In fact, the vast majority of home sales — more than 70 per cent — involved just five major real estate brokerages, which have seen commissions soar since 2007 as home prices here skyrocketed 25.7 per cent in that time, a Competition Tribunal was told Monday.
On the surface, the complex case is meant to determine if the Toronto Real Estate Board — Canada’s biggest board by far with close to 35,000 licenced agents and brokers — has engaged in anti-competitive behaviour.
But the true crux of the issue is whether real estate boards can maintain their exclusive control of the Multiple Listing Service (MLS) and deny critical information, such as data on previous sales, to new online competitors seeking to offer cheaper, à la carte services to consumers.
The first day of the hearing shone a bright light on a big-money industry that many consumers don’t really understand — apart from the fact it is getting increasingly expensive to sell a house in the GTA, where prices have soared by two-thirds in the past decade.
With the average home now selling for $ 464,264, compared to $ 369,340 in 2007, those 2.5-per-cent commissions alone now add up to $ 11,500 per property, compared to $ 9,000 five years ago, said John Rook, counsel for the federal Competition Commission, in his opening statement Monday.
Competition Commissioner Melanie Aitkin has accused TREB of trying to stifle competition and protect “bricks and mortar” brokerages by refusing to allow a new generation of web-savvy realtors easy online access to the very same MLS data routinely handed out by more traditional agents to clients.
“There is a real incentive, given the magnitude of these amounts (of commissions), for TREB to restrict the manner in which business is being done in the GTA.”
TREB stressed on Monday that its chief concern has been possible privacy violations that could occur if it provides more open access to “sensitive” MLS data like sold data, mortgage information and even, say, lockbox codes that may be noted on listings.
TREB lawyer Donald Affleck argued Monday that the tribunal has no case and that the board is stating an “unyielding no” to opening up the MLS system further, citing privacy laws, professional regulations and copyright laws, which he said protect the proprietary MLS system created by real estate boards.
TREB launched an 11th-hour constitutional challenge to the hearing, saying the federal watchdog has no jurisdiction over provincially regulated real estate boards. The tribunal has promised a ruling on that issue Tuesday.
Affleck said realtors have relationships with clients, which makes it less likely they will give out sensitive information to the wrong people or, say, neighbours just trying to suss out the sale price of the place up the street.
This case is expected to be precedent-setting for realtors across the country, CREA lawyer Sandra Forbes told the tribunal.
It could “very harmful to the industry,” she said, if changes are imposed on TREB that compromise the trust and confidence consumers place in the CREA trademark and an industry that’s already subject to stringent rules and regulations.