CBC News – Consumer Life – Q&A: Real estate association defends MLS

Q&A: Real estate association defends MLS

Last Updated: Friday, February 12, 2010 | 3:52 PM ET Comments26Recommend3

Canada’s real estate industry is more competitive than the banking, insurance and legal industry, says the head of the Canadian Real Estate Association.

Dale Ripplinger, the president of CREA, said he doesn’t understand why the Competition Bureau has filed an application to force it to change how it operates the Multiple Listings Service, which it owns.

The bureau said this week that CREA imposes too many restrictions on the way realtors can do business — and that those restrictions are anti-competitive.

Ripplinger defended CREA during an interview Thursday with host Carol Off on CBC Radio’s As It Happens.

Here is their conversation, edited for grammar.

Q. Mr. Ripplinger, the Competition Bureau is saying your association is forcing consumers to pay for services they don’t want or may not need. What’s your response?

A. Well Carol, that’s simply not true. The MLS system offers numerous choices to consumers, always has. It’s a competitive system and consumers can choose from a flat fee, limited-service model to a full-service, full commission — so plenty of choice, lots of competition.

Q. You mention the MLS, the Multiple Listings Service. Who is in control of that?

A. The MLS system is a trademarked system, which is controlled by our association.

Q. And who gets to use it?

A. Our clients can use the MLS system by employing the services of a realtor.

Q. This is what the Competition Bureau is saying is central to the problem, that if you use the MLS system you have to use a real estate agent.

A. Yes, but you can pick from 98,000 realtors. You pick the one who’s going to provide you the level of service and charge you fees commensurate with that level of service.

Q. And the average commission is how much?

A. There’s no such thing as an average commission.

Q. The one most of us have paid is around six per cent.

A. Yeah, well, we don’t comment on commissions because the Canadian Real Estate Association doesn’t get involved in negotiations between our members and their clients. If a realtor won’t work for what a client is willing to pay, then that client has to find another realtor who will, and believe me, they will, because there’s lots of competition and lots of choice.

Q. The biggest issue that can come up is that the house can sell in a day or two and the clients are paying commissions of $30,000, $40,000, $50,000 to an agent.

A. Yeah, well, if they are paying $40,000, $50,000, that’s something they negotiated with their agent, but that’s certainly not representative of what a commission might be. There are all kinds of business models, ranging from low-fee, flat-fee service to whatever commission rate is negotiated. Now if the client wasn’t happy with that commission rate, they should have found someone who would work for a commission rate they were satisfied with. As far as the house selling in two hours, that’s a test of the effectiveness of the realtor. That meant the realtor effectively, in a limited amount of time, brought an acceptable offer to a client.

Q. Here’s a case that was brought to us, and that isn’t the only time I’ve heard of this. The homeowner signed with a real estate agent to sell a house, in this case on Vancouver Island. Almost as soon as the ink was dry on that agreement with the agent, a friend came forward and said they wanted to buy the house. The sign never went up on the lawn, nothing came of that contract with the agent but they still had to pay the $56,000 in commissions. How is that fair?

A. That’s an isolated situation and I suppose theoretically it could happen. It’s not fair unless the client was willing to accept the deal. Ultimately the client decides. There’s millions of other examples where clients were well-served by their realtor and were satisfied with paying and would use that realtor again and again and again and get fair value for the fees they pay.

Q. I guess that among the comments we receive is the sense that there are neighbourhoods and houses that sell very quickly and the commissions are exactly the same on a house that sells very slowly. Should there be a different kind of schedule that reflects how much time and how much effort was really put into this sale?

A. If you’re sitting on a valuable piece of property that you’re convinced is going to sell quickly, then you take that into consideration when you’re talking to a realtor. And if your realtor agrees, their fees reflect that when you sign the contract. And if not, you don’t.

Q. How much flexibility is there really?

A.Lots. The real estate industry is more competitive than the insurance industry, it’s more competitive than the law profession. The real estate industry is more competitive than the banking industry. We’re the most competitive industry providing the service we provide in the country. So quite frankly, I’m puzzled why there’s competition issues.

Q. Well, it’s not me that’s putting this forward. It’s the Competition Bureau, which doesn’t often get up on its hind legs and roar like this.

A. I’m not sure what their motivation is.

Q. What would the motivation be beyond taking care of consumers? What do you think is.…

A. We’re taking care of consumers by providing service that brings confidence to Canadian consumers when they handle the most important transaction of their life.

Q. I’m just going to go back to what you said about various ways you can sell a house. We spoke with a real estate agent from Vancouver who said he was charging $300 to list a house on MLS and was giving the seller’s name as the contact person, and he was told he wasn’t allowed to do that. It has to go through him. Why is that?

A. The MLS system is owned and operated by the Canadian Real Estate Association, which remains a member-to-member system. Part of the problem with that model is that you’re not really involving the realtor in the process. Now if you don’t want to involve the realtor in the process, you don’t have to. You can sell your home privately. There’s lots of private internet websites.

Q. But then you can’t list your house on the MLS. Ninety-some per cent of houses in Canada are bought and sold on that listing. So why shouldn’t they have access for a fee to that Multiple Listing Service?

A. But they do.

Q. Only if they go through an agent.

A. Well, yeah, they have to use a realtor to access the MLS system. It’s no different than if you want to go to court, you’re probably well advised to hire a lawyer, and you assume that lawyer is a member of the bar society, otherwise they’re not a lawyer. We’re not doing anything anti-competitive, and our rules are not anti-competitive. It’s a system that offers lots of choice to Canadian consumers. I guess we’ll have to see what the tribunal says.

via cbc.ca

Posted via web from Toronto Real Estate News | Blog

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About Tariq Sultan
Dear Readers, I am a dedicated Toronto, Ontario based real estate professional who has been successfully meeting and exceeding the needs of his clients for past several years. I am actively involved in the insurance, financing, and mortgage industry. Real estate is not only my career – it is my passion. I strive to continuously provide my clients with exceptional service to ensure they are fully satisfied when it comes to their real estate needs. For any real estate related inquires contact me today, I will be happy to assist you. Best wishes, Tariq Sultan

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