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For sale by owner: realtors are still trying to keep the public’s hands off MLS, but you can’t hoard information in the information age

(Image: Brian Rea)

I’m not a do-it-yourself type. The one time I wallpapered my basement, I ended up with a stiff neck, peeling corners and a marital spat. Nevertheless, if I had to sell my house tomorrow, I’d be tempted to do it myself.

The main incentive for selling your own home is, of course, to avoid paying the real estate agent’s fees, which can be enormous, usually amounting to five per cent of the value of your biggest asset. A DIY seller of a $431,000 house (the average house price in Toronto in 2010) would save $24,350 (including HST). You could buy a new car for that. Even if your buyer uses an agent, which most buyers do, and you’re on the hook to pay a 2.5 per cent commission, you’d still save more than 10 grand. In the same dramatic way consumers dumped travel agents to buy cruises, hotels and plane tickets over the Internet, I expect that we will soon be rethinking the way we use real estate agents, if we use them at all.

For the moment, we still need agents—not because of all the services they provide, but because of just one. We can’t list our homes on MLS.ca without them. MLS, the Multiple Listings Service, accounts for 90 per cent of all residential sales in Canada. House hunters can browse the site (and nose around their neighbour’s kitchen, right down to the Sub-Zero refrigerator), but the Canadian Real Estate Association controls the flow of information and carefully guards the most up-to-date data about sales.

Until last fall, CREA rules dictated that only traditional agents—those representing clients through the entire process, from appraisal to final sale—were allowed to list on the database. This gave CREA and its member boards across the country a virtual monopoly on real estate listings.
The so-called discount brokers, who offer homeowners an à la carte menu of real estate services for reduced fees, have been multiplying despite CREA’s stonewalling. One in particular decided to take on the association. Lawrence Dale, a 48-year-old fast-talking workaholic lawyer and one-time general counsel for SkyDome, has deep real estate credentials. He’s the nephew of the late legendary broker Sadie Moranis; as a kid, Dale would often accompany Moranis to her office on weekends. Later, as a real estate agent himself, he co-founded a group that bought control of the tony firm Chestnut Park. (He has since sold his interest.) In 2001, he and his cousin Stephen Moranis launched RealtySellers, a discount brokerage, and flouted CREA’s guidelines by allowing customers to list their homes on MLS for a flat fee.

A year later, CREA blocked RealtySellers from the site, and Dale sued. CREA argued that MLS was proprietary—its members created it, owned it and maintained it. But Dale countered that the very success of MLS meant that the Web site should be open to all. Restricting access, he argued, was anti-competitive. Dale temporarily shut his company down and pursued what became an eight-year legal battle that caught the attention of the Canadian Competition Bureau. When the CCB launched a formal complaint, CREA—having depleted much of its multimillion-dollar war chest—yielded and amended its rules.

“Without me, it wouldn’t have happened,” says Dale, more than a little chuffed by his victory. (He ultimately settled his suit with CREA, pocketing what he calls a “big cheque.”) Dale relaunched RealtySellers last October and now offers consumers MLS listings for free, in the hope that customers will return for other services.

Now Dale is challenging CREA’s dominance again. He’s pushing for unfettered consumer access to all the information that’s stored on the MLS system, including property taxes, the number of days a property has been on the market, its sales history and, most significantly, what places are selling for. If you’re buying or selling a house, current information is critical.

  • Jeremy Pilarski

    The woman in the story got lucky that the buyer came back at the same price. A lot of times that happens and the buyer comes back with less -they may have paid more with a smart counter offer the first time. Sometimes you need an agent who cares about you but can tell you when you should accept or at least work with an offer so you don’t lose out. Turning down a good offer and setting an offer date after the property has been on the market for a while are 2 great reasons why she should have paid to have a good full service agent represent her. I’m sure there are more. And btw, your welcome to Ms Blair, my dues helped subsidize your listing -somebody has to pay for this system.

  • David Pylyp

    Know why we beat a FSBO everytime? We can call a Buyer prospect back without sounding desperate!
    Know why buyers use us? Banks are hesitant to lend on Private deals? The market has not been exposed to the OPEN MARKET to assess market value. Why Do you need CMHC?
    Some buyers don’t need us. Thats fine. Some experienced seller don’t either. There are companies that deal with them.

