Real estate industry is killing its only remaining advantage - Macleans.ca

Real estate industry is killing its only remaining advantage

James Cowan considers shifts and tactics in a changing market

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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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