Competition Bureau Update
Last week’s news reports prompted me to write a bit on the MLS. Most readers are interested in gaining access to the MLS database, and we can argue about that until the cows come home. However, what is clear is that the media reported some innaccurate information. I was a little surprised at how easily blog readers let the MSM off the hook, but there you are.
In any event, I’ve received some information from the Board that sheds some light on the current state of affairs between CREA and the Competition Bureau. I’ve copied parts of it below.
Questions & Answers from the Canadian Real Estate Association (CREA)
What is going on with the Competition Bureau?
CREA’s membership approved the current “Interpretations” in 2007, which deal with the acceptance of listings on Boards’ MLS® Systems. In March of 2007, the Competition Bureau initiated a formal inquiry (which followed ongoing informal investigations by the Bureau) and obtained a court order requiring CREA to produce, among other things, documents related to CREA’s rules and the operation of Boards’ MLS® Systems. On October 20th, 2009, CREA representatives were advised by the Bureau that the Commissioner of Competition had completed her inquiry.
What is the Competition Bureau proposing?
The Competition Bureau has requested that CREA change certain Rules and Interpretations that deal with the acceptance of mere postings on Board MLS® Systems (i.e., where the agreement between the listing agent and the seller is that the listing agent will not provide services other than listing the property on a Board’s MLS® System).
What will happen if CREA does not agree to the Competition Bureau’s Proposal?
The Competition Bureau has said that if CREA does not remove these restrictions the Commissioner of Competition will initiate an application before the Competition Tribunal, which is a quasi-judicial body that can, among other things, make orders requiring or prohibiting certain conduct (e.g., requiring rule changes).
What is CREA’s position?
CREA is awaiting additional information from the Competition Bureau about its proposed resolution and is reviewing the matter to gain a better understanding of the ramification of the proposed changes. CREA’s position is that Boards’ MLS® Systems are and should remain member-to-member systems. A settlement with the Bureau regarding the changes to CREA’s Rules would be subject to member support.
Are media reports accurate?
Some media are reporting that there has been a settlement with the Competition Bureau or that CREA has changed its MLS® Rules resulting in Boards’ MLS® Systems no longer being member-to-member systems. These media statements are incorrect.
CREA has not reached a settlement with the Competition Bureau and CREA has not changed its MLS® Rules and Interpretations.
What is CREA doing about adverse media?
There is high volume of media attention with considerable misunderstanding and misinformation – CREA has limited our response to correct actual inaccuracies. Otherwise we have deliberately chosen not to comment while discussions with the Bureau are ongoing. We continue to actively monitor media activity and will respond as needed to correct misinformation.
66 comments
By mid-November
Interest Rates (bond market)
Will rise to one year high
Mortgage rates will rise - – across the board
Listings will go ballistic
Sales will hit a brick wall
Prices will fall 15% over the holidays
Then things get really bad
Or
Something else will happen
Only
T
I
M
E
Will tell.
feel bad for everyone impacted suspect it could hit Vancouver/Burnaby hard, with a few hundred (or more?) job losses these are higher than average paying jobs i wonder if this will have any impact on the RE market?
Kodak also killing jobs in Vancouver
Not sure if any of these job losses will impact buying pressure
Will we lose jobs after the winter games?
“Not sure if any of these job losses will impact buying pressure”
Some of these folks who lose their jobs may be selling their homes and moving to other places to apply their hi-tech skills.
These jobs at AE pay well; creating 1,500 new jobs at $8/hr is not exactly replacing 1,500 AE jobs.
I agree Jimmy.
My view on things is that the macro BC environment is getting sketchy and will worsen as we move towards and through the Olympics.
Rates will rise, taxes will rise.
Something’s gotta give – any guess as to what that might be?
If MLS isn’t in violation of any competition guidelines, the CREA should be holding its head up high. The lady doth protest too much, methinks.
We often forget businesses are often held to test against the public good. It doesn’t mean that those not tested aren’t without sin.
Question for Rob: Suppose I write a script to harvest all of the info that is currently available to the public on the MLS. Am I allowed to distribute that info as I wish?
The reason I ask is this: Suppose we make an analogy to how other products are marketed and sold (eg. a TV). When characteristics/features of the product are publicized by the manufacturer (or owner) to market the product, that information enters the public domain and is not restricted from re-distribution. Does the CREA contend that the info on the MLS in fact belongs to them?
ObserverX:
I think that you are not allowed if you change it. I think you are allowed if you reproduce it exactly as the Board releases it and you attribute it to the Board. I’m no lawyer, but I recall they board told a local blogger to stop taking our data and plugging it into his own charts and then publicising it and I think it was more a trademark issue than anything else. Otherwise, if its available to the public its available to the public and I doubt CREA has any position on that at all.
CREA contends that the system belongs to members, and that as members we have the right to set our own membership rules. They’re not talking about the data, and neither is the Competition Bureau. We shouldn’t forget that. The information can be shared by members with their clients, and members can advertise information under reciprocity agreements with other members. What effectively limits lots of what we can let loose is agency, privacy legislation or a combination.
That said, until it becomes public information the data on the MLS does indeed belong to the various boards (and that means their members). We obtain it contractually, and we get copyright to it. A lawyer may argue that we don’t do it effectively or properly, but the language is right there in the contract. In short, we collect and obtain copyright to personal information from consenting people who have reached the age of majority, are receiving consideration and engaged in legal activity.
