Toronto Real Estate Board and Competition Bureau clash

The Toronto Real Estate Board is hell-bent on keeping control of MLS data. Its latest offensive includes questionable ads about your privacy and a personal attack on Canada’s competition commissioner. Have the real estate agents finally gone too far?

Joe Castaldo 0

(Illo: Daniel Hertzberg)

Those who work in the real estate industry are not known for being subtle. Witness the garish advertisements featuring oversized agent headshots, the aggressive market projections and the fat commissions that have grown alongside ballooning home prices. But a recently launched online “awareness” campaign from the Toronto Real Estate Board (TREB), dubbed “Protect Your Privacy,” is extreme even for the brassy real estate business. Using a website, a YouTube video and a few posters designed to be shared over social media, the board, which represents 34,000 Greater Toronto Area realtors, portrays itself as the guardian of consumer privacy and safety in an ongoing legal fight with the federal Competition Bureau. It also implies dire consequences for the public if it loses, and even suggests Commissioner of Competition Melanie Aitken is only taking on the board to boost her own reputation.

The campaign is a response to a complaint the bureau filed against TREB last May. That action alleges the board unfairly restricts how its members can divulge certain pieces of market information—such as negotiated sale prices and broker compensation—to their clients. Under TREB’s current rules, real estate agents and brokers can access this information through the Multiple Listing Service and turn it over by hand, e-mail or fax to their clients (the clients can’t get it themselves because it’s not available on Realtor.ca, the public version of MLS). TREB prevents members from providing these details through their own websites, even though it’s a far more convenient method. The bureau’s action, which is to be heard by the Competition Tribunal in September, maintains that such restrictions are discriminatory and anti-competitive because brokers who want to operate primarily online cannot offer the same level of service as traditional paper-based offices.

TREB’s position is that offering additional information online, even historical sales data, constitutes a violation of privacy and could put homeowners’ safety at risk, a message it plays up in its campaign. In one poster, a shadowy figure lurks outside of a pleasant suburban home. In another, a scruffy bearded man peers through a set of blinds, his sinister eyes burning in anticipation of the evil deeds he will inflict upon the home’s occupants—a home he found through a real estate brokerage’s website, presumably. The website, meanwhile, paints Aitken as an opponent of privacy. “TREB is troubled that she is taking action that would force TREB to release private information openly and without accountability on the Internet,” the site’s copy states. Richard Silver, president of TREB, says Aitken’s motivations in the case are unclear. “Is she interested in helping the consumer? Or is she interested in feathering her own nest?” he says.

The bureau isn’t moved by any of these arguments, saying that if brokers already give out the data in print, it’s in the public domain. “If TREB is genuinely contesting the Commissioner’s position on privacy grounds, then TREB’s traditional member brokers must already be in widespread violation of the very privacy rules TREB claims to be concerned about,” states the bureau’s complaint. “TREB cannot have it both ways.”

How the matter is resolved will likely dictate how the other 100 real estate boards across the country allow their members to handle information on the web. And as much as TREB says its dispute is about privacy, what’s really at stake is who controls the online flow of information, and ultimately millions of dollars in commissions and transaction fees, between buyers, sellers and brokers. The pressure in this case is coming from brokers who want to set up their own virtual office websites (VOWs)—essentially searchable online databases similar to Realtor.ca—and furnish the sites with the same kind of details (mainly negotiated sale prices) they can pull from MLS and give to clients through other means. Proponents argue VOWs allow brokers to be more efficient. They don’t have to waste time fielding information requests over the phone or by e-mail. Consumers also get more power. Instead of calling an agent to find out how much the homes in a particular neighbourhood recently sold for, they can go online and find out themselves.

That, critics of TREB charge, is what has the board so worried. If consumers can do more work on their own, they won’t need to rely on real estate agents so much. Agents run the risk of irrelevancy, or at least having to work harder to earn commissions. Aitken already scored one victory in a duel with the industry in 2010 by loosening its grip on how it operates the MLS. The battle she’s picked over VOWs is yet another threat to the traditional real estate model. “This is all going to force people in the industry to justify their existence, which is why they’re fighting to the death,” says Toronto broker and entrepreneur Lawrence Dale. “The vast majority can’t do that.”

Although Aitken is leading the charge against TREB, it is Dale’s actions, complaints and lawsuits that have pushed the bureau to act. He’s been waging a war against the traditional real estate industry for more than a decade. In 2000, Dale launched a brokerage called Realtysellers that offered different levels of service and lower fees to home sellers, breaking from the old full-service model that saw agents involved in every part of the transaction, including advertising, showings and negotiating the close. TREB later cut off his access to the MLS (each local board controls access by its members), citing rules requiring realtors to carry out the entire transaction in order to list. Dale fought back and ultimately won in court, but claims he had to shut down in 2006 because the Canadian Real Estate Association maintained similar rules nationally that discriminated against discount brokerages.

That’s when the Competition Bureau got involved. In February 2010, under Aitken, the organization filed an action against CREA, alleging its rules were anti-competitive, stifled innovation and limited consumer choice. Discount brokers were disadvantaged, it said, because they were effectively cut off from the MLS, and consumers wanting to list but handle the rest of the process themselves were forced to pay high commissions. The two sides came to an agreement the following September, and CREA modified its rules to allow for “mere postings,” meaning agents can list properties and allow sellers to do the rest of the work. The decision finally opened the door for discount brokerages to compete. But Dale wasn’t satisfied. That’s because in 2007, he had co-founded yet another brokerage that took data only available to realtors through MLS and repackaged the details for consumers on its own website. TREB shortly terminated the brokerage’s MLS access. Dale, also a lawyer, fought this in court too, but an Ontario judge ruled that TREB was within its rights.

The Competition Bureau is now taking issue with the TREB rules at the centre of that case, arguing that if the board allows brokers to access and distribute information through a variety of means today, it should permit members to provide that same information through a VOW. Shortly after the bureau launched its suit, TREB introduced what it called a VOW policy, but critics contend it was simply a rehash of existing views.

The bureau argues TREB’s rules are still inadequate because brokers can’t provide key pieces of information, such as the negotiated sale price of a home, which shows the price before the transaction has officially closed. Some brokers argue that detail is relevant to buyers because it provides the most up-to-date picture of local market conditions. Restricting how brokers use that information creates an unlevel playing field, “entrenching the traditional ‘bricks and mortar’ model and discriminating against members brokers wanting to innovate,” the bureau states in its complaint.

TREB will continue its public-relations campaign as the case heads to the Competition Tribunal in the fall. Exactly why is not entirely clear, since the tribunal is unlikely to be swayed by public opinion. “Our intention is just to say, look, we’re not being obstreperous. The public has said they’re not comfortable with that level of information,” says Silver. Von Palmer, the board’s chief privacy officer, cites a host of increased risks to consumers if the bureau has its way: break-ins, mortgage fraud, identity theft. Though when pressed, he backs away from the threatening tone of the campaign, implying the shadowy figures are more metaphorical than literal. “People will read what they want into the graphics we’ve used,” he says. “You see someone peering through the window, it’s a violation of privacy. That’s the concept we’ve captured.”

Both Palmer and Silver reject the notion that TREB’s resistance is really about protecting traditional brokers. “This is all about privacy,” Palmer says. But the repeated references in TREB’s campaign to “personal information” need to be unpacked. The campaign states the bureau wants to make a seller’s name available over the Internet. Nowhere does the bureau say that in its filings. Brokers such as Dale wanting to launch VOWs don’t even want to include that detail, since a seller’s name has nothing to do with how consumers make buying and selling decisions. That makes one statistic trotted out by TREB, that three-quarters of Ontarians say that a seller’s name and a home’s negotiated sale price should be confidential, largely irrelevant. (Note that TREB asked about the two pieces of information together, rather than separately.)

“What you often see is privacy used as a last resort when none of your arguments are working,” says Mark Hayes, a privacy lawyer in Toronto. “To some extent, that’s the situation here. Considering what [TREB’s] own members do with information already, it’s a little bit of a red herring.”

Meanwhile in Nova Scotia, Bill McMullin is already operating the kind of real estate brokerage online that TREB is trying to prevent. In 2010, McMullin spent roughly $2 million to launch ViewPoint.ca, which pulls data from the two provincial real estate boards and other sources to create a more comprehensive version of Realtor.ca. Visitors can see how many days a home has been on the market, the last price it sold for and negotiated sale prices, which he’s been allowed to access with comparatively little fuss. “We’ve been doing this for two years,” he says. “Sixty-five million page views later, we haven’t broken any laws.” Membership is free, and the hope is that users poking around on ViewPoint will ultimately use the company’s brokerage services when it comes time to buy or sell.

McMullin wants to expand in other markets—especially Toronto—but TREB’s policies prevent him from providing the same depth of data. “They don’t like the idea that brokerages will be able to efficiently distribute information that has been a primary reason why the consumer has been forced to call a realtor,” he says.

The irony is the board’s fear could be irrational, says McMullin. “Just because you make more information available to consumers, it doesn’t mean they want or need a real estate agent less,” he says. Some established players agree. “The transaction sizes are so large, and the complexities aren’t going away anytime soon, so most people just don’t feel comfortable walking through that transaction completely on their own,” says Phil Soper, president of Royal LePage. But the number of real estate agents in Canada could shrink, he says, as more competition prompts agents to find more ways to be useful for their clients. Those who can’t will be forced out of the business.

In that light, TREB’s aggressive stance against the Competition Bureau makes more sense. But protecting its members from change is an argument unlikely to win the board any sympathy from the public. In fact, if the tribunal ultimately rules that TREB’s policies are preventing competition and limiting consumer choice, it may become a target of scorn by the very homeowners it’s now purporting to protect.

Leave a comment

Your email address will not be published. Required fields are marked *