out the rest of the important U.S. data.



In the U.S., buyer agent commissions are normally 3 per cent. Some real estate brokerages such as redfin.com, through their own website, make available all local listings, including historical data to buyers who visit their website. This is referred to by the Bureau as a “virtual office website.” It allows consumers to see what homes in the area sold for and how long a listing has been on the market.



When Redfin started around 9 years ago, they advertised that if a buyer found a home on their site and decided to use a Redfin agent, Redfin would give back 2 per cent of the 3 per cent buyer commission, so the actual commission payable by the buyer would be 1 per cent. Redfin lost a lot of money.



Today, Redfin advertises that buyers can get back “up to 50 per cent” of the buyer agent commission when they use Redfin. I get nervous when I see the words “up to.” That means a minimum buyer commission of 1.5 per cent and possibly more. In addition, the National Association of Realtors has released results for 2010 that show that even with all of this information available to buyers, only 10 per cent of real estate deals in the U.S. are done without a realtor.



In Canada, buyer commissions are negotiable, but in many regions, they are 2.5 per cent. So I suppose the commissioner is looking at potential savings of at most 1 per cent, without taking into account all the rest of the services provided by buyer agents.



The Toronto Real Estate Board is legitimately concerned about how to protect the privacy and integrity of all listing information, before permitting it to be used on private websites. We have already witnessed situations where listing information has been fraudulently posted on Kiijii and similar websites, and unsuspecting buyers or tenants are paying money to intermediaries who claim to be representing the seller or landlord.



Personal information could conceivably be taken and used by fraud artists who commit identity theft. I understand that the real estate board intends to adopt new policies to make sure that when this private information is used by a registered brokerage on their own private website, they agree to follow all of these guidelines.



Sellers will have to be informed that when they list their property, it may appear on these other private websites as well. In particular, every consumer who visits these private websites will have to enter some personal information themselves, like a legitimate email address, so that there is a record as to who is using the site. This should work to discourage the fraudsters.



I expect that these new policies will be implemented by the Toronto Real Estate Board by the end of the summer, with no need for any further taxpayer-funded competition tribunal proceedings, where only lawyers make money.



Finally, why would anyone look to the U.S. housing market for guidance or leadership on anything? This is the same market that almost caused the collapse of the world’s financial system two years ago and is still at historic lows.



Last time I checked, the major oil companies were all charging virtually the same price per litre of gasoline, give or take half a cent per litre. Madame Commissioner, why not do Canadians a favour, and look more closely at the obvious companies that appear to be fixing prices?



This article by Mark Weisleder- a lawyer, author and speaker to the real estate industry. If you have any questions about real estate issues, email mark at mark@markweisleder.com