Before anyone blows a gasket about members setting the rules of their own trade organizations, remember, these aren’t, by any stretch of the imagination, Charter breaking rules. Anyone licensed by the government can join a real estate board. All we ask is that there is some degree of agency offered, because we’re associations of agents, not merely advertising agencies.
Jesse:
One individual in the Competition Bureau is of the opinion that thousands of people in hundreds of cities are restricting trade by not alowing the mere posting of listings and by requiring that agents actually offer agency services. This commissioner is not a judge, and nobody’s been told that any rules or laws were broken as of yet.
Your response seems to be “Just because you haven’t been to court doesn’t mean you aren’t guilty” Nice presumption of innocence. Search Ezra Levant on Youtube
“we collect and obtain copyright to personal information from consenting people …”
Wow, I betcha the lawyers could have a field day with this one … “Sorry, Mr. Seller, you are no longer allowed to tell anyone else your name or where you live since you’ve handed over copyright to us.”
Not that I’m quoting wikipedia as authoritative but here is what they say: “Copyright does not cover ideas and information themselves, only the form or manner in which they are expressed.” If correct, I don’t see how a blogger could be prohibited from harvesting data and re-packaging as s/he sees fit so long as the form used in the re-packaging is clearly distinct from that used on the MLS.
Industrial land prices fall in Vancouver
The value of industrial land in Metro Vancouver decreased by as much 30 per cent in the last year as speculators desperately unloaded land bought near the market’s peak into a market with little demand.
……..The market saw prices double between 2003 and 2008, with prices reaching $600,000 an acre in Abbotsford and as much as $4-million an acre in Vancouver.
…….Meanwhile, the region’s industrial vacancy rate increased to 4.4 per cent in the third quarter, up from 3.2 per cent in the spring.
http://tinyurl.com/ylp8t5r
MLS = grrrrr
Has anyone else noticed that the maps on MLS no longer show the properties? Is it a glitch or just a bunch of bozo’s running the show over there?
Maybe public access to raw data is a good idea … at least then it may actually work.
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Why arent we anywhere in this list? Isnt vancouver the most livable city in the world?
http://ca.travel.yahoo.com/guides/Other/799/the-worlds-happiest-cities
GG:
the list you should be looking for is:
the world’s-most-stressed-population
http://www.yattermatters.com/
Larry say’s mortgage broker’s noting slowing of apps…could legitimately be that not much compelling product/pricing on the market – any thoughts?
ObserverX:
I’m sure that the owner can still use his personal information, and, as I’ve said, the restriction we put on information has more to do with agency concerns and privacy than with us wanting to hoard data. The seller (or buyer, for that matter) has ultimate say in their agency relationships, which means that they can say “Release my personal information to anyone who wants it”. Our job is to be someone’s agent. Its not to collect their data and sell it. We collect the data in order to be better agents, so while you’re right that a lawyer would have a field day with us if we were to try to do something that we don’t do, I’m not too worried because, well, we don’t do that, try to do that or plan to do that. I’m also sure a lawyer would have a field day with us if we were to release private personal information that compromised a principal’s negotiating position, and that would be a much more slam dunk and costly case. At the very least the commission would be toast, and if damages could be proven there’d be those to collect as well, which is why we’re required by the government to have E&O insurance. The provincial government, it seems, sees the value in realtors being agents rather than mere posters, while the commissioner at the Competition Bureau does not.
“I don’t see how a blogger could be prohibited from harvesting data and re-packaging as s/he sees fit so long as the form used in the re-packaging is clearly distinct from that used on the MLS.”
As I said, if its in the public domain its in the public domain, but based on your interpretation above, couldn’t I record a hillbilly version of Gin and Juice and tell Snoop that he has no copyright over it? I’m just using the information, re-packaging it, and making it clear that I’m not Snoop Dog, right?
(Google Dynamite Hack – I’m sure they’re paying royalties but maybe I’m wrong).
So, to repeat, the Competition Bureau isn’t trying to open up data. They’re trying to relax membership rules. I think we’re more concerend about agency and privacy than about hoarding data.
Here’s a question to you: does asalvari or ex-B or Ray have a right to know everything about you or your proeprty that they want to simply because they’re members of the public and they want to know? What if they’re moving companies, or theives, or fraud artists? They seem to indicate that they want the information to make a decision on the market, but how do we enforce that requirement? Asking them to use an agent seems to onerous (and “using” and agent doesn’t require that they buy through that, or any agent).
ex-B:
Do you use REALTOR.ca or somewhere else? Try this: http://robchipman.net/blog/vow
and see if you like it.
Regarding your earlier idea, how about this: you pay me a fee to be negotiated, more or less as you outlined, but instead of me not participating in the sales commission of the property you finally buy, we apply whatever you’ve paid me as an information fee to the commission? In other words, using your numbers, you give me $5,000 for a certain level of information. We sign a buyer agency agreement that sets out the duties I owe you. We eventually find a property and when we do the listing agent agrees to pay me $10,000. I must, by law, disclose that information to you, and when I do you say “OK, you’re owed $10,000 to sell this place, but I already paid you $5,000, so $5,000 of that should be rebated to me”, to which I replay “Sure, no problem, that’s what we agreed. I never had a problem supplying information to my principal, once I was convinced I had your loyalty “ If, partway through, you decide that you don’t want to buy, or want to use someoen else, no problem – I’ve been fairly compensated for my time and energy.
