For sale by owner: realtors are still trying to keep the public’s hands off MLS, but you can’t hoard information in the information age

For sale by owner: realtors are still trying to keep the public’s hands off MLS, but you can’t hoard information in the information age

(Image: Brian Rea) 

I’m not a do-it-yourself type. The one time I wallpapered my basement, I ended up with a stiff neck, peeling corners and a marital spat. Nevertheless, if I had to sell my house tomorrow, I’d be tempted to do it myself.

The main incentive for selling your own home is, of course, to avoid paying the real estate agent’s fees, which can be enormous, usually amounting to five per cent of the value of your biggest asset. A DIY seller of a $431,000 house (the average house price in Toronto in 2010) would save $24,350 (including HST). You could buy a new car for that. Even if your buyer uses an agent, which most buyers do, and you’re on the hook to pay a 2.5 per cent commission, you’d still save more than 10 grand. In the same dramatic way consumers dumped travel agents to buy cruises, hotels and plane tickets over the Internet, I expect that we will soon be rethinking the way we use real estate agents, if we use them at all.

For the moment, we still need agents—not because of all the services they provide, but because of just one. We can’t list our homes on without them. MLS, the Multiple Listings Service, accounts for 90 per cent of all residential sales in Canada. House hunters can browse the site (and nose around their neighbour’s kitchen, right down to the Sub-Zero refrigerator), but the Canadian Real Estate Association controls the flow of information and carefully guards the most up-to-date data about sales.

Until last fall, CREA rules dictated that only traditional agents—those representing clients through the entire process, from appraisal to final sale—were allowed to list on the database. This gave CREA and its member boards across the country a virtual monopoly on real estate listings.
The so-called discount brokers, who offer homeowners an à la carte menu of real estate services for reduced fees, have been multiplying despite CREA’s stonewalling. One in particular decided to take on the association. Lawrence Dale, a 48-year-old fast-talking workaholic lawyer and one-time general counsel for SkyDome, has deep real estate credentials. He’s the nephew of the late legendary broker Sadie Moranis; as a kid, Dale would often accompany Moranis to her office on weekends. Later, as a real estate agent himself, he co-founded a group that bought control of the tony firm Chestnut Park. (He has since sold his interest.) In 2001, he and his cousin Stephen Moranis launched RealtySellers, a discount brokerage, and flouted CREA’s guidelines by allowing customers to list their homes on MLS for a flat fee.

A year later, CREA blocked RealtySellers from the site, and Dale sued. CREA argued that MLS was proprietary—its members created it, owned it and maintained it. But Dale countered that the very success of MLS meant that the Web site should be open to all. Restricting access, he argued, was anti-competitive. Dale temporarily shut his company down and pursued what became an eight-year legal battle that caught the attention of the Canadian Competition Bureau. When the CCB launched a formal complaint, CREA—having depleted much of its multimillion-dollar war chest—yielded and amended its rules.

“Without me, it wouldn’t have happened,” says Dale, more than a little chuffed by his victory. (He ultimately settled his suit with CREA, pocketing what he calls a “big cheque.”) Dale relaunched RealtySellers last October and now offers consumers MLS listings for free, in the hope that customers will return for other services.

Now Dale is challenging CREA’s dominance again. He’s pushing for unfettered consumer access to all the information that’s stored on the MLS system, including property taxes, the number of days a property has been on the market, its sales history and, most significantly, what places are selling for. If you’re buying or selling a house, current information is critical.

According to Dale, the opening up of the data on pending sales will be the real game changer for the industry. “It’s the best, most relevant information,” he says. “It’s not even in the land-registry office yet. It’s nowhere, except with agents.” Under CREA rules, only traditional agents can pass this information along to consumers, and only individually, by old-fashioned fax, by e-mail or by hand. The system isn’t just inefficient; it helps ensure that agents maintain control of the market. Discount brokers want to level the playing field by making the information immediately accessible to clients through their Web sites.

It’s only a matter of time before CREA loses its stranglehold on an industry that is badly in need of modernization. In the digital age, consumers expect to be able to access information quickly and freely, and to make their own decisions about how the information is used—especially when it comes to their own property.

Another challenge to CREA’s dominance is already underway: unfettered access to all the back-end information stored on the MLS system

Toronto may be the perfect test market for DIY selling. Real estate is, after all, our favourite amateur sport. We read about it, gossip about it and drop obsessively into open houses. Many of us are as savvy as the average real estate agent. We have a good idea of what our place (and our neighbour’s) is worth at any moment. And we tend to view our homes as cold commodities, which is good because emotional detachment is important when selling.

Private sellers who have handled the negotiations themselves tell me it’s surprisingly easy. All the necessary paperwork can be downloaded from the Toronto Real Estate Board Web site. Homeowners can prepare the documents in advance, then have each side’s lawyer review offers when they come in. Deposits can be made in trust to the seller’s lawyer.

The toughest part of a private sale is figuring out how much your house is worth. Pricing is typically done with the help of an agent, who reviews comparable sales in your neighbourhood. If the Competition Bureau does the right thing and forces CREA to open the MLS database completely, you’ll be able to instantly access past and pending sales yourself by going through a discount broker.

Until the information is made readily available to the public, DIY sellers will be at a significant disadvantage. One seller I spoke with, Elizabeth Blair, is a good example. She heard about the partial opening up of MLS last fall in the news and contacted RealtySellers. After paying exactly nothing, she had a lawn sign and an MLS posting for her semi-detached house on Atherly Crescent in Mississauga.

Blair listed it at $398,000. The first week, she confidently turned down an offer of $375,000. A few weeks later, she announced a deadline on offers, hoping to drum up excitement. Only one came in, so low she didn’t sign back. Then the original buyer’s agent approached her again with the same offer of $375,000. This time, after 33 days on the market, she accepted. “We actually could have sold it in a week, but it took us a while to realize that the offer was a good price for our neighbourhood,” says Blair