Deregulating real estate market will reduce service: Realtors
May 11, 2010
Tony Wong

A move by the Competition Bureau to encourage more competition in the real estate market will ultimately lead to lower customer service standards, say real estate professionals.

According to a survey released by Royal LePage Real Estate Services on Tuesday, proposed changes by the Competition Bureau to open up the Multiple Listing Service will do little to improve an already competitive industry.

“Our agents welcome competition in the industry, but are very concerned that the severe deregulation of the residential real estate brokerage industry would hurt, not help, Canadian home buyers and sellers,” said Phil Soper, president and CEO of Royal LePage. “Within the industry we see that there are already people who will offer very low fees, so we are a little baffled as to what end all this effort will be if low cost alternatives already exist.”

According to an online poll of 1,726 realtors, a vast majority of real estate professionals – 86 per cent – said they were “concerned that the push to foster increased competition in the industry will result in lower customer service standards.”

(Another 14 per cent disagreed, however, saying that customer service standards would not be impacted.)

Realtors argue that the market already has plenty of competition and there is no need for more reform. According to the poll, 76 per cent of realtors say the market is already “Highly competitive.”

Consumer associations say the poll, taken by a real estate agency are highly self-serving. But Soper says there is a need for the industry to get their message out.

“Their arguments don’t really hold water,” said Mel Fruitman, vice president of the Consumers Association of Canada. “The point is that the Competition Bureau is simply asking that Canadians have choice in what they buy. If they wish to buy a service that is cheaper and maybe with a lower standard of customer service, that’s their choice.”

The Ottawa-based Competition Bureau is taking the Canadian Real Estate Association to court. CREA owns the rights to the MLS where 90 per cent of real estate transactions are made. However, the bureau wants the computerized listings database opened up to more competition by unbundling services.

Traditionally, consumers have had to purchase full agency service, instead of being able to choose certain services at a cheaper price.

While the move has been applauded by consumer groups, it has not pleased many in the industry who feel that the privately owned database should remain completely under industry control.

Meanwhile, realtors such as Royal LePage remain in talks with competitors such as ReMax and Century 21 over what could result in the sharing of listings on websites in the future. The deal would not supplant the need for an MLS, but simply another way to get listings out to the public, said Soper.

“This is another alternative,” said Soper. He says the co-operative system could be in operation as early as sometime in 2011.

The poll was conducted in April with Royal LePage agents with an average of 15 years experience in the industry.–deregulating-real-estate-market-will-reduce-service-realtors

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