There’s (at least) two issues floating around: (1) access to MLS info and (2) what you’re allowed to do with it once it becomes public. I’m speaking only to (2).
Snoop dog’s claim is predicated on the fact that his song represents original material. A 10′x12′ room size is not.
ObserverX:
“Snoop dog’s claim is predicated on the fact that his song represents original material. A 10?x12? room size is not.”
I’m not a lawyer, but I’d tend to disagree. Snoop’s claim would be predicated on the fact that he owned the rights to the songs. The Beach Boys, for example, can prove that their songs were their original creations, but I think A&M actually owns the rights to them. From that perspective the actual information isn’t so important, but ownership of it is.
Going further with your claim, could I argue that your name isn’t your information, nor is your phone number nor SIN number, because they aren’t original creations? Could I collect and sell them without your permission?
You’re right that there are at least two issues floating around. Let’s repeat, the Competition Bureau isn’t asking for access to MLS info. I think its also pretty clear that blog readers here aren’t too concerned about what the Competition Bureau is actually trying to do. Fair enough.
The public has access to MLS info, but the access is through a member agent. What’s wrong with that?
What can you do with the info once its public? I can’t answer too much more. The Board has had lawyers on retainer for years, and that’s where our contracts come from. They are either enforceable or, if they fail a court test, they get tweaked. We don’t just make the stuff up. We do have to comply with agency concerns and privacy legislation.
Is it in our interests to hoard info? I’m not convinced it is, and what’s more, I’m not convinced we do it for the reasons people claim we do. What if Google scraped the system and used it to create a parallel one? Who would be the loser in that equation (btw, NAR is fighting google on exactly that).
Dudes, the blogger in question got a complaint from attributing the data to the board. That was the issue, not the use of the data, but the use of the words “Real Estate Board of Greater Vancouver”. If I remember, they complained on the grounds of trademark, not copyright. Also, while they complained, it does not make them right (though they kind of had a point as it made it look like they were endorsing the presentation). The Snoop Dog thing is off base. We are not talking about information there, but creative composition. It’s very different stuff. I don’t know anything about Canadian copyright law, but you can get a pretty good take on the US case here:
http://answers.google.com/answers/threadview/id/778789.html
But to address the original question, always ask a lawyer. Consultations in advance are dirt cheap compared to defending a complaint.
“Snoop dog’s claim is predicated on the fact that his song represents original material. A 10?x12? room size is not.”
-”I’m not a lawyer, but I’d tend to disagree.”
Some would argue that Snoop’s songs are about as creative as a 12×10 room size.
Newcomer:
Thanks for the memories. I couldn’t remember what exactly had happened, but I know that the staff at the Board were unhappy about one specific thing, and otherwise weren’t too concerned what they blogger did (I thought it was trademark, too, but really couldn’t remember). Thanks for reminding us.
Rob 15 … “Regarding your earlier idea, how about this: you pay me a fee to be negotiated, more or less as you outlined, but instead of me not participating in the sales commission of the property you finally buy, we apply whatever you’ve paid me as an information fee to the commission? In other words, using your numbers, you give me $5,000 for a certain level of information. We sign a buyer agency agreement that sets out the duties I owe you. We eventually find a property and when we do the listing agent agrees to pay me $10,000. I must, by law, disclose that information to you, and when I do you say “OK, you’re owed $10,000 to sell this place, but I already paid you $5,000, so $5,000 of that should be rebated to me”, to which I replay “Sure, no problem, that’s what we agreed. I never had a problem supplying information to my principal, once I was convinced I had your loyalty “ If, partway through, you decide that you don’t want to buy, or want to use someone else, no problem – I’ve been fairly compensated for my time and energy.”
Rob, I’m not quite sure why I’d do that. Under my original proposal, I’ll pay you say $5,000 for information flow for 12 months structured the way I want to see it ($/sq ft) whether I buy a place or not. If I find a place, you present the offer and negotiate as part of the fee. If I don’t find a place, you keep the dough.
Under your counter, I pay you $5,000 up-front and all it does is come off the commish later. Total payable is still the same, so there’s nothing in that deal for me.
Let me put it another way … why wouldn’t I just pay you nothing up-front and everything upon completion? Standard real estate compensation.
Just playing Devil’s advocate here, but what’s my motivation to take you up on your deal? I don’t gain anything.
I think I’m saying: I would gladly pay you tomorrow for a hamburger today … or … I will gladly pay you half price for a 50:50 shot at a hamburger … but definitely not I will pay you up-front for a hamburger I may never eat.
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Rob….. have you heard of Don Campell, he was on CBC radio today talking real estate.
http://www.realestateinvestingincanada.com/
Dave#1
Dave/22,
…where he unleashed a veritable word salad of contradictory advice. For example, when determining the maximum monthly payments you’re able to shoulder, don’t forget to consider that interest rates in the future may be higher. But (paraphrasing), “just add a couple of percent to the current rates; any old number will do.”
If you ask someone who sells books on real estate investment for advice on real estate investment, what do you expect to hear…?
Turkey:
“If you ask someone who sells books on real estate investment for advice on real estate investment, what do you expect to hear…?”
Um…buy my book?
ex-Banker
“Under your counter, I pay you $5,000 up-front and all it does is come off the commish later. Total payable is still the same, so there’s nothing in that deal for me”.
Sure there is. You get the information you want. You may not like the price, or that its not your original offer, but you do get one of the things you’re looking for.
