Canadian real estate industry due for change

Multiple Listing Service

On Monday, the Canadian government made their presence felt on the real estate industry which can affect many Canadians. More specifically, the issue is with the MLS (Multiple Listing Service) monopoly in the real estate industry. This is the only major listing service in the country, run by CREA (Canadian Real Estate Association) that can only be used by real estate agents and if a seller decides not to use it, then chances are it will be difficult to sell their home.

The government’s Competition Bureau has decided to take this organization to court in order to break the monopoly and let in more competition and innovation in this industry. On Monday, CREA decided to try to thwart the Competition Bureau’s onslaught by instituting new rules that force real estate agents to provide the seller’s phone number (if the seller chooses to) and by changing listing policies on the MLS. The new rules still require the use of a real estate agent in order to place a home on the MLS database but, it will cost a flat fee and then that seller does not have to commit to that agent for the entire time. This does give some more rights to the seller which is good, but it still would keep the MLS as the only game in town. I hate monopolies and I see no reason why there should be one in this industry.

Often times, government intervention ends up being more costly, more ineffective, creates loopholes and other negative outcomes. However, when it comes to opening up industries to more competition, governments usually don’t mess it up because they let the market work and that generally has more positive results.

Today there are many possible innovations that can be made in the home selling/buying process and the MLS system is fairly primitive as an online way to view a listing. The search portion of the site is not very good and it only offers a few still pictures of each home rather than a virtual tour. Also, if someone wants to sell their home without any real estate agent help whatsoever, that simply is not possible, even with these new rules. There is no reason why people would not be able to buy or sell homes without real estate agents because the paper work can be made simpler to understand.

If this happens then it will mean that good negotiators will save more because of the agent commissions they won’t have to pay. For those that are not confident in the home selling or buying process using a real estate agent would still be a good person to use as it will ensure that they do not get ripped off or make a big mistake. Real estate agents will still have a wealth of business available because I suspect many people will still opt to use them, but at least it gives the option for those that feel confident in their selling/buying abilities.

Hopefully, the government will eventually make the right decision regarding more competition in this industry.