Any move to allow greater public access to home sales data in the Greater Toronto Area will be the first step toward pulling Canada’s real estate industry out of the “stone age,” says a Ryerson University professor.
Real estate players are getting ready for changes in regulations preventing public access to Multiple Listing Service (MLS) sales data after a recent ruling by Canada’s competition watchdog.
Other industries have been transformed by big data but the real estate business remains entrenched in information control, says Murtaza Haider, an associate professor at the Ted Rogers School of Management at Ryerson University.
“We often fail to imagine how an industry will thrive once it’s been liberated. Information liberation leads to prosperity.”
The Competition Tribunal issued a decision in late April that concluded the Toronto Real Estate Board engages in anti-competitive behaviour by restricting realtors from publicly distributing sales information from its Multiple Listing Service. The ruling called the practice an abuse of dominant position.
The full decision, including testimony, has not been released. The two sides will present potential remedies and an appeal is still possible.
It’s expected that whatever takes shape in Toronto will form the basis for change across more than 100 real estate boards in the country.
The case goes back five years. The tribunal initially dismissed the application from the Commissioner of Competition but agreed to another hearing held last fall.
Haider says the TREB’s close guarding of sales price data doesn’t make sense since 95 per cent of homes sell within five per cent of asking price.
But changes to the dissemination of information – primarily sale prices and days on market – will correct the “asymmetry of information” between buyers and sellers.
The board, the largest in the country, had argued it was protecting clients’ privacy. But many saw the board’s position as a means to protect the role of the traditional real estate agent.
“The true value of a real estate agent is not that few pages of comparables,” said Haider. “The net benefit is the service. A realtor’s role is to prevent a buyer from feeling buyer’s remorse and a seller from feeling seller’s remorse.”
That service is “priceless,” he said.
The United States already has a much more open industry, with players like Zillow – an online database of sales data for more than 110 million properties. Advocates for a more open system in Canada point out that Zillow has been around for 10 years and 87 per cent of all U.S. home buyers still used a realtor in 2014, according to the National Association of Realtors.
Canada’s real estate market is already one of the most competitive industries, says agent Frank Leo of Remax West in Toronto.
There are more than 40,000 agents to choose from in the GTA, along with a suite of do-it-yourself, and flat-fee options, he says.
“There is no lack of competition out there and all of the information they are talking about is already out there at the (land) registry office.”
Leo, ranked the No. 1 Remax agent in Canada and No. 2 in the world by volume sold, says making sale prices and other information public will only open consumers to sales pitches from a host of companies, ranging from movers to furnace sellers.
“This is only going to appeal to these large companies across North America that exploit data to sell other products. It’s not going to help the consumer.”
But Mayur Arora, a Vancouver real estate agent and owner of Oneflatfee.ca, argues that real estate is poised to go through a similar transition to the travel industry.
“There used to be a travel agent on every corner and 10 of them in every mall. When was the last time you booked through a travel agent? The same thing should be happening in real estate.”
‘Consumers’ best interests’
Arora wants to see it possible for a consumer to click on a home listing and see all past transactions for that house, including commissions paid to realtors and expired listings.
He’s already working with web developers to get out of the gate quickly when regulations change.
“If you make that information open, it’s easier for buyers and it cleans up the industry. This notion of tightly held information is an archaic way of thinking. This isn’t China or Russia… What they are doing is counter-productive to consumers’ best interests.”
Arora also thinks buyers in bidding wars should also have clear and accurate information about how many competitors they face.
“I think there is resentment because it’s not a transparent industry… There are millions of dollars at stake and you are handing responsibility for it to someone who just wrote an exam to be a realtor. These are life-altering decisions and everyone should have the best information possible.”
Leo isn’t concerned about his business.
“Selling is not difficult but selling for the most money is. It’s like selling a Picasso at a garage sale. What are the odds you will get the most money for it? There is a public misconception that all you need is MLS and a sign on the lawn,” he said.
“But if you look at Apple, there are lineups out the door while Blackberry has crickets. It’s all about marketing.”
Walter Melanson, director of partnerships at for-sale-by-owner company PropertyGuys.com, doesn’t expect the industry to change overnight. He says it may take “baby steps” to get to a place where the consumer ultimately wins.
“The real estate industry has long been dominated by the top brands in the country, so it goes without saying it’s in their best interest to keep information behind lock and key.”
Up until now, any real estate agent who shared too much with the public was threatened, fined or denied access to MLS.
“We have to kind of anticipate where this (ruling) leaves everyone right now … We are waiting to see how far this swings in favour of complete openness and free access to information. We are waiting for that green light.”