In your original offer you wanted me to give you information and write, present and negotiate the offer for less than what I normally charge. The inferred benefit is that I get paid a certain amount up front, so I avoid some risk. It was my opinion that you were putting to much value on avoiding the risk.
So, while both of us were intrigued with the idea, neither one liked the price that much.
Let’s forget prices for a bit, and look at what each of us wants. I want loyal client that I can turn into a customer for life, and I want satisfactory payment for whatever I end up doing.
I know you want some information, and I think you want someone to write the offer, present it and negotiate it. I’m not sure if you also want a discount commission, or if you want to pay less and receive less (maybe there’s a difference).
If I’m right about what you want here’s what we do: you enter into a buyer agency agreement with me, we write up specifically what you want on the schedule “A”, you pay me something that we negotiate up front and we apply that payment or another negotiated amount to any eventual commission paid. The negotiated figures depend on what you want to get, and what you want me to do.
I get a loyal customer with a written agency agreement who’s put his money where his mouth is, and I get a certain payment that I can apply to my fixed costs. Those are important considerations for me, so its a good deal for me, depending on what the numbers are.
You get the information you want, real estate advice, negotiation and brokerage services. Sounds like a good deal for you, too, assuming the numbers work.
Do we have the bones of a deal to put some meat on? If so, lets put some meat on it by you telling me specifically what info about properties and the market that you want.
Whaddya think?
Dave #1/Turkey
I checked the link, and yes I’ve heard of him. Looks like a book seller to me.
Turkey 36, 3 blogs ago…priceless; sublime.
and now the ridiculous:
http://www.herald.ie/national-news/city-news/family-fears-loss-of-their-dream-house-1931827.html
Mum stayed at home…Dad was a security guard.
Rob: “Your response seems to be “Just because you haven’t been to court doesn’t mean you aren’t guilty” Nice presumption of innocence.”
Nice try, Rob. I never said CREA was “guilty”. MLS has been operating for years under what may or may not be decided to be anti-competitive practices. Kick and scream all you want but I’ll wait for the judgment.
I don’t know why this is such a big deal to Realtors. The good ones provide a fair service and will continue to do so regardless of what happens with MLS. The rest who “need” MLS to make a decent living (which I find hard to believe) can and should find other jobs as far as I’m concerned, for the long-term good of the profession.
It is an interesting statement Rob makes that the data on MLS is copyright (i.e. owned by the CREA. In the work I have done with the Privacy Act, PIPEDA, and the various provincial statutes related to privacy (IANAL, by any means) information related to an individual belongs to that individual…not the person or group that created the information. And I don’t think this right can be “signed” away. In essence the CREA is claiming to own the pricing and technical specs of the properties sold through MLS, but I can’t see how they can be the owners when it is information about other people, and other people’s assets.
Personally, I look forward to any lessening of the control the CREA exerts over the MLS data. Pricing data should be available to anyone who wants it. Vive data liberation!
Burnaby Bear:
You might not think that someone can sign away their rights to their personal information, but I’m not saying they are. I’m saying that we have contracts drawn up by lawyers that give us copyright to information that we collect. I’m not sure that means that the individuals we collect it from no longer have rights to it, but I’m pretty sure it establishes our rights to it.
Pricing data is available to anyone who wants it. Its just not available for free and completely without restriction.
That said, if someoen else wants to collect the data and set it free, nobody’s stopping them are they?
Jesse:
“MLS has been operating for years under what may or may not be decided to be anti-competitive practices. Kick and scream all you want but I’ll wait for the judgment”.
For there to be a judgement there would have to be some sort of court action, no? We’re not even close to that.
“I don’t know why this is such a big deal to Realtors. The good ones provide a fair service and will continue to do so regardless of what happens with MLS”.
That’s true. The good ones also want a certain level of professionalism in the industry and CREA tries to impose minimum standards (and they’re very minimal). The Competition Bureau is opposed to that. That’s what CREA and its members are upset about.
“The rest who “need” MLS to make a decent living (which I find hard to believe) …” Again, I agree with you. I don’t buy into the argument that restricting access to MLS is what keeps Realtors employed. If Google were to create a new, better data source I’m sure realtors would stay employed at pretty much current rates. But, if we both agree that MLS isn’t the key element keeping realtors employed, how has it been so anti-competitive for so long? Any feelings about how, exactly, preventing “mere postings” is anti-competitive? Seems to me that anyone can become a realtor and compete with other realtors. They can offer discount brokerage services. They can charge any amount they want to. The only thing CREA wants is that they offer agency, and don’t just free ride on a system maintained by agents.
Rob
Any Gut Instinct updates?
Breaking News
Commercial property values sink
PricewaterhouseCoopers doesn’t expect gains until mid next year, see weak conditions for development
Steve Ladurantaye
Commercial real estate values in Canada have decreased by as much as 20 per cent through the recession and won’t start increasing again until the middle of next year, according to PricewaterhouseCoopers LLP.
In a report released Tuesday and co-authored by the Urban Land Institute, PwC said conservative banking practices and stricter regulation likely kept real estate investors from overextending themselves with debt. But the 900 professionals surveyed still worry that a prolonged U.S. slump will chip away at their Canadian investments.
Basically, you cannot copyright information, and certainly you cannot copyright isolated pieces of information like the selling price of an individual house. That does not mean that you do not have contacts that imply that you do. Contracts are written by contract lawyers who generally know nothing about anything other than contract enforcement. It is certainly not the case that a contact can give you copyright to something if the law does not support it.
