Competition Bureau challenges MLS rules

The federal Competition Bureau says it will challenge the restrictive rules that govern the multiple listing service (MLS) system used by most Canadian home sellers to list their properties.

The MLS system, run by the Canadian Real Estate Association, includes information that is only available to CREA members, and that is too restrictive, the bureau said Monday.

It also wants consumers to be able to pay a fee to list their homes on MLS without being forced to get a whole range of other services that they must pay for. This would essentially allow homeowners to use MLS for a small fee, then negotiate the sale of their homes without the help of an agent.

The bureau has filed an application to the Competition Tribunal, a quasi-judicial body that will decide if its complaint is justified.

“Selling a home is one of the largest financial transactions that most Canadians make in their lifetime,” said Melanie Aitken, the commissioner of the Competition Bureau. “Consumers should be able to choose which services they want to buy in order to facilitate that transaction, including lower-cost options.”

The bureau said it had tried to negotiate a compromise with CREA, but the association was “unwilling to agree to changes that would have opened up competition.”

CREA's rules limit consumers' ability to choose the real estate services they want, the bureau said, and force them to pay for services they don't need. The rules also stop agents from offering clients innovative services and pricing options, it said.

The real estate industry has argued that consumers need real estate agents to help them through a confusing process, and that the updated skills of agents are necessary to maintain the integrity of computerized listings.

The MLS was developed in the 1960s, long before computer networks made information sharing simple and efficient. It allows agents from different real estate agencies to co-operate on deals, and ensures that each property is well-exposed to potential buyers.

Some of the information on MLS -- such as what a property sold for in the past, and recent sale prices in the neighbourhood -- is only available to agents.

The Competition Bureau wants all MLS data to be shared with outside companies, which could open the way to innovative products and discount providers – companies that would help seal a real estate deal for a flat fee, rather than the typical commission structure.

Aitken said the Competition Bureau “is focused on striking down these anti-competitive rules, so that real estate agents wishing to offer innovative services can do so, and consumers can benefit from greater choice.”

While the market will ultimately determine prices for residential real estate services, she said, “we expect that if the Tribunal strikes down the anti-competitive restrictions, there will be downward pressure on real estate fees in Canada.”

In the United States, a 2007 ruling by the Department of Justice opened up the MLS data in that country, spawning a wide range of innovative web-based real estate services and driving down real estate fees.

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