Real estate industry is killing its only remaining advantage

James Cowan considers shifts and tactics in a changing market


 

Steve Helber/AP Photo

My family and I are thinking about buying a new house. The idea is closer to “strong notion” than “airtight plan” on the thinking-about-stuff spectrum, but we’ve looked at a few listed homes and will do some repairs this summer in preparation for eventual sale. When the moment arrives, I will happily pay a real estate agent. We need someone who knows our area, exerts no pressure and, most important, someone who we trust.

Like stockbrokers and travel agents, real estate agents no longer hold a monopoly over their fields, with online services now making it easy to look for houses, buy stocks or book a trip to Cuba. Agents in these fields once sold market access; now they sell wise counsel. So it is baffling that real estate associations have wasted years fighting inevitable industry shifts with tactics making them appear neither trustworthy nor credible. They are killing their only remaining advantage.

Earlier this month, the Toronto Real Estate Board (TREB) claimed a worthless victory in its three-year battle with the Competition Bureau. The federal agency alleged TREB, which represents 35,000 agents and brokers, unfairly blocked its upstart competitors’ access to crucial data, such as the previous selling price of a home. On April 15, a tribunal rejected the claim on a technicality, contending the complaint was filed under a portion of the Competition Act intended to stop dominant companies in a sector from squeezing out competitors. Since TREB itself doesn’t buy or sell houses, it isn’t a true competitor to the smaller discount and online brokers affected by its practices. The tribunal, while dismissing the case, suggested a better section to cite should someone else wish to complain. It was a clear indication the real estate board won its case on semantics, not substance.

Which is lucky for the realtors, since their case was thinner than a pre-sale coat of paint. Without policies discouraging agents from setting up their own password-protected databases, private information could be improperly disclosed, TREB argued. People could determine how much the Joneses across the street paid for their home, or the size of their mortgage. It is an antiquated view of the world: a realtor you deal with in person (or on the phone, or by fax) is more trustworthy with personal information than one dealt with online. By that logic, we should all still be standing in line at our local bank branch, waiting to chat with our favourite teller.

The realtors’ argument reached its absurd extreme last year, with an advertising campaign suggesting homeowners will be at risk of break-ins and assaults if their personal information became more readily available online. “You hear stories about realtors getting attacked and killed. Can you imagine if we put that information out there about consumers? You can only imagine the headlines,” a spokesman told The Globe and Mail at the time. (The paper noted police didn’t consider violence against real estate agents to be a significant issue in Toronto.)

Realtors aren’t the first profession to watch in horror as the Internet fundamentally changes their business. But rather than adapt and innovate—on service, on price, on technology, onsomething—the industry obfuscates and litigates. A previous complaint by the Competition Bureau forced the Canadian Real Estate Association to allow homeowners to list their home directly on its Multiple Listing Service—provided they pay a flat fee to an agent—and to permit agents to offer bare-bones services for a lesser commission. Even then, the association did little to demonstrate itself trustworthy and accountable to the public. It first reported its members had rejected the changes, and then its president refused to answer questions at his own news conference.

By fighting to protect the outdated status quo, the industry has eroded the public’s trust in their profession—they are only hastening their obsolescence by struggling so hard. I’ll hire an agent because they are valuable as consultants, not gatekeepers. Individual agents deserve our trust; the industry as a whole no longer does.

James Cowan is Deputy Editor of Canadian Business. Read more of his columns here.


 
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Real estate industry is killing its only remaining advantage

  1. Like your financial planner, accountant, or plumber, the job you get depends on the person you hire.

    We have a regular real-estate agent, she’s not a discount one, charges the full fees, and honestly, she’s worth every penny. We had a vacant property we wanted to free up the capital from quickly. She looked at the area, looked at the property, and advised us to *increase* our asking price to something a bit above the highest price in the neighbourhood but spend a portion of the difference on a professional stager, and recommended a couple.

    We followed the advice, and the place sold within two days of being listed for damn close to our asking.

    • If it sold within two days, you probably undervalued it…

      • The average days on the market for sold homes is ~50+. Sure sounds like you left money on the table — but you seem happy.

      • Could be, but we were going to *really* undervalue it before, because we had another use for the capital that was time sensitive.

  2. I think the treb’s days are numbered.

    count on another person complaining under the tribunals recommended section.

    • i kind of agree.

  3. I don’t know if anyone has made this argument yet or not, but what I don’t understand is why TREB gets targeted to release this information on sellers such as prices sold, address, etc and then criticized because they refuse to provide it. This information is readily available on the land registry system along with assessed values and other very detailed property ownership data. However, at present it is only available to professionals such as real estate agents and lawyers. Just because TREB gathers its own statistics and data which its members pay for, doesn’t justify forcing them to make the information public. Seems to me this is a much larger issue at the government level. Why is land registry data not available to the general public? Because someone or some level of government decided it is private information and needs to stay that way. Seems to me there is some wisdom behind that so why should TREB then make a decision to release private information that has been deemed to be PRIVATE. Its argument is that some (or many) people may not want that information released. In the US, you can easily look up online in each state’s city tax collector site, private information on home owners names, addresses, property taxes, and price paid. Do we want that here in Ontario? I’m not so sure we do, and if we are going to explore it then there should be some public consultation. Competition Bureau is just trying to bully TREB without any intelligent consideration of all the issues. IMHO

    • Carol, can you point me to legislation or court precedent that states information relating to the sale of property is private in the province of Ontario? It seems to me this who area of protecting privacy is a smoke screen but I stand to be corrected.

  4. This article hit the nail on the head. Many agents use fear tactics to try to scare people into thinking they are the only option. Listing agents cost a small fortune, and to what end? We have countless happy customers who have sold their homes without the financial burden of a listing agent. It’s not yet well known that sellers (and buyers) have a lot more choices these days.

    • Buyers and sellers know their options today and are free to chose the service and service provider they wish. I agree organized real estate may have lost focus on the consumer to a certain degree but the 20% of the agents who do 80% of the business haven’t and continue to provide the same quality of service they always have. Supplying knowledgeable,professional advice is what good realtors provide for their customers. As in all services you get what you pay for.

      • I agree 100%. One of the problems these days is that there are a lot of real estate agents that got into the industry to do 1-2 deal and be out and they are not giving their clients the best service. therefore, they end up being expensive and not worth they money (even if their fees were discounted). before hiring an agent: get their track record. most people only get the %

    • Well the way I look at it, realtors had their run on the entire market forever. It was only a matter of time until the internet boom claimed another industry. And it was available for the taking. Untouched. At the end of the day, good realtors will always be able to land the leads and sales pitch themselves because they are good at what they do. They can get top dollar and handle all the details. But never count out the up and coming FSBO sites. They will get you! ha ha http://www.USFastTrack.ca

  5. I agree, and I am a real estate sales person, an ‘agent’ in common parlance.’ Powerful vested interest groups like CREA, TREB, OREA and the big franchise networks who live on the back of the ‘agents’ like me and every home buyer and seller in the province are causing great harm. Thank you for writing this article.

  6. Great article. Just to note that the landscape is definitely shifting in favour of consumers. I would like to bring your readers’ attention to our company TheRedPin.com. We were a witness in this case and have changed the way people buy and sell homes in the GTA by embracing technology. Take a look at our short video. I’d love your feedback:

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