I could be wrong but my take on things is that the competition bureau is trying to unravel a critical pin to test to the value of the services that realtors provide and charge for it. There may be some procedural issues as to how the MLS data will be collected if realtors are not involved throughout the whole process but probably these can be dealt with.
So if realtors or non-licensed people can merely list on MLS, it will provide a testing ground. At first, there will be that a few sellers who test the field and only use the MLS for listing. If many of them start to find difficulties in making their transaction, then the market will simply roll back to what we have now because it will become clear to the market that the services that a licensed realtor provides is fundamentally of value and priced correctly.
If many of them complete their transaction without difficulty (of course we are assuming no malicious interference from realtors), then it would reasonable to assume the commissions that realtors charge can be lowered for the reduced service.
Right now, the system is somewhat inflexible because no realtor wants to deal with another realtor who is only going to give 1% commission (that is, there is a resistance to charging less than the going commission rate because there is little official differentiation in services provided).
In the new system, there is a differentiation between using a licensed realtor for the whole process and using a licensed/non-licensed realtor for merely listing (and various other possibilities). That is, some diversity in the kinds of services provided is being introduced, which is always good if one wants to create a healthy market system.
By removing this pin, it will create some diversity which will allow the market to price the value of real estate services more accurately.
So now I do see the point behind the bureau’s inquiry, even though it will involve some work trying to figure out how to keep the integrity of the MLS data.
bummer, some friends got laid off at EA…good severance though….cuts were deep….
AC, how do you square the rising gold/oil/base metal prices with your deflation thesis? (just wondering)….I think its a tale of both deflation and inflation, I give weight to your credit contraction thesis…
“Low interest rates will not last. It’s a matter of time that the current ultra-low interest rates will spike up, resulting in home prices less affordable to home buyers. High home prices not supported by fundamentals. Whether it is a detached home, town home or a condo, the rental return is not enough to cover mortgage payment, property tax and maintenance. This may be the best time to sell when others are buying. If everyone is thinking of selling, it may be too late. Home prices can easily fall 15% to 20% when market sentiment turns, and home sellers are rushing to sell.”
No, that’s not me talking. Just sounds like me. Instead those words belong to a realtor, James Wong, who sells houses in Richmond, BC. He writes that on his web site after release of the latest Olympic-sized numbers from the Vancouver Real Estate Board (aka The Cartel, Wet Coast HQ), which show the average SF detached home has reached $913,939.
I think Wong has it exactly right. Except for the 20% thing….
Vancouver was the best performer in the survey, although with a ranking of just 5.75 out of 10 for investment prospects and 4.68 for development prospects.
“Many wonder what will happen after the Olympics,” the report says.
The report follows another released this week showing the value of industrial land in Metro Vancouver fell by as much as 30 per cent in the last year, driven down by speculators trying to sell their property bought near the market’s peak.
Average land prices doubled between 2003 and 2008, reaching approximately $600,000 per acre in Abbotsford, B.C. to $2 million per acre in Vancouver – and a record $4 million per acre in some locations – said the Avison Young report.
It said land values have generally fallen 20 to 25 per cent, and in some cases more than 30 per cent in the area.
Meantime, vacancy rates rose to 4.4 per cent in Metro Vancouver in the third quarter of 2009, up from 2.4 per cent in fall 2008.
Holy Shit
Home inspector must pay $192,000:
http://tinyurl.com/yadfzrw
Rob: “The only thing CREA wants is that they offer agency, and don’t just free ride on a system maintained by agents.”
Why not charge a fee for service, then? I don’t see the end result as demanding that anyone can list on MLS for free. The system needs to be maintained and provide some income to its owners, namely CREA. I have no problem wit that and I would think a fair adjudicator wouldn’t either. But restricting who can use the service which has effectively become the marketplace “ask board” seems odd.
MLS has become victim of its own success. What the competition bureaus and ultimately governments (as a proxy for society) want is open and transparent marketplaces. No doubt before MLS the market was significantly less transparent, though no more so than, say, the new/used car market is today, with ads placed in various local media outlets. The problem comes when MLS usurps the old marketplace mode (i.e. ads in the local real estate paper) and limits the ability of any citizen to list his or her property on an equal playing field (even if for a fee). Nobody is stopping a private person from using local papers to advertize his/her property through the media but they are denied access to MLS without using an agent. Not an “equal playing field” at all yet it is easily solved by allowing access to MLS to anyone who meets basic content guidelines (as do Realtors today) and is willing to pay a fair price for access to the system, as they would for an ad in a newspaper. Requiring an agent is, IMO, going to be a sticking point that CREA is going to have significant difficulty justifying in the context of open and transparent markets.
It seems we agree that MLS’s existence, in whatever form it takes in the future, will not restrict good Realtors from earning a decent (if not exceptional) living. I still don’t understand why this is such a big deal, especially for you.
Jesse:
We do charge a fee for the service. We just don’t charge a fee to anyone who wants to list something on the service. We don’t see ourselves as an advertising service. We see ourselves as a group of agents, each one independent, who operate an open association that anyone can join, provided they meet government imposed requirements and agree to abide by the same rules that all of us abide by (A Code of Ethics and Rules of Cooperation). The key distinction is whether we come together to advertise property or offer more professional agency services. Clearly I, and CREA, choose the later. Some others seem to think that we are, or should be, the former.
