Changes to the MLS. What does it mean to home sellers and Realtors?
There is a lot of confusion amongst the general public and in real estate offices across the country. I took a couple of phone calls yesterday from people living in Kitchener Waterloo about the unbundling of services and how that might work for them selling their homes. What exactly changed? Can people upload their properties for sale onto the MLS database? Are realtors redundant? These are just some of the questions I’ve been asked recently.
Why is there so much confusion?
On one side, the TV media and private home selling franchises are reporting this is great news for consumers; they no longer have to pay high realtor commissions. On the other side, the Canadian Real Estate Association (CREA) is saying that consumers always (at least in the past ten years) had other choices than full service realty. Besides selling their home themselves, they could employ flat fee brokerages or negotiate with their realtor fees for service.
What’s changed for realtors then?
The big change is that realtors can unbundle their services and offer consumers a choice, like:
Post your house on MLS: $500
Update MLS for open houses, price changes: $50 each time
Hold two open houses: $200
Advertise in print publications: $150/week
(I’m just making up these numbers and menu choices). The point is, previous to the change, realtors could not charge this way. We had to charge a percentage of selling price. The other change is that realtors don’t have to wait for a listing to sell to get paid. These are upfront fees.
How soon can I take advantage of these changes?
Home sellers can take advantage of these changes now. The only problem is with the real estate paperwork. Currently the real estate board is updating our forms. They should be completed soon. In the short term, realtors can use the old forms but with many amendments.
Why do the listing forms need to be changed?
The forms are obsolete for many reasons. One reason being, in the past, realtors were not allowed to charge a dollar amount for listing and a percentage for selling. There are also all kinds of representations and legalities that have to be taken out of the paperwork (or made optional and chargeable, I assume).
Can I, as a private home seller upload my information onto realtor.ca (MLS)?
No. Only real estate boards can do this. They get the information from their licensed board members (realtors).
I still have to deal with a realtor for my house to appear on MLS?
Can my name appear as the contact on realtor.ca (MLS)?
No. The realtor’s name (or brokerage) has to appear here.
Can a realtor charge whatever he wants for posting my info on MLS?
Will agents adopt the listing menu approach?
Probably not. Certainly not the way the media reports it. The problem is, for realtors, because of commission splits with our brokerages it doesn’t make any sense for us to take on the work, responsibility and liabilities for posting something onto MLS for $500 or even $1000 unless there is something else the home seller can offer (like using the agent to buy their next house so the agent can get paid on that end).
So it really comes down to money?
No. It really comes down to representation. Realtors work with their clients to protect them from lawsuits, fraud, property crime…Realtors represent the best interest of their clients and are liable if they make mistakes. Realtors simply cannot post listings to MLS without representation at this point in time. The risk is too great and the reward is to little.
How do you see things changing?
I predict more flat fee brokerages and “posting agents” will enter the market. They will offer service without representation to post your house for sale on MLS. They may offer other chargeable services and advice. If a home seller takes this route, he should be very careful about what he discloses about the house to the potential buyer (especially if the buyer has an agent). He will be liable for things he discloses and doesn’t disclose. In many cases he’d be best advised to have his lawyer approve the offer to purchase and be around anytime the buyer is meeting with the seller.
I also think realtors and their clients will spend more time upfront discussing the home sellers options and exploring ways the realtor might help.
What about the Property Guys and other franchises? How will the changes help them?
I can’t see how the change helps them. They aren’t realtors so they can’t post their clients’ properties to MLS. What we had before was a two-tier system between no service (and no representation) and full service (with representation). Now, what we appear to have is more choice for the consumer but with more risk. That’s my take on it anyway. Let’s see how it plays out.
If you have any questions, please ask.
**UPDATED Further Reading**
Why are realtors’ commissions so high? How to negotiate your realtor’s commission.
Can I put my house on MLS without a realtor? No. You want to be listed on your local board.
Can I list my house for a flat fee using an agent? Yes. Be prepared to do some on the work.
Comfree or Property Guys? Which is better? Comfree is better.