Monopolies are a bad word in industrialized countries because our entire economic system is based on competitiveness and the gains from trade…so competition watchdogs are looking out for monopolistic behaviour to protect consumers from inflated prices. A famous case is the United States vs. Microsoft.
The issue at hand is whether the MLS system and CREA have created a market entrenched in anti-competitive behaviour. The reason?
THE ORIGINAL ISSUE
The MLS system hosts 90% of listings in Canada and only CREA members are allowed to add listings to the system. Fair enough, CREA owns the system and maintains it…so only their members can add to it. But, the way the system is currently arranged, sellers must use agents for the full duration of the selling process. Hence, if you want to list a property on the MLS system, you must pay the agent the full commission. On the flip side, though, CREA was insulted as well. One agent said:
“Imagine, you want to sell your car so you go to the local car dealer and say you want to sell your car on your lot and put a for sale sign on it and not pay anything for it. What do you think they’ll say? No.” The Toronto Sun
CREA’S CRY FOR MERCY
That being said, CREA overturned this rule in a vote that had overwhelming support from its members (87%). Overturning that rule means that sellers would have the option to pay a flat-fee for listing on the MLS and providing a contact number instead of forcing them to pay for the full slate of services offered by selling agents.
However, their cry for mercy came with some strings.
Insiders say that the stumbling block is wording in the news rules stating that any additional service to be provided by the listing realtor is applicable to “regulatory requirements and the Rules of CREA and Boards/Associations” Yourhome.ca
This could mean that individual associations could make services even more anti-competitive. But Ripplinger, former president of CREA, said that no association would partake in anti-competitive behaviour because they would not want to chance the potential backlash from the Competition Bureau.
THE COMPETITION BUREAU’S RESPONSE
NO! The Bureau does not want to give individual boards/associations a mandate to make the rules even more anti-competitive and, even worse, more fragmented (which would make it more difficult for the Bureau to monitor).
They want an ‘a la carte’ style-list that allows sellers to choose what particular services they want to pay for. If sellers want to show their own homes, so be it!
THE AGENTS’ RESPONSE…TO THE RESPONSE
Agents are confused and even a bit, dare I say, hurt by the claim that the industry is anti-competitive. They feel as though they have to fight for every bit of business.
Furthermore, agents feel it is an affront to their professional capabilities. After all, if sellers could do it all themselves, then we wouldn’t have agents at all. Agents hold that if many more private sales are conducted, the income previously allocated to agents for drafting offers etc. will be reallocated to lawyers for litigating private lawsuits regarding botched sales agreements.
That’s all we’ve got for now, folks, but check back for updates on this heated debate.