When you say CREA is the owner of MLS I think we have to be clear that CREA is your local member realtor. Its not a faceless corporation. Independent agents who are in competition with each other when it comes to price and service come together to agree on some basic rules, and form local real estate boards and a provincial and national bodies (BCREA and CREA, for example) to further our collective interests.
One of those collective interests could, theoretically, be to restrict trade, except that restricting trade is not in the interests of all members, and since its an open club (not, in any sense, exclusive) we couldn’t possible keep efforts to restrict trade secret even if we wanted to. On top of that, restricting trade is illegal, so even if we wanted to we couldn’t do it without breaking the law. Let’s suspend those two things for a moment (illegality of the aim and the aim not being in the interests of all members) – assuming we decided it was in our interest to restrict trade and assuming trade restriction was legal, there are thousands and thousands of member realtors across this country. How could we keep the restrictive features secret? It would require a pretty fantastic conspiracy.
“MLS has become victim of its own success.” True, but more to the point, its become the victim of envy. What is it doing that is wrong, and what is it doing that is bad? Who does its success harm? I ask those questions seriously, and invite you to answer them (not so I can hammer you, but to further the discussion).
”[MLS]… limits the ability of any citizen to list his or her property on an equal playing field (even if for a fee). “ Not really. If someone is willing to pay a fee they can list the property with any member agent. All that we require is that the member agent provide minimum services (set out above); they can charge any price for it they like, and do so now.
” …allowing access to MLS to anyone who meets basic content guidelines (as do Realtors today) and is willing to pay a fair price for access to the system,…”
Except at that point it wouldn’t be equal access for Realtors, unless you removed all agency requirements for them, correct? Anyone can access MLS for a fee either means ‘anyone” or it means “non-realtors”. Which do we really mean? If we remove agency requirements (which is what this is about) what do we accomplish?
“I still don’t understand why this is such a big deal, especially for you.”
I’ll explain more fully later, but as I’ve mentioned, it revolves around the idea of what MLS is (its not an advertising service). Many think they knbow what it does, but few know what it is. I suspect that the commissioner from the Competition Bureau fits that description.
Is it just me or did the REBGV remove the statistical packages from their website? I can find the link to stats packages, but it’s just the summary press release. There’s also a link to look up individual HPI charts for different areas / housing types, but these only go back a couple of years. I found the full stats packages much more useful (like the ones still posted on Fraser Valley RE Board website).
Do we have to pay for these now too Rob?
Another interpretation is that MLS is neither an advertising agency nor a brotherhood of realtors but a market place. In most markets, there is a distinction between the administrators of the market and dealers in the market. The bureau isn’t pursing this line at this point in time however and seems to be focusing on creating more diversity in the kinds of service level which buyer/sellers can use in this market place.
me minions tell me its gotten mighty slow out there
I am in Bohol, Philippines right now ( a diving mecca), and running into plenty of worldly and well traveled individuals. Most are Europeans, and many have visited Vancouver. Without exception, they all think Vancouver is “little city”, with crappy weather, with more murders than New York. Apparently that month long gang killing spree last year got ALOT of international media headlines.
I was checking prices out in Manila for new developments, and right now you can get 700 square foot places for 44k. With inflation down here, prices go up 5% every quarter. Puts things in perspective.
And for vomitting dog, the Koreans here are your equivalent to the Chinese in Vancouver. There is a pretty vocal opposition to them coming and buying everything up.
PS – Looks like the market is even hotter since I left – 90% list/sell ratios. And at a time when things “traditionally” slow down. We are either going to run out of buyers quicker than expected, or the foreign money is pouring in….
observer:
“Another interpretation is that MLS is neither an advertising agency nor a brotherhood of realtors but a market place”.
I’m not saying its a brotherhood of realtors. I’m saying it is a market, not an advertising board. What are some of the differences between the two?
“In most markets, there is a distinction between the administrators of the market and dealers in the market”.
There is at very least a partial distinction here. Realtors compete with each other (nobody disputes this – if I were to describe a scenario where a seller interviews three realtors prior to listing the prorty noboby would describe that as unrealistic). As competitors their interests are not the same, and in fact are mutually exclusive (I can’t get the listing if you get it). On a different level we employ paid staff to adminsiter our corner of the marketplace (and I recognize that our corner dominates the rest of the marketplace to the extent that “corner” is a misleading label). That staff enforces rules upon all realtors that isn’t always in the interests of all realtors (short term or otherwise).
“The bureau isn’t pursing this line at this point in time however…” Correct. They don’t want someone else to administer the market. They want us to change how we administer it, and they want specific changes.
” [the Competition Bureau] …seems to be focusing on creating more diversity in the kinds of service level which buyer/sellers can use in this market place”.
Exactly. They want us to remove the requirement of providing some level of agency, regardless of the price we charge. You could go further and say that the word “seems” is misplaced, because what you describe is exactly what the CB wants.
Who does this benefit? Or, to put it another way, who’s suffering now?
Who will it hurt?
Work through the mechanics of the process with and without the changes as well as you can. Is this a solution in search of a problem?
In an earlier post you wrote:
“Right now, the system is somewhat inflexible because no realtor wants to deal with another realtor who is only going to give 1% commission…”
Although discount brokers do exist, and remain in business.
“… (that is, there is a resistance to charging less than the going commission rate because there is little official differentiation in services provided)”.
Is that accurate? Discount brokers charge discount rates, so clearly they don’t resist charging less. They’ll argue that there is no difference in service levels. In terms of “official” differentiation, I don’t know what you mean – there is no “official” definition of services other than the interpretations listed in the post above and those are pretty wide open.
