Officers for a government agency in Canada are talking and meeting with limited-service brokers in the United States to gauge the potential effects of real estate restrictions in Canada.
The Canadian Competition Bureau, that nation’s equivalent of the U.S. Justice Department’s Antitrust Division and Federal Trade Commission, has contacted several members of the American Real Estate Broker Alliance, a group of flat-fee real estate brokers that formed last year. The group advocates against state mandates that require a specific level of real estate services even if consumers do not want or need all of those services, among its other priority issues.
Real estate rules passed and proposed by the Canadian Real Estate Association, a trade group with about 88,000 Realtor members that is akin to the National Association of Realtors trade group in the United States, have drawn criticism from the Competition Bureau, and CREA members are meeting March 24 to consider approval of a list of items that relate to the association’s MLS rules and regulations. Competition Bureau officials did not offer a comment for this article.
The National Association of Realtors, its affiliated state associations and local Realtor-operated multiple listings services have also clashed with antitrust law enforcement agencies. The national association is locked in an antitrust lawsuit that was filed by the U.S. Department of Justice over online property listings policies that the agency charges are overly restrictive.
Meanwhile, state-level Realtor associations have backed so-called minimum-service legislation requiring real estate licensees to perform a range of services in real estate transactions — the Justice Department and FTC have stated opposition to the most restrictive of these measures. And the FTC last year took action to prevent MLSs from placing restrictions on a category of property listings favored by discount and limited-service real estate companies.
Dubbed “Interpretations,” the list under consideration by CREA members includes requirements that MLS members who list properties “shall receive and present all offers and counteroffers to the seller” and “shall be available to provide professional advice and counsel to the seller on all offers and counteroffers unless otherwise directed by the seller in writing.” The list also states that the “mere posting” of property information in a multiple listing service without obligations for the listing agent to remain an agent of the seller “is contrary to the rules and regulations” of the association.
Also, only MLS members are allowed to display the MLS trademarks in signage and advertising, and sellers’ names and contact information are not allowed to appear on CREA’s MLS.ca property-search Web site or in the public remarks section of the MLS system.
Similarly, some minimum-service legislation passed by U.S. states has targeted real estate business models that offer to place a property in an MLS while providing few or no other services to sellers. State Realtor groups have charged that such service arrangements are potentially harmful to consumers and cause confusion for agents working on the other side of the transactions, while opponents of the minimum-service measures have charged that consumers should have choice and there isn’t sufficient evidence of harm to justify passage of such laws.
Alan Tennant, CREA president, said in a Jan. 25 notice to members that the items on the “Interpretations” list “do not have the effect of changing the rules and regulations, rather they are intended to indicate how the rules and regulations should be interpreted and applied when dealing with MLS trademark usage. It is hoped that the Interpretations will assist boards, associations and members in following both the letter and the spirit of the rules and regulations.”
According to Tennant, “There must be a reasonable level of professional involvement with each real estate transaction” so that the association’s trademarks for the MLS term do not “become generic and therefore unenforceable.”
CREA had earlier sought a separate list of MLS rule amendments, though member groups voted in September to delay consideration of these amendments, and Tennant’s January announcement noted a replacement of this original list of proposed amendments with the Interpretations list.
“CREA has no comment regarding the protection of the MLS trademarks at this time,” CREA spokeswoman Jody Cox told Inman News this week, adding that the association is “making inquiries regarding the international interest of the Competition Bureau.”
Aaron Farmer, the broker-owner for Texas Discount Realty who battled efforts by the Texas Association of Realtors, Texas Real Estate Commission and Texas state Legislature to pass a minimum-service measure in that state, said he was contacted by officers of the Canadian Competition Bureau and he set up a time to meet with bureau officials in Austin, Texas. “I told them the basic stuff I’ve been through … and what the Texas laws are,” Farmer said.
And Albert Hepp, president of the AREBA group and owner of BuySelf Realty in Minneapolis, Minn., said he has also been contacted by a representative from the Competition Bureau. A competition law officer for the Canadian bureau stated in a message to another AREBA member that the group is “examining restrictions placed on limited-service brokers in the Canadian real estate market” and is contacting brokers in Canada and the United States “to help us understand the real estate industry and what the likely effects of the restrictions are no competition in Canada.” The differences between the real estate markets in Canada and the United States could possibly help the bureau to determine any effects that real estate restrictions are having in Canada, the official stated.
Corey Scholtka, an AREBA member an owner of BuyHomes.com in Wisconsin, said he spoke with a bureau representative and discussed legislation that has been passed in the United States. Limited-service companies have found a way to work around restrictions that have been imposed, he said, and also noted that there appears to be a growing acceptance in Wisconsin for new business models. “Realtors realize the future is here,” he said.
The bureau representative seemed particularly interested that there is not a wide selection of new real estate business models in Canada — “they’re wondering why they’re not seeing more competition,” Scholtka said.
Realtysellers, a discount real estate company in Canada that was co-founded by Stephen Moranis, former president of the Toronto Real Estate Board and director of CREA, announced in November that it was suspending operations “pending resolution of the (MLS) issues brought about by the actions of the Canadian Real Estate Association. CREA has been working to implement rules that would restrict Realtysellers’ access to the MLS systems of local member boards.”
The company had engaged in a lawsuit with CREA and the Toronto Real Estate Board, and a 2004 settlement “ensured continued access to MLS for Realtysellers without interference,” Realtysellers stated in the announcement. Despite this settlement agreement, the company charged that “CREA is again attempting to restrict access to MLS.” CREA representatives have denied that any MLS changes have been recently enacted that would affect any member company, noting that existing MLS rules have been in place for several years.
Moranis declined to comment for this article. The Realtysellers.com Web site is inactive — the Web site is blank save for a small company logo centered at the top of the page. Representatives for the Toronto board also did not comment.
Ian Martin, CEO for erealty.ca, a low-commission real estate company in Canada, said he questions CREA’s motives in pursuing its list of recommendations. “Some of the things they’re proposing I find are not legitimate and the Competition Bureau will hopefully do something about it.” The Toronto Real Estate Board offered no comment for this article and referred questions to CREA.
“I’m here just talking about the consumers’ point of view. There should be more alternative avenues for them. Not everyone wants to have a Realtor who sips coffee with them and … walks (with them) every step of the way,” he said.
There is one MLS system in Canada, he said, and “there’s benefits to that as well as cons.” He has spoken with CREA officials and with officials at his local real estate board to voice his position. “The rules that they are trying to tighten make it a little more burdensome for the consumers. As I told CREA, I think you’re building your fence too high. If you build the fence too high, consumers say, ‘Screw it.’ It’s the system that is antiquated and expensive — that has got to change.”
Martin said his company works to put buyers and buyer’s agents in direct contact with home sellers, though the proposed “Interpretations” would change the way his company operates. “This has been allowed for four years — now they’re saying they’re not going to allow that anymore. If our client, the homeowner, wants that (contact information) to be published, then why are you preventing it?” he said.