Last week, the Canadian Real Estate Association -- the entity that upholds the Realtor Code as well as provides local analysis for markets across the nation -- ruffled its members’ feathers with a new policy to restrict the use of “exclusive” or “off-market” listings.
The new policy, to go into effect in January, would require any listing that has been marketed to the public -- whether via a website, flyer or “coming soon” lawn sign -- would need to be added to the seller agent’s board of association’s MLS within three days.
This effectively removes the ability to “double-end” real estate listings, a practice where an agent or brokerage represents both the buyer and seller and collects commissions from both parties. The tactic has come under fire previously for bad-actor agents who don’t properly disclose that double-ending limits the number of eyes a listing receives, meaning the seller may have lost out on a higher sale price if the property had been marketed the traditional way on MLS.
"Canadian consumers stand to benefit from increased transparency,” Phil Soper, President and CEO of Royal LePage, tells STOREYS. “CREA's Realtor Cooperation Policy will make the details of even more property listings available to potential buyers, giving sellers the best chance of finding the right buyer and strengthening trust between Realtors and consumers. It is important that we look beyond the current market correction and remember that Canada is a nation facing a severe shortage of housing. Of course, there are exceptions to every rule. There will be rare cases where, for reasons of privacy or safety, exceptions will need to be made."
However, while others in the industry note the policy’s noble intentions, concerns have arisen that it removes power and choice from sellers, who should have the final say in how their home is marketed.
Christopher Alexander, President of Re/Max Canada says that the topic is a “double-edged sword” -- while MLS is indisputably the most effective way to generate interest in a listing, “there are certainly legitimate reasons as to why somebody would want to list exclusively.”
“I think the big challenge is that really, it’s not not up to us to decide,” he says. “The seller should really have the right to choose how they want their property to be marketed and I think that, in my opinion, is the key here. And it’s not really us or CREA to make that decision. Having said that, realtors are going to have to do a better job explaining the benefits of MLS and why it’s the most advantageous marketing tool there is for a listing.”
Alexander points to the blind bidding alternative implemented by the province last spring in the updated Trust in Real Estate Services Act (TRESA) which stipulates that sellers can list their property in an open bid auction format, provided all parties consent.
“The provincial government said, ‘Hey, you can have open bidding if you want, but we’re not going to force it on you,’” Alexander adds.
However, a positive aspect of the policy could be a boost in supply available on MLS -- a badly-needed infusion given listing inventory remains at record lows. According to CREA, there were only 3.7 months of inventory on a national basis at the end of September; a scant improvement from the 3.5 months recorded in August, but well below the long-term average of five months.
“I think that -- and this is part of CREA’s intention too, I believe -- is that they are trying to have equal play for everybody and in an extremely limited inventory environment, having access to the most amount of listings that you possible can is great for buyers,” Alexander says. “I just think that our industry needs to come together to work with CREA to find the right solution, because I think the bones of what they’re trying to do is right, but there’s got to be a way to still have exclusive listings under certain guidelines and at the same time being able to provide as much open transparency as possible so that everybody’s got a fair shot.”
The first iteration of the policy allows for exclusive listings to be kept within the same brokerage upon explicit direction of the seller client, after they’ve been informed -- in writing -- by their agent on the benefits of listing on MLS.
On CREA’s website, the association states that it is taking the “constructive criticism” it has received from agents into consideration, and is thinking about adding flexibility to the policy by allowing a listing agent to directly communicate, on a one-to-one basis only, with an agent colleague in a different brokerage regarding a specific property for sale, with “details and more consultation to come” at its 2023 AGM.
In a statement provided to STOREYS, Pierre Leduc, Media Relations at the Canadian Real Estate Association, writes:
“A working group was created in 2021 to propose solutions that could address issues surrounding cooperation in the Canadian real estate industry. It proposed the REALTOR® Cooperation policy in the interests of advancing REALTOR® professionalism, and in the best interest of consumers and the integrity and comprehensiveness of MLS® Systems.
With regards to adoption, implementation and enforcement, we’re focusing our efforts on taking advantage of meetings and events to further listen and engage with boards and their members.”