That said, if there was an official differentiation, that is, say an a la carte menu that set out prices industry wide for whatever services (let’s ignore for a moment that that would be price fixing, central planning, anti-competitive, anti-capitalist and anti-free market) would the existence of a price list motivate someone to work for less pay than they want to receive? Let’s face it – that’s the challenge with a discount brokerage model. The discounter tries to sell some variation of “You can get the same for less” while depending on someone whom the discounter does not employ to work for less and honour his discount. Its the huge and unsolved flaw in that model.
MLS®: 270003
Someone please look at this listing and tell my why has insanity set in. This House needs a bull dozer not a hammer, and is listed for 379K… the house value is $0.00 the don’t even show a pic of the inside.
interest rates are sitting at 2.2%, and lending standards (especially if you have a good credit rating) are so relaxed right now in Canada. (but not in the US)
I am able to finance 43% of my Gross Income towards a house, not only that the lender will let me add $1100.00 a month on my income to qualify for an even higher mortgage if the house has an illegal suite. Oh, and stretch that out to 35 years, and thank you Canada for letting me use $50,000 from my RRSP’s…. my family income is $73,000, i can buy a house throught this lender (Australian company) for $700,000 (at todays 5 years rate of 4.2)
This is 10 times my earnings… i thought a safe estimate is 3 ???
“Credit is dried up” – bullshit, it has never been easier
“Houses are affordable” – only because of creative financing like this
“Canada is different” – how are we different ?????
We have learned NOTHING from the Americans, we have learned NOTHING from the previous housing bubbles of the 80’s and 90’s….
this doesn’t look good…
Just a friendly warning to ya’all — I’m a big believer in Murphy’s Law.
I recently went from being all cash to about 60% In The Market. I even went long on Canadian Real Estate Investment Trust. ( http://www.creit.ca/ ) (BTW, any of you reluctant Bears who want to tie your assets to RE without the commitment of a $1m mortgage can throw a bit in REITs, ya know…)
But anyway, just a heads up — if I’m the last guy to jump on the bandwagon, expect the music to stop any day now…
Unsolicited public service announcement from
WhyBuyWhenUCanRent’til2013?
I know MOI is under 3, but there are over 250 open houses on the west side this weekend. Seems like business as usual rather than no inventory.
Don’t worry WhyBuy, it’ll only crash once I buy in!
Spaceman 46
It is truly criminal what the pumpers and CMHC and whoever else is responsible for this extroadinary bubble we are in. But the ones who will be at the most risk and therefore will face the worst losses are the ones who are horrendously overextended. I heard on 1130 this morning of how we will see gains of 20% in the next year.
People seem to be concerned with monthly payments and not concerned with the huge overinflated price of the moldy old shack…
Disbelief:
” It is truly criminal what the pumpers and CMHC and whoever else is responsible for this extroadinary bubble we are in.”
Your statement begs the questions:
-Would the actual sellers and buyers who agree on the price bear any responsibility for the current level of prices?
-If so, any idea how much? What percentage of the blame goes to them?
-Or are they smart enough to have a vote and pay taxes, but too stupid to make their own decisions about how to spend their money?
Both the buyers and the sellers are all victimized by the economic state of this RE bubble. Most of the stupidity is reflective on the buyers. If you pay too much you can’t blame the seller. I think your questions miss the point in that the frenzy was and is the sole responsibility of the CMHC and the lending practices of the financial institutions that have overextended the buyers. Lets face it you can get a lot of sheeple to believe in what you say if you keep telling them things over and over. Advertising is a very powerful tool and this bubble is a result of just that.
Disbelief (and many others),
To call other human beings “sheeple” is to set yourself up to miss the point. Your average layperson is no idiot — maybe they’re missing something, or maybe they’re being swept away by emotions. Either way, there’s richer material there than simply writing them off as braying livestock.
For example, explicit advertising isn’t that powerful (sorry VD, but I think it’s true.) It’s the cultural normalization that accompanies it, and the degree to which we’ve fetishized homeownership doesn’t happen without our help. Every one of us, perhaps especially those on this forum.
WhyBuy/47 + VD48 re: ‘But anyway, just a heads up — if I’m the last guy to jump on the bandwagon, expect the music to stop any day now…’….
Precisely why HP is in ‘wait n’ see’ mode… I run several ‘hypothetical’ investment accounts just to gauge the market ZeitGeist - but the only equity making any progress for me at the moment is the gold ETF… tempting, but every day when I work out I keep seeing these ads on CNN, you know the ones… someone who looks like LouDobbs encouraging Grannies in the HillBillyRiviera to start buying MapleLeafs… and that always gives me pause.
Speaking of which, does anybody else besides me think that that ‘poor’ Syrian dude with all the MapleLeafs in his car who got hauled into custody @ PeaceArch was simply mis-informed. As in told by his relatives that Vancouver Realtors had a strict ’show me the money’ admission policy to open houses???…
Turkey/52… you would be AMAZED at what a truly good campaign can achieve…. simply AMAZED…
Or to put it another way… have you ever heard of Division23?….
http://tinyurl.com/yj8eabd
You’ll have to take my word on this, Turkey… but the ‘best of the best of the best’ in that profession are snapped up right out of GradSchool for ’silly money’ by the FMCG’s and ad majors….
