You may have seen media coverage regarding potential changes to MLS. The MLS system used by Realtors across Canada is owned by the Canadian Real Estate Association (CREA). In 2010, the Competition Bureau entered into a discussion with CREA, indicating its concerns that the rules which regulate how MLS is used by its members might be too restrictive or monopolistic. Many Canadians have expressed strong feelings about this issue. In this post, I’ll put down my personal take on what it all means.
A little background…
The genius of the Multiple Listing System concept is this: it allows member Brokerages to share information, including much that is confidential, with other Brokerages who are all bound by the same rules of confidentiality and responsible use. It allows me, as a licensed Realtor, to “co-operate” with any one of hundreds of Brokerages in the GTA or beyond, in order to show or market their listings to my clients. (Note: the “public MLS” site, realtor.ca, is a separate marketing site, where confidential information has been stripped from the data.)
The benefit of MLS for Sellers is clear: their home can be marketed by all Realtors to their clients, rather than only by their own Brokerage. The benefit to Buyers is also clear: a client with any Realtor has access to all suitable homes, regardless of which Brokerage holds the listing.
There is a second benefit to Buyers that is crucial, but less obvious. The rules that govern the use of MLS by member Brokerages ensure the reliability of the system, and the data on it. Brokerages are responsible to ensure that the information they load onto the MLS database is accurate and timely. This means that if a house is advertised as having a private drive, the Brokerage has ensured that it does in fact have one. If a Brokerage advertises that the living and dining rooms have hardwood floors under the broadloom, and it turns out to have plywood, then the Brokerage is answerable to the Buyer. The measurements, legal descriptions, and tax information all have to be accurate. Every day, when Realtors bring their clients to one of my listings, they rely on the integrity of the information I have provided on MLS, which they pass on to their clients.
Why the fuss?
The complaint has been that since MLS is so widely used, it’s not fair to keep out folks who just want to get their house posted. In fact, some brokers for years have envisaged a business model where they could charge owners a small fee to simply provide a conduit for the electronic uploading of “for sale by owner” listings onto MLS. This would be something like Craigslist, though not exactly free.
One misconception is that until now there has been no choice in the price for Brokerage services. In fact, Realtors have been competing openly and aggressively for as long as I can remember, and wide varieties of pricing are being used every day.
As a member of CREA, my view has always been that the strengths of a well-managed MLS add a lot of value for consumers, both buyers and sellers. If changes can be made to increase the value of the MLS system, great! But I’ve always been aware that openness and competition are just pieces of the puzzle. Part of the responsibility of operating a web-based data system is to protect people’s privacy, under the federal government’s PIPEDA legislation. And as Brokerages we function in a regulatory environment under provincial statutes, which in Ontario include REBBA and the Consumer Protection Act. These laws demand strict adherence to rules about how business may be done, and who is permitted to do it.
What’s going to happen next?
CREA and the Competition Bureau have a tentative agreement, which needs to be ratified by CREA’s stakeholders across Canada. Until a firm agreement is in place, details will not be released. When the dust settles, expect both sides to claim victory without too much changing.
My guess is that CREA will find a way to spell out how some limited-service options can meet the legal requirements to be placed on MLS. Brokerages will still bear legal responsibility for their listings. As information technology continues to evolve, consumers will have more options for how they obtain information. And Realtors will continue to add value to their clients’ buying and selling. Some will provide narrower service options, and that will enhance the range of available choices.
My bottom line
As an experienced Realtor, I know that my work has provided value for my clients. By providing market analysis and negotiating skills, I’ve optimized their monetary outcomes. By providing psychological support and partnership, I’ve made a complex and scary process seem almost easy for them. A lot of what I’ve done for my clients has not shown up on any invoice (see my earlier post, 9 Free Real Estate Services.) I’ve also done my share of volunteer work in the community, and I know myself well enough. Whether the work is paid or unpaid, it’s still my work, and I don’t compromise on quality.