Competition Bureau Challenges CREA’s Monopoly of MLS

There has been a lot of news lately about opening up the Canadian Real Estate market and allowing easier access to list properties on MLS, in addition to accessing more of the detailed information on MLS. Historically, this data has only been available to licensed, registered real estate agents, but today, their stranglehold on this information may have loosened.

The Competition Bureau announced today that it will challenge rules imposed by the Canadian Real Estate Association (CREA) that “limit consumer choice and prevent innovation in the market for residential real estate services”. The Commissioner of Competition has determined that CREA’s rules restrict the ability of consumers to choose the real estate services they want, forcing them to pay for services they do not need. The rules also prevent real estate agents from offering more innovative service and pricing options to consumers, such as agents simply charging a fee for listing a property on MLS, and the consumer can purchase additional services only if they want to. The Commissioner’s application to the Competition Tribunal seeks to strike down these anti-competitive rules.

Melanie Aitken, Commissioner of Competition said, “Consumers should be able to choose which services they want to buy in order to facilitate that transaction, including lower-cost options. While the Bureau would have preferred to resolve this matter amicably, CREA’s leadership was unwilling to agree to changes that would have opened up competition, and offered options for consumers and real estate agents.”

For example, under CREA’s rules, agents are prohibited from offering consumers the option of simply paying a fee for an agent to list a home on the MLS system. Instead, all consumers looking to list a property on MLS must purchase a pre-determined set of additional services from a real estate agent, such as the presentation of offers and negotiation of a final deal.

These rules have given room for the For Sale by Owner or private sales to grow. These companies mainly offer their services over the internet and charge a seller to list their property for a much reduced cost and they don’t have to pay a commission once they sell their property. The major issue is getting enough eyeballs or buyers to these websites, to generate enough interest for people to sell their homes. That’s the main draw of the MLS system, its popularity, as so many people use it to look for homes for sale, although after today’s announcement it will be interesting to see if that’s still the case in 5 years time.

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