The long-awaited decision of the Competition Tribunal concerning the dispute between the Competition Bureau and the Toronto Real Estate Board was released early in June. Here’s what you need to know.
What was the main result?
Lawyers keep getting richer. TREB was ordered to pay legal costs of close to $2 million to the government lawyers, since the Competition Bureau won this round. TREB has already said that it is appealing the decision. This case will likely not be finally decided until it goes to the Supreme Court of Canada. This means even more money to be made by the lawyers.
What does the decision mean?
What it means is that if the decision holds up, buyers in the Toronto board area will essentially be able to do a CMA or comparative market analysis by themselves, using information provided by what is referred to as virtual office websites run by real estate brokerages, provided that the buyer registers with a password. This will include properties that have been sold, with conditions having been waived, but will not include sales where conditions have not yet been waived.
Have the Competition Bureau decisions made a difference in the real estate industry?
Let’s back up. Five years ago, the Competition Bureau was of the opinion that if a seller could only get their property listed on an MLS system without paying a large listing commission, the property would sell by itself, thus reducing the amount that sellers would pay to list a home. This led to posting companies who permit a seller to post a property on to an MLS system for a fee, and then the seller for the most part conducts all showings and negotiations themselves.
After five years and perhaps the strongest market ever seen in the GTA, less than five per cent of homes are sold this way. This is even less than before the Internet changed the way buyers and seller search for properties. Result – as Shakespeare would say – the decision was “full of sound and fury, signifying nothing.”
Is this decision going to make any difference, once we obtain a final decision from the Supreme Court of Canada?
In my opinion, the answer is clearly no. For years I have been noting that in the U.S., in over half of the states, buyers have had access to sold prices and the result is that still over 80 per cent of all transactions in the U.S. are done with a Realtor. There is so much data on the Internet that in many ways, it is too much. And things change almost daily in markets such as the GTA.
There will never be a substitute for the knowledge of a local real estate salesperson and their negotiating skills. The more data a potential buyer has will of course be helpful, but it will not change the business going forward. Continue to offer clients value-added service and the referrals will keep on coming.
If you have any question related to the Competition Bureau decision and its impacts on the real estate business, do not hesitate to contact me.