Ok Mr Turkey explain to all of us layman why this over priced out of whack RE is just getting more overpriced all the time with no sign of downturn.
I meant no disrespect to sheeple just that when people act on impulse based on what they hear and not what they think… I am an upfront kinda guy. Camping out for days with little regard for any logic whatsoever is kind of sheepleish.
Since we’re dishing out blame, how about spreading some out to the Canadian voters for not insisting (through the ballot box) that the government quit propping up the RE market through the CMHC ’stimulus’? Aside from RE blogs like this, there seems to be precious little public outrage about this.
Disbelief/55,
Look, we’re all laypersons in another expert’s field. Are you a RE expert? Am I? No. Does that make us sheeple? No. The same goes for your visits to the dentist: you don’t floss properly? That doesn’t make you an idiot. I think the term “sheeple” needs to go, unless you’re going through your Nietzsche phase.
I think I overstated my case in my previous post (thanks for keeping me honest, HP)… marketing is effective, but it doesn’t turn people into zombies. It takes an entire culture to do that.
Turkey/57… ‘takes an entire culture’… Agreed!
….
And speaking of zombie culture – or to be more precixse, the political economy of hegemonic decline… here are today’s best reads; courtesy the LA & NY Times, respectively…
http://tinyurl.com/ykq658a
http://tinyurl.com/ylxy9zq
Afterthought to my #54 – and a glaringly obvious oversight on my part – as regards great ‘campaigns’ achieving the amazing/seemingly impossible… 2 years ago would anyone have thought it even remotely likely that a 40 something black dude with an Arabic moniker could ascend to the commanding heights of his nation’s polity…
I’ll leave you all with an admittedly anachronous clip from Jackson Browne’s repertoire – which is nevertheless oddly apropos to ‘our times’….
http://tinyurl.com/ya4pafb
Rob: “What is it doing that is wrong, and what is it doing that is bad? Who does its success harm? I ask those questions seriously, and invite you to answer them”
There is nothing inherently wrong with the service and I applaud MLS’s success. However equal access is blocked unless a citizen uses an agent. This is no big deal if it can be shown that MLS is not used as the primary marketplace. But there are, IMO, convincing arguments why MLS has become the primary marketplace and needs to be opened up. A look into MLS and other services in the US may shed some light on how things could eventually turn out.
This need not be a bad thing for the CREA. If it is forced to open up it will make money off a la carte non-agent listings. I know of relatively few who have the balls to list without an agent and since a piece of RE is traded so infrequently there will always be demand for agency. I expect opening up MLS will have a limited, if not a positive, impact on good Realtors.
One more point is that from a competition point of view it doesn’t matter what else MLS offers. The argument is that MLS is a market place but also many other things. However if MLS is deemed to be in a situation where the marketplace it facilitates is not fair and accessible, the portion of MLS that violates those terms needs to be opened up. That need not necessarily mean that ALL of MLS should opened up, only the part that is restricting access, so as to promote an open and efficient market.
For example is restriction to previous sale prices anti-competitive? In the US the answer was yes and anyone can now find out previous sale prices for free. How about restrictions to listing services?
Personally I could care less about previous sales prices because I would buy based upon income generation and building/neighbourhood quality, not what someone else was willing to pay. Others find the info useful for gauging a fair price. An interesting note is that during the US market crash between 06 and 09, previous sales prices meant almost nothing to the actual sales price.
At the end of the day, it is the lawyers who take care of actual transaction based on the contract. I wouldn’t be surprised if hybrid lawyer/realtor services start popping up where the realtor service part is minimal but there is still close attention paid to contract details.
The more I think about, the more I think the bureau is really on the ball here in trying to allow more diversity in the kinds of services which can benefit the market. Once this diversity is introduced, there will be a more efficient pricing of real estate services.
As for more open access to market data, maybe one day, especially the US has made some steps towards this.
Observer/62… You’re on the right track… but it isn’t the Bar who’ll inherit the RE industry… ask yourself this, which sector/oligopoly already has a stake in the game, the IT infrastructure in place and the political connections, ‘main street’ presence, deep pockets and motivation to dominate… ???
Just follow the money. And in any case, with so many foreclosures to come, why bother using a realtor, go straight to the MLS.
observer:
Lawyers can already offer the services. I doubt it pays as well as actual lawyer work.
What other kind of services (aside from a hybrid lawyer/realtor model) could be offered by removing the minimum standards that the CB wants changed (I’ve listed them in the orginal post if you want to reference them).
Jesse:
“if MLS is deemed to be in a situation where the marketplace it facilitates is not fair and accessible, the portion of MLS that violates those terms needs to be opened up. That need not necessarily mean that ALL of MLS should opened up, only the part that is restricting access, so as to promote an open and efficient market”.
I think you’re right on the point. Is accessibility restricted by requiring a minimum level of service to third parties wanting to charge the public for access to the MLS? (|That’s the current scrap, which I’m sure you recognize).
You can currently get access to past sales prices either by buying the information from the govenrment or asking a realtor, in which case you can get it for free or by paying for it.
If you restrict the complaint to the fact that a non-realtor can’t access the MLS then the only problem becomes agency. You have a licensed individual dealing with a non-licensed individual- the licensee is an agent of the buyer. Who represents the seller? What stops the seller from claiming, after the fact, that the buyer agent engaged in dual representation, and thereby suing for damages? (I’ve seen it happen).
What about some combination of mortgage lender/realtor/lawyer/CMHC/bank/developer/city of vancouver millenium?