    When I have Buyers in the car our conversation and drive is about what other homes have sold that have sold and are priced similarly.

    Accredited Senior Agent Living in Toronto, What else do I provide? Many many things; from an opinion of value to having people in (trades) to repair, refurbish, renovate, repaint, stagers, landscapers, home inspectors, lawyers. surveyors, or getting a survey online where possible. Not only will I help you with your financing and insurance to make sure you have the best deal possible, I will attend with you at the lawyers at closing, to make sure everything is as you expected.

    Land Transfer Taxes have been in the news for years. Why are buyers still shocked? Yeah, any one can fill out a form. Selling a house for top dollar takes a little experience. Marketing, Presentation and Negoitation are skills. Don’t forget, the astute buyer who is market aware is also looking for a deal where [they] can also save that very same commission.

    Have a peek at my video on how you can beat a FSBO every time. http://www.youtube.com/watch?v=PG950d2mM8E

    David Pylyp

  • Joe Mancinelli

    Joe Mancinelli likes the idea of an open and free market and having a choice. Things change, times change, technology changes. This gentleman Dale is a game changer and we should all thank him for taking on such a formidable for 8 years and winning.
    Having said that, full time realty professional agents can offer tremendous advice and can be worth the 5% or 6% a seller pays.
    The biggest advantage of having an agent is they will negotiate and depersonalize the bidding process.
    At least we now have a choice.

  • Jason

    I’m a Realtor and I work with FSBO’s on a regular basis, I allow FSBO’s to have sellers rights reserved and encourage them to keep trying to sell the property whilst it is listed with me. You also need to remember commissions are negotiable and I will reduce the my commission if the house sells quickly or if the Seller wants to use me to help purchase new home.
    OkotoksRealEstate

  • Mike

    Thank Jeremy for your 10c contribution to Ms. Blair’s MLS listing! God, the balls of people! I don’t doubt you have had many opportunities to sell a home in a week with minimal effort and pocketed a nice cheque, and driven off in your BMW/Audi/Mercedes. I can’t wait for the lot of you to get a real job.

  • jon

    This needs to play out, I heard that a seller signed back on two offers and both accepted, resulting in him paying off one of the buyers to walk away!…

    However, there will be a market who don’t have the ability, time or patience to handle their own sale, busy executives doing 60+ hour weeks, investors from the west coast or overseas, older homeowners who don’t want to deal with confrontation of a negotiation, forced sale (divorce etc.)the list goes on…

    I can’t see it wiping realtors off the face of the GTA, I think at most it will take a small portion of the market 3-5% maybe.

  • MRE

    Doubful on that scenario. If that were the case (a mere 3-5%), the realtors wouldn’t be doing all they can to shut own the FSBO groups. While some people may choose to use the realtors in the future as ‘jon’ would suggest, it will be a small percentage that can afford to do so. The vast majority of us will do what we now do to travel and search/research/book online. I don’t have the luxury of paying 15-20K to a realtor (30-40K in actual after-tax dollars) to pay someone to hold an open house or two and smile with pen in hand. Real estate values have increased to much over the past fifteen years to lay out a significant portion of my hard-earned gains to someone with a vested interested for only 2 weeks.

  • say no to realtors

    David Pylyp: repeat after me “Do you want fries with that?” Start practising…

  • Ali Rizvi

    We all need to take responsibilities here. A professional Realtor in Ontario goes through extensive training at least twice a week. Pays for errors and omissions insurance, keeps paid RECO memberships, must complete within two year Real Estate courses to keep license, goes through extensive courses from well renowned Speakers, motivators life coaches, experts, to provide Fiduciary duties to the clients. A professional Realtor takes pride in SELF EXCELLENCE and takes pride in advocating for the client who hired him/her. We learn how to BLOCK our time for families friends and for our profession lives. We learn to uphold our own accountability with utmost integrity. When the author of this article will experience such a professional in any industry the author will respect that professional. And as to one of the commentors “…need to get a real job…” You are absolutely right my friend…its a career worth having and life worth living. A professional never takes it as a JOB but rather as a PROFESSION. Thanks for all your comment and especially the author. Last but not the least to all the Real Estate Professionals…we all know that educating every household is our number one priority and never the commissions. Relationships are created from our professions out of respect in our profession. Every consumer and reader have a right to Hire or NOT HIRE any Realtor. But to get the job done professional you always need a professional. Author must keep writing the articles the beauty is truly to keep me as a Professional Realtor never lose track of my Professionalism. I thank you for letting me share my views.

