Canadian regulators have sued the Toronto Real Estate Board (TREB), saying it’s denying agents the ability to share in-depth listing information with consumers through password-protected Virtual Office Websites, or VOWs.
TREB — which with 31,000 members is the largest real estate board in North America — says it’s working to implement rules governing VOWs by the end of August, and that the suit by Canada’s Competition Bureau amounts to little more than political grandstanding.
Technology-based U.S. brokerages like ZipRealty and Redfin employ VOWs to provide consumers with access to deeper listings data, rivaling what brokers and agents see when they log in to their multiple listing service (MLS).
VOW sites let consumers see previous listing and sale prices, historical prices for comparable properties in the area, and the amount of time a property has been on the market, for example.
While agents who belong to TREB can provide detailed MLS listings information to customers by hand, mail, fax or email, "there are currently no VOWs operating in the Toronto real estate market that enable customers to search a full inventory of listings," the Competition Bureau said in announcing the suit.
In its complaint, the Competition Bureau said real estate boards and associations in other Canadian jurisdictions, such as Nova Scotia, allow members to provide Internet-based services.
VOW brokerages "have lower operating costs and are able to offer markedly reduced commission rates or significant rebates to their customers, a practice denied to would-be innovative brokers" in the greater Toronto area, the complaint said.
In 2007, the Competition Bureau alleged in its complaint, TREB went to court to enforce its right to terminate a prospective VOW operator’s access to the MLS.
"TREB has cultivated a reputation for shutting down any broker who develops an innovative service that is prohibited by the TREB MLS restrictions, including VOWs," the complaint states. The board "has created a hostile environment for VOWs" in the Greater Toronto area, "resulting in a chilling effect on any broker who would otherwise wish to invest the time and money (including legal fees) necessary to begin operating a VOW."
TREB President William E. Johnston said the board sees allowing VOWs "as a reasonable thing to do," and began a process for implementing the necessary changes to MLS policies in July.
TREB’s board of directors has signed off on the concept, and an MLS committee is drafting proposed rules, Johnston said. Under TREB’s bylaws, the proposed rules would be subject to member comment for 60 days before the board of directors votes on them in August.
Johnston said the rules will be similar to those adopted by the National Association of Realtors in 2008 to settle a lawsuit filed by the U.S. Department of Justice.
The settlement gave brokers and agents who belong to NAR-affiliated MLSs the right to operate VOW sites, and many non-Realtor-affiliated MLSs also offer such capabilities.
"It’s heading in a good place — as a board we’re fully in favor of VOWs, we just want to make sure it’s done properly," with consumer protection in mind, Johnston said.
Canada has "very strong privacy laws and laws around identification of financial transactions," said TREB board member Richard Silver.
"We have been using the NAR VOW policy as a model and are on track moving forward but sadly, not fast enough for the Competition Commissioner," Silver said, referring to the Competition Bureau’s head, Melanie Aitken. "As you know, member organizations don’t have the flexibility the corporations may have."
A spokesman for the Competition Bureau said regulators have been in discussions with TREB since early this year, with the goal of achieving a "mutually agreeable voluntary resolution."
Eventually, the spokesman said, "it became clear to us that (TREB) was not willing to make substantive changes to (its) practices" to address the bureau’s claims that the board’s policies amounted to anticompetitive restrictions.
Johnston called that assertion "totally ridiculous," saying TREB was engaged in good faith discussions when the Competition Bureau filed a "headline grabbing" lawsuit with Canada’s Competition Tribunal, an administrative court that decides disputes over issues ranging from mergers to restrictive trade practices.
Asked whether other Canadian real estate boards restrict members from operating VOW sites, the Competition Bureau spokesman said it took action against TREB after receiving complaints about that board’s practices.
"Should any other real estate board be engaging in similar activity, we’d like to know about it," the spokesman said.
The Competition Bureau and the Canadian Real Estate Association last year entered into a consent agreement that ended a 3 1/2-year battle over rules that the bureau alleged were aimed at restricting competition from flat-fee, limited-service brokerages.