Competition Bureau challenges real estate group
MLS rules said to restrict choice and innovation
Last Updated: Monday, February 8, 2010 | 6:26 PM ET
The Competition Bureau says rules imposed by the Canadian Real Estate Association limit consumer choice and force people to pay for services they might not want when it comes to selling a house.
The federal agency has filed an application with the Competition Tribunal that would, if successful, force the association to change its rules surrounding real estate sales.
The Competition Tribunal is an independent body that rules on recommendations made by the bureau after it has investigated citizen complaints.
The Canadian Real Estate Association owns the Multiple Listing Service, which includes the public interfaces MLS.ca and Realtor.ca. People who want their homes listed on the MLS system must pay for all the services the association offers, even if they don't want them.
Melanie Aitken, the commissioner of competition with the bureau, said the main issue is consumer choice. The real estate association requires all sellers wanting to use the MLS to pay for a full suite of services, she told CBC News Network's Lang & O'Leary Exchange, when some of its members are willing to sell only some of those services for a lower commission.
In the bureau's view, this requirement interferes with competition, she said.
Aitken said the decision to take the issue to the tribunal came after three years of negotiations failed to produce an agreement.
Such changes have been introduced in the United States, Aitken said, and have resulted in more choices for consumers to spend less money and use only those MLS services they need.
For instance, a homeowner may be willing to book their own showings or negotiate offers and counteroffers but currently they must pay for those services, Greg Scott, the bureau's senior communications adviser, said in an interview Monday.
The vast majority of home sales are done through the MLS, Scott said. The bureau has predicted that if it wins the fight, real estate fees will be reduced, he said.
'We do expect downward pressure on real estate fees.'— Greg Scott, Competition Bureau
"We do expect downward pressure on real estate fees in the marketplace as a result of these changes, assuming we're successful," he said. "We have seen in the U.S. where restrictions have been lifted, we have seen competition flourishing in the marketplace."
There are cheaper alternatives to the Canadian Real Estate Association in this country, such as bytheowner.com, propertyguys.com and propertysold.com. Businesses like these charge a basic fee to list a house on a website and the homeowner is responsible for everything else involved in the sale.
"We would like to see more innovation of service offered, in addition to those [types of businesses]," Scott said said.
The bureau filed the application against the association after three years of trying to negotiate changes to the rules.
"We've been negotiating with them for three years," Scott said. "We've been negotiating with them intensively since October. Clearly we've arrived at a point where CREA's leadership wasn't willing to agree to the changes that we felt were necessary to open up the real estate market. At that point, we felt we had no option but to proceed with an application to the tribunal."
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