Sunday, February 14, 2010

Enjoy competition? Becoming a REALTOR is for you! Part I

I hear a lot of moaning and groaning about realtor commissions and the MLS monopoly, so I would like to point out some facts – as I see them in this three part posting series.

The Competition Bureau claims the MLS system has to open up further and emotional claims about a realtor monopoly and unrealistic commissions can be heard everywhere. So I want first to address the MLS system.

The MLS system started about 54 years ago and was brought onto the internet some 10 years ago and is in part available to the public. The creation of the MLS software and database did cost millions that were paid for by the membership of CREA (Canadian Real Estate Association) of which close to a hundred thousand realtors are members. Not all realtors are members but most who sell residential real estate are. The success of MLS as a marketing tool is undeniable and consequently a large percentage of people think that they should have access to it as well. It is their right they claim. Really??

You can market your properties outside MLS, there is Craig’s list, Kijiji and just plain personal websites. Many REIN members sell without realtors or they only use a realtor some of the time. Tony Peters finds renters-to-own via an extensive marketing campaign. Mark Loefler uses the find-tenant-first strategy; only once he qualifies his tenants he contacts a realtor (to save time and money) to help the tenant select the RTO property. But when he sells to his tenant there is no realtor.

Anybody heard of Ron Le Grand? Yellow letters? Excuse may, that is buying and selling without a realtor. And guess what? How many learned the hard way that ‘yellow letters’ cost a lot of money and sweat and even... police calls. How many REIN members placed classifieds or send around newsletters to sell their properties? Is that for free?


The real issue is that MLS is so darn good at selling properties that no-matter how much the realtors association invested in this website and its technology (it is from the realtor’s side even more impressive), now a lot of people feel it is their right to use it. Is this a new form of socialism? “Now that you build up this successful tool with blood sweat and tears and now that you made it work, it is mine?”

Next blog is about commissions,

BTW, CREA announced some rule changes to accommodate the demands from the competition bureau. When accepted by CREA's membership it would mean that a person could list a property through a realtor who is to ensure the data meets the MLS database requirements. The lister would then be offered the option to decline further realtor services (and thus pay less commission) in writing.

The problem I personally see with this is that experienced real estate buyers and sellers may indeed pay less,  but those starting in reak estate , tempted by the lower commissions, will no longer be protected in this new much harsher market.

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