Competition Bureau says Competition in Real Estate Profession is Limited- You must be Kidding!

From the desk of RE/MAX Professionals, Darryl Mitchell, Managing Broker

There has been a tremendous amount of speculation as to the consequences of the Competition Bureau reviewing the way that organized real estate is performed in Canada. Some say that our industry is on the precipice to change that will overwhelm the existing participants. Others say no change will occur. Still others say this is the demise of our industry, Realtors will be dinosaurs fit for extinction and our customers will applaud.

Nothing is further from the truth. The Competition Bureau rightly reviews industries where they feel competition is controlled or inefficient. They are concerned that without competition, consumers and thus society will be hampered in their activities. The concept is good. They have served society well for many years.

It is interesting that they have chosen to review organized real estate where there are varied business models inside of and outside of the organized realm. Should reviews not be done on industries where there is little or no competition within the industry? Such is the lay of the land with the stock market monopoly, The Toronto Stock Exchange. One market controlled by the marketers! What about the Canadian banking industry? Few players in an oligopoly mode. Or what about the political industry in Ottawa! Four major players using their clout to prevent competition. Too bad we could not just prorogue the whole issue!

So the assumption here is that there is little or no competition in the real estate industry. Let us review the competitive nature of real estate sales in Canada.

The real estate industry is organized through cooperative real estate boards that provide a multiple listing service (MLS) as a means of registering current properties for sale. The cooperative nature of the business is almost 100 years old and was established at a time when real estate brokers did not cooperate on allowing others to sell their properties and obtain a payment, or commission on the sale. By cooperating, these foresighted individuals benefited the consumer by allowing an open and effective market place where consumers were represented fairly as buyers and sellers. The term “Broker” reflected this openness between parties to the sale.

Even with this cooperative MLS services, consumers are still allowed by the Real Estate and Business Brokers Act to sell their own homes without an agent. Lawyers for clients or estates are allowed to sell homes for a fee as well. Builders and Developers are allowed to sell real estate for their own businesses using their own employees.

Then why is it that the Real Estate Associations, Real Estate Boards, Brokers and Sales People are on the radar of the Competition Bureau? What has changed?

Do we, as real estate professionals have an open market place? Absolutely!

Do we not have competition for listings with negotiable commissions? Absolutely!

Has competition for listings, commission rates and prices become restricted by unfair practices? Absolutely Not!

Are different business models not allowed in our industry or within our country? Absolutely! There are more business models, franchised and independent offices and business opportunities than anyone can imagine! One only needs to review the business models of RE/MAX, Royal LePage, Coldwell Banker, Min Max Pear Tree and so on to realize there is tremendous competition among the major players, franchised or not.

Then why are we, Realtors, organized real estate if you will, targeted? Perhaps it is because we are easy, visible targets who have not explained our value proposition well in the past. It was not a year ago, when the real estate market was reeling in the recession that our professional services were valued much higher. Just ask those who are still in the realm of recession in the United States, how they value their Realtor friends. They now are pleased to pay an effective agent who can sell their home quickly and smoothly more than even a year ago, simply since they know it is not easy to do in a distressed marketplace.

And waht aboutthe increased cost our customers and clients must pay for government servcies just to get the sale completed? Why is it that our society allows new costs to the real estate transaction such as multiple land transfer taxes, environmental (green) home studies, HST increases on real estate fees and services, and so on with little or no fight?

Is the competition controversy simply a diversion from these increased government service costs?

Hmmm? Something to think about.