  • Ora

    I’m tired of hearing how the MLS is the only place a consumer can get info on Sold Properties and therefore it must be accessible by all. The registry system where closed sales are posted is public information. Perhaps not everyone can access it online – but it is public info and a simple trip to Government offices will give a private seller all the info he needs.
    If private sellers want access to use the site they should be forced take the same training, pay the same dues and abide by all the obligationsm, rules, conduct and disclosures as a lisenced Realtor.

    On another note – isn’t it anti competetive that a Realtor must pay a higher fee to advertise in the newspaper than a private seller? hmmm just curious…

  • Value Proposition

    Free and open competition is good for everyone. It just means that professionals will have to come to the realization that you will have to re-evaluate the service offering and the value proposition of your business.

    By the way, this extends to not only Realtors but many professions not the least of which is Ms. Wong’s.

  • Jim

    This is old news people. CREA changed its rules last last year and now allows “post only” listings on the country’s numerous MLS systems. If FSBOs want their wares on MLS’s, they still need to retain the services of a REALTOR and there are many out there willing to do such for a flat fee.

    Oh, BTW….it’s be called REALTOR.ca for over three years now , it’s not MLS.ca although the old URL still redirects to the new site.

  • jeff316

    The problem here is that both sides have a point. The market strangehold isn’t fair, but at the same time realtors are becoming a victim of their web-based system’s own success.

    The real test is going to come in the next few years as private listings on reatlor.ca increase. People are reluctant to buy houses not listed by realtors due to the inherent risk of dealing with someone who has no training and cannot be held accountable for their conduct during the sale.

    Having known two private sellers, I know I wouldn’t have ever bid on their house for my own emotional and financial security. That being said, who wants to give 3.5 percent of their sale to anyone else?

    The disconnect is the age-old conundrum: we all want the benefits, but nobody wants to be the one to pay for it.

  • Rex

    Has anyone actually watched Mr. Pylyp’s Youtube video? If that doesn’t put you off dealing with realtors for good, I don’t know what will. When their livelihood is threatened, the claws certainly come out, don’t they? My favourite part of the video: when he squints smarmily at the camera and says (of an FSBO) “Nooowww, let’s make them dance.” Nothing but middlemen the bunch of ‘em, and the internet is fast making them obsolete unless they find ways to play in the sandbox without resorting to ESPIONAGE.

  • Jeremy Pilarski

    Mike,
    There are 30,000 Realtors on the Toronto Board paying paying $1200 or so to the board and Canadian Association which operates this system and ensure that its run properly and ethically by its members. That’s $36million. Last year there were ~85k sales. Thats $420 per sale. Every Realtor can charge what they want for a listing but if you end up with 15 companies listing charging $200 per listing, then the whole system falls apart. I’m not against FSBO websites or people trying not to use agents to sell -though I don’t recommend it as much as I don’t recommend going with an incompetent Realtor -but if you want to be on the site with the most listings that is best run and gets the most traffic, you should pay your fair share. when you don’t expose your house to the most potential buyers and the most motivated ones -usually found in the back of a good Realtor’s car -you short change yourself.
    And BTW, its a Merc and I earn it every day. If I take the day off, overprice a house or don’t get my clients what they want, I don’t get paid.

  • Mike

    In the new information age, people will not be paying 5% of $600,000-700,000 (do the math!) for the likes of Jeremy and David to practice their ‘added-value service’. We buy cars, stocks, vacations, and a vast array of merchandise via the internet now, and a home is just that–albeit an expensive one. With the aid of your own research on neighbourhoods and home features you want, a home inspector and a lawyer for the contract, you will do just fine.

    Oh, and you will have enough money left over to buy Jeremy’s Mercedes from him. He will be taking the TTC…

  • Elizabeth Blair

    @ Jeremy Pilarski
    Its Elizabeth Blair…….and yes, I did PAY $10,000 (so you did not have to “subsidize” the system for me) and that was paid to the agent who brought me the buyer.
    …I saved myself the other 2.5% doing the listing work all myself…. open houses, advertising and negotiations and I can tell you confidently, it easy – I would do it again.

  • Edward

    Please clarify: Tha author of the article states that if a buyer has their own agent, the seller only has to pay half a five percent real estate commission. Is that right?

    I recently sold my house and my agent got the full 5% from me and the buyer had their own agent. Should I have only paid 2.5?

    Thanks

  • S P Arif Sahari Wibowo http://www.arifsaha.com/

    I remember when I lived in Champaign, Illinois, several years ago, the house price histories were public information. I just need to go to the city hall and ask the information on any house in the city I am interested on, then papers contain the information about the exact measurement of the land and the building, all history of building, renovation, and selling, will be lent to me to be read in that office or to be copied as I please. Sound’s like a good idea for me.

  • listing home for sale by owner

    Doubful on that scenario. If that were the case (a mere 3-5%), the realtors wouldn’t be doing all they can to shut own the FSBO groups. While some people may choose to use the realtors in the future as ‘jon’ would suggest, it will be a small percentage that can afford to do so. The vast majority of us will do what we now do to travel and search/research/book online. I don’t have the luxury of paying 15-20K to a realtor (30-40K in actual after-tax dollars) to pay someone to hold an open house or two and smile with pen in hand. Real estate values have increased to much over the past fifteen years to lay out a significant portion of my hard-earned gains to someone with a vested interested for only 2 weeks.
    listing home for sale by owner

  • Tim

    Realtor is the way to go. Just as you interview and find the best match that fits your needs. My neighbour interviewed her agent at Sundaybell. She was really happy she did. Anyone here use them? Supposedly its free to use and you negotiate services/commission with zero sales pressure…I really like that part.

    Tim

  • Len

    While I believe that opening the MLS to all sellers is the right thing to do, I do not agree that all information on the MLS is public, and therefore should be open to all.

    The information other than the listings is collected by people who pay to access it and add to it. No less than information on any premium content web-site.

    Opening access to all information on a web-site that is restricted by rules and payments would open a can of worms we don’t as individuals, as business owners, or as a country want to go down.

    Having worked in the area of I.T. Security and privacy for over 20 years, you must be careful what you ask for, because legal precedent in one area that might seem to be innocuous can open the floodgates in other more contentious areas that could expose details about you are your information held on private sites that you would rather not have in the public domain.

    Full disclosure: I am an Independent Home Inspector and my wife works as an admin in a Brokerage.

  • Anna

    I am about to become a FSBO after having listed my home with a traditional broker. It strikes me that realtors claim owners are “too emotional” but I have found realtors too emotional in discussing alternative arrangements. I have been told I will be perceived as cheap, “you get what you pay for”, “good luck with your Walmart” model. Realtors need to look through the lense of the seller. There is no question that the internet has transformed the industry. I just received a mailing from a broker who wants to list my property and shows me all of the websites he will us. I am using that information to my advantage since I can list on most of those websites myself.

    The key aspect is not forcing a one size fits all model. I understand that some transactions can get messy but some are straightforward. I have done a for sale by owner that was very smooth and I just hired a realtor to look over the contract. In some markets, some sale are total cash transactions.

    From a marketing standpoint, I don’t want open houses — I think the yield is too low and is more of a lead generation for the listing realtor. Again I know some of these things are market specific but the seller should only pay for those items relevant to the sale of his home.

    I do think some maybe most buyers should be represented and I am willing to compensate for the actual sales.

    Please don’t get hung up on what you think you value is and how much you’ve invested in your career experience and economically. What matters is what the marketplace values
    and what they are willing to pay.

    Believe me I’ve been there — I know it can be difficult to face.

    Let’s work together. I really don’t like the current model where the listing broker gets nothing if the house doesn’t sell and gets squeezed for commission reductions to make the sale. Let the seller pay the listing broker for services he wants. I am the seller and I am willing to take the risk for my decisions

  • MLS Listing

    Agreed that saving on realtor commissions is the way to go!!!
    I reviewed propertyguys.com, http://www.letmelist.ca and http://www.mycondolisting.ca. We ended up saving $14,500 when we sold our condo.

 

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