So, the Canadian Real Estate Association will implement the Realtor Cooperation Policy amid seemingly significant disagreement from many in the industry.
With so much discord around this policy, this is often a clue that we are near the point where the many different interests converge. So, from an ethical standpoint, who are the parties, what are the interests at play, which ones should supersede the others, and why?
In short, who is right, who is wrong and how right and how wrong are they?
NOTE: I have purposely kept my personal opinions out of the discussion (other than a brief comment at the very end) as I am attempting to analyze this from a strictly ethical perspective.
“I see three interested parties: organized real estate, individual real estate agents, and consumers.”
The question at hand is how to limit the “coming soon” marketing of listings soon to be on the MLS. Even though I am analyzing this from an ethical perspective, legal duties are so intertwined I don’t see how I can do this without including them fully.
I see three interested parties: organized real estate, individual real estate agents, and consumers, although organized real estate could be further broken down into its local, regional, and national organizations.
So with these interested parties, what are the interests at play?
With organized real estate, their interests seem to be the furtherance of professionalism, putting clients’ interests first (collectively) and protecting the integrity of the MLS system.
With us individual practitioners, I see a couple of diverging interests, protection of clients’ best interests versus our right to choose our own business models.
With clients, I see one major interest—the right to choose how they market their properties.
I think it is safe to say that all the above interests are valid. The big question is which one (or ones) should be the overriding interest(s), why, and where the rest fit in. Before I do that, there is another issue at play, at which level (local, regional, or national) does the authority to make this decision lie (if indeed it even exists)? From what I can see, this is more of a legislative or procedural issue and less of an ethical issue, so I won’t (and am likely not qualified to) address this issue.
I would say the highest-ranking interest of all the above is the clients’ right to market their properties how they see fit. I say this because of established agency law, competition law, our various provincial and territorial rules and, finally, our Code of Ethics. They all point to the primacy of the client and of our duties thereunder.
If my assumption is correct, the next question is how do the remaining interests rank and, where they conflict, which should rule? Again, for the same reasons, it seems to me that the next highest interest is our right as practitioners to choose our individual business models, followed by the protection of our individual clients’ best interests under our chosen business model.
“I am not sure we have any valid claim to decide what business model is best for consumers as a whole, nor do I feel we are the best body to be making this decision ethically.”
The professionalism of the industry and the integrity of the MLS system strike me as the bottom-ranking interests in this hierarchy (and I think it is arguable that existing codes of ethics are sufficient to protect the industry’s professionalism and integrity. Note I am not saying that they always work adequately; I am simply saying they provide the required standards (adequate compliance and enforcement is a whole different kettle of fish).
The one interest I see as problematic is us as an industry protecting clients’ interests collectively; I am not sure we have any valid claim to decide what business model is best for consumers as a whole, nor do I feel we are the best body to be making this decision ethically.
I also question where it is written that an exclusive listing means “a listing whereby the listing agent can only market one-on-one to individual prospects.” What if a fully informed consumer chooses of their own free will to market their property to the marketplace publicly through one agent only? Where does this fit in? Where do we acquire the authority to declare this as an invalid way to market exclusive listings? Many countries operate solely on this model.
Now I admit I do not know how agents have been marketing “coming soon,” but assuming they are not doing it through MLS, I must also question where we as an industry acquire the ability to limit the practice if a fully informed client has chosen to allow their agent to do this.
Yes, they may possibly receive less than on the open market, but if they choose this option of their own free will, where do we gain the authority to deny this?
“I just don’t see our interest in protecting the MLS system as equal to consumers’ rights to choose how to market their properties legally or ethically.”
Now if the client has not been fully informed, then clearly, this is a serious issue, but we already have rules and a code of ethics to deal with this. Would it not be enough to create a simple “fully informed” form outlining all the potential costs for the client to initial each item and sign (and perhaps the broker sign as well) before a listing can be marketed as “coming soon?” Or maybe just create a time limit for marketing upcoming MLS listings as “coming soon,” leaving exclusive listings out of the equation?
I clearly see the danger this poses to organized real estate (and our cooperative system in Canada is, in my opinion, a huge benefit to consumers), but it seems to me our interest here is subservient to the client’s right to choose how they market their properties. I am struggling to see how this will survive the first legal challenge. I just don’t see our interest in protecting the MLS system as equal to consumers’ rights to choose how to market their properties legally or ethically.
Gerald has been a licensed real estate agent for thirty years and an industry instructor for over twenty. He has served on several committees with the Realtors Association of Edmonton and on the Board of the Real Estate Institute of Canada (REIC) Edmonton chapter. He is also an ethics instructor for REIC nationally and enjoys