In the News: Canada’s Competition Bureau is suing the Toronto Real Estate Board

Canada’s Competition Bureau is suing the Toronto Real Estate Board (TREB) before the Competition Tribunal to give the public online access to key crucial house hunting information such as previous home listings, the length of time a house is on the market, and the price homes have sold for in that market.

TREB gives its 39,000 licensed real estate brokers and salespersons in and about the Greater Toronto Area access to this data through its Multiple Listing Service (MLS). The agents can share these statistics with their personal clients but they can’t post them on their websites.

Canada’s largest real estate board says it’s all about privacy. In an email statement, TREB CEO John DiMichele says, “Consumers have rights under Canadian privacy laws. They have a choice as to how their personal information is collected, used, and disclosed including the display and disclosure over the Internet. The Toronto Real Estate Board will continue to work to protect the personal information entrusted to it and its members by consumers. TREB and its members will continue to offer the highest possible quality real estate service but without sacrificing the privacy rights of consumers.”

The Canadian Real Estate Association, an intervener in the case, said through its lawyer, “Innovation over the Internet is not on trial here. Access to sensitive data is at stake. Virtual office websites don’t function the same way as realtors: they don’t conduct showings and they don’t close deals.”

The Competition Bureau says the real estate board’s actions are keeping the cost of buying and selling homes artificially high. It says the real estate board is standing between consumers and the information because it is afraid that competition from online startups could spark a price war and lead the lower commissions for its member real estate agents.

“TREB’s anti-competitive behaviour restricts potential homebuyers and from taking advantage of a greater range of service and pricing options when making one of the most significant financial transactions of their lives.”

The role of the Competition Bureau, as an independent law enforcement agency within the federal government, is to investigate anti-competitive activities and cartels. It defines a cartel as a group of independent businesses whose goal is to lessen or prevent competition by agreeing or arranging to fix prices by allocating markets and customers, or rigging bids.

This boils down to whether the data about recently sold properties has to be conveyed through a real estate agent or broker. There is a degree of information available to the public on realtor.ca but there are more details only agents and brokers have access to: historical data, demographic information, crime and traffic statistics, and the lowdown on local hospitals and schools. This information can help homebuyers and sellers gauge a property’s value.

Some realtors want to set up virtual office websites with this information, which would let them search a completed catalogue of up-to-date listings before they go to an open house. It saves time for the clients who can focus on what they really want, and the brokers who can concentrate on appropriate properties.

Some brokers in Toronto defied TREB by making the data only available to registered users rather than to everyone. But the real estate board didn’t like that either and sent a threatening letter to its members, threatening to suspend them from MLS that, for brokers, has become the essential tool for doing business. The brokers have backed down for now.

This is a crucial fight for TREB. In an industry with similar components, travel consumers can bypass agents and book directly. The real estate board doesn’t want to see its members go the way of travel agents or independent bookstores. It could be another case of technology overtaking tradition.

Realty websites in the US and in Nova Scotia have been publicly posting home sales history for years. William McMullin, the CEO of Viewpoint Realty Inc. in Halifax, told the hearing, “We continuously look for ways to use the Internet, data, and technology to facilitate trade by assisting buyers and sellers. I have never met a customer that didn’t want to know as much as they can.”

The case in Toronto would have a ripple effect, shaping the practice of buying and selling houses in all parts of Canada.

Closing arguments will be heard on November 2 in Ottawa.

Flickr: Joe Gratz