On September 30, 2010, reports broke of a settlement between the Canadian
Real Estate Association (CREA) and the Competition Bureau and with it my
blackberry started to ring off the hook. Realtors asking what's next,
clients confused about misleading reports of what is to be, confusion was
the best way to sum it up. Unassuming consumers breathed a sigh of relief
and rejoiced at the Competition Watchdog's announcement that the world is
now a better place. "This agreement is welcome news for Canadians", said
Melanie Aitken, Commissioner of Competition. "If ratified, the agreement
will ensure that consumers have the ability to choose which services they
want from a real estate agent when selling their home, and to pay for only
those services. It also provides much-needed flexibility for real estate
agents by ensuring that they have the ability to offer the variety of
services and prices that meet the needs of consumers." Aitken went on to
say "Since challenging CREA's rules, the Bureau's goal has always been to
achieve a long-term solution that would strengthen competition in the
residential real estate brokerage services market. This resolution, if
ratified by CREA's membership, achieves this goal."
As discussed in my previous blogs, competition in the real estate brokerage
services market has never been an issue. A realtor is free to charge any
amount, can provide as many or as little services as their client wishes,
and can charge a flat fee or a percentage of the final negotiated price.
There are many different business models operating throughout our great
country. Models that offer discount pricing for inferior service, and high
end models that offer full-services for slightly higher prices. So after
all this work, time, and money wasted, it is reported that Canadians NOW
have flexibility? You're kidding me right? Did our taxes just go to fund
this make-work project?
As a real estate professional, one must laugh at the commissioner's lack of
knowledge on this subject. According to her press release, Realtors may now
provide a-la-carte services. Now? Realtors could and would provide
a-la-carte services since the introduction of organized real estate. What's
even more comical is the idea that a-la-carte pricing will benefit the
consumer. Sure, if the consumer just selects to be on the MLS and nothing
more, this may be a monetary savings albeit not a significant one in the
end. You see, a listing placed on the MLS by a Realtor who is under contract
to the seller assures the seller of the Realtor's fiduciary duties. The
fees are also tied to an important aspect of the service called THE SALE of
the home. A Realtor is not paid for the listing until the sale has been
completed. As a flat rate service, the fee is due and payable at the time
the listing has been posted on the MLS. This is a welcome change? What
are we now, lawyers? Realtors provide a service, we do not charge for time.
By misleading the consumer and giving them advice to select services without
educating them as to the features and benefits of each service is absurd.
Shame on the Competition Bureau and CREA for not looking at the consumers'
best interest. There should have been detailed lists of services that are
offered by Real Estate Professionals, their features and benefits to allow
consumers to make the right choice. At that time, and only after that,
consumers could and should be able to choose the services they require. The
old adage, "You get what you pay for" is certainly applicable here. But
what are consumers paying for? How can the issue be relevant if all the
pieces of the puzzle are not disclosed. Great, you save money by paying to
post a listing, but what else is involved in selling a home? How does it
affect the sale price? How is the consumer protected? The MLS is one small
tool in selling a home. It is not the be all and end all of the sale.
Now in Ms. Aitken's Wonderful World Of Real Estate, a Realtor may charge a
flat fee to post a property on the MLS and provide no other services. The
seller may choose to conduct the rest of the sale on their own by marketing
the property, preparing property for sale, advertising, booking
appointments, conducting background checks on visitors, verifying employment
of Realtors, confirming appointments, arranging showings, securing their
premises, following up with visitors and agents, monitoring market
conditions and competition, drafting offers, negotiating sale terms,
negotiating commission with selling agent, scheduling inspections,
renegotiating based on home inspection findings, arrange bank appraisals and
negotiate with bank in case of discrepancies, confirming financial
worthiness of the purchaser, drafting and negotiating fulfillment of
condition documents, arranging additional purchaser visits, ensuring buyers
are prepared to close, coordinating closings, and finally post closing
arrangements. Just paying to post the listing on the MLS is fine and dandy,
however the flat fee for the MLS posting is collected up front with no
additional liability for the Realtor so how is selecting just the MLS
posting a benefit to the consumer? The seller's identity and contact
information is now available on the internet, and with more and more fraud
artists using the internet as their "industry tool", the seller is wide-open
to fraudulent activities against them. Does the Competition Bureau overrule
the Privacy Commission? Realtors have to abide by Privacy Laws, so you are
protected when you use a Realtor, not so much when the changes suggested by
the Competition Bureau kick in.
Of course, as the seller you can select a number of the above services and
pay a flat rate for each. Think of visiting your favourite restaurant.
Each restaurant allows you to order complete meals for a set price, or you
may choose to order a-la-carte should you choose not to have a complete
meal. In the end, if you choose two or three a-la-carte items, you're
surely going to pay more for your meal than you would have with the "combo".
Now take this back to Real Estate, by ordering the "combo" you're
guaranteeing that you will not pay unless your home sells, you can still
select what you want and don't want. Not only that, you are also getting a
qualified professional to guide you through the process and negotiate the
best deal on your behalf. By taking the "combo" or even ordering a set of
a-la-carte items, you are also transferring the liability from yourself to
your "agent". Realtors are insured against Errors and Omissions and cannot
trade in Real Estate unless they can show proof of insurance. Fraudsters
and con-artists are exempt from this rule and won't have insurance, they
will however be actively seeking out properties as soon as they are able to.
Does the consumer really want to go on their own and take on the liability
and leave themselves open to lawsuits, criminal activities and fraud? Your
lawyer will obviously be there to protect you and most will do it for free
since they are your friends. Or, actually, they won't they don't work for
free, at least I don't think they will. A lawyer charges by the minute. So
what you may save in terms of dollars spent on a Realtor, you'll surely
spend through the legal process of protecting yourself against lawsuits that
will be brought against you. Legal fees are set to go through the roof if
people choose to take on the liability on their own. Can you imagine the
retainers that lawyers would have to charge? As grow-house operators start
to sell their own properties, fraud artists and con artists start
capitalizing on identity theft and sell homes they don't own, buying and
selling real estate will get very scary, and lawyers will be raking in the
money you thought you were saving. Realtors are trained in Real Estate Law
and provide much of the documents that will keep your legal fees to a
minimum. By the way, did you know you cannot sell your home without a
lawyer? Why hasn't this aspect of the anti-competitiveness been brought
forward yet? Did you know that when you go to a lawyer, they have to charge
certain fees and registration fees? I wonder if you can tell them you just
want to pay a flat fee for the title registration and conduct the rest of
the process yourself. Could it really be that hard to figure out the
adjustments? How about trying to tell the bank to transfer the mortgage
funds directly into your bank account so you can deal directly with the
seller/buyer. Since Realtor are highly qualified to trade in Real Estate,
how about eliminating the lawyer's role in trading Real Estate and saving
the consumer some money? So the MLS is anti-competitive but the Land
Registry isn't? Hmm. If it looks like discrimination, smells like
discrimination, and walks like discrimination, whatever could it be? Another report from Canoe.ca/money mentioned that a group of advertisers,
which the media misleadingly reported to be "brokers", launched a new
property selling network that will compete against the MLS. This is great
news. Since Realtors were not allowed to advertise their listings on sites
such as For Sale By Owner, Property Guys and ByTheOwner.com, the allowance
for private sellers to advertise on MLS should also be extended to Realtors
advertising on the aforementioned Private Sales sites. Also, sites like
Kijiji that now charge Realtors for their listings should be deemed
anti-competitive for their two-tiered system, and Realtors should be able to
advertise for free as everyone else. More great news!! Now our clients
will have a greater reach and be able to market their properties to a wider
audience - all for the same low price as they are paying now. This is part
of the deal right? The deal doesn't discriminate just against Realtors does
it? I'm sure the Competition Bureau addressed this nonsense and made this
part of the Agreement, am I correct? I hope they did. CREA has always stated that they do not discriminate against any of the vast
business models trading in Real Estate. A quick glance of the MLS will
prove this is true with the differences in fees being charged to sellers,
varying commissions being paid to co-operating brokers, and wide range of
services that are included/excluded. Discount brokerages already exist and
run successful operations throughout the country. Consumers have always had
a choice as to what they spend, who they use, and what services they
require. The entire "investigation" has just been a waste of tax payers'
dollars and time. The only thing this has accomplished is that newspapers
had content to write about, an average lawyer became a household name, and
awareness about our Competition Bureau was heightened. From a Realtor's
perspective, our roles have been questioned, reputations tarnished, however
the value of a Realtor has never been greater! Real Estate is still the
greatest investment Canadians have, and only a handful will take it upon
themselves to gamble with their life savings. Let's hope this goes away now
and we can get back to protecting the integrity of the MLS, and continue to
lead our nation to economic stability through a strong real estate market.
If you are interested in discussing the value of a Realtor, and/or would
like more information on the features and benefits of the services we offer,
please do not hesitate to contact me. My focus is on educating my clients
with options available to them and assisting them to maximize their return
on their Real Estate Portfolios while protecting the integrity of our
country's Real Estate systems. You can always email me at
teamkhan@asifkhan.ca. Regards,
Asif
DreamTeam (1)
Asif Khan, Realtor
Re/Max All-Stars Realty Inc.
Google me: Asif Khan Re/Max
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