Watchdog rejects proposed real-estate rule change

Date: Mon. Mar. 22 2010 10:31 PM ET

The Competition Bureau has panned a move by the Canadian Real Estate Association to give private home-sellers access to the MLS database, calling it a "step in the wrong direction" that will not reduce costs.

About 300 real estate agents from across Canada who attended the association's annual general meeting voted on the amendments, which will allow home sellers to pay a flat fee to have their homes listed on the Multiple Listing Service and then handle the negotiations themselves.

Currently, agents are paid a commission on the transaction in exchange for handling the listing and price negotiations.

Private sellers must also have an agent in order to list their property in the MLS database, and that agent must be involved throughout the sales process.

The association's rule changes came about after the Competition Bureau voiced concerns that the current system drives up the cost of real estate for individuals.

But the cost to sellers of listing a home and then going it alone is unclear and the Competition Bureau argues the amendments don't allow realtors to offer clients "a la carte" services.

"They are a step in the wrong direction," Competition Bureau commissioner Melanie Aitken said in a statement. "These amendments amount to a blank cheque allowing CREA and its members to create rules that could have even greater anti-competitive consequences."

More than 98,000 real estate agents, brokers and salespeople are members of the association, and only they are permitted to list homes on the MLS database.

The CREA said it was willing to review the process after the bureau filed charges with the Competition Tribunal alleging that real estate agents can't offer their clients "a la carte," fee-based services. The bureau also complained that the MLS rules prevented sellers from negotiating their own deals.

The new guidelines will come into effect as soon as each of the country's real state boards approve them.

Dale Ripplinger, the CREA's outgoing president, would not explain to reporters Monday how the amendments will help agents or home sellers.

Ripplinger said the changes are "too technical in nature and wouldn't make sense to anybody except realtors."

Georges Pahud, the CREA's president-elect, said he was pleased that the amendments had been passed. The association has now addressed the Competition Bureau's concerns, he said.

But Aitken said there is nothing new in the CREA's proposed changes. The Bureau plans to continue to challenge what it calls anti-competitive rules imposed by CREA.

"We have repeatedly advised CREA's leadership that these amendments do not solve our ongoing competition concerns and I reiterated this directly to CREA as recently as last week in a letter to the president," Aitken said.

The real estate association said it will dispute the Competition Bureau's accusations.

The association must submit a formal response by Thursday.

With a report by CTV's Richard Madan in Ottawa and files from The Canadian Press
To see the CTV news report go to the following link:
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20100322/crea_rules_100322/20100322?hub=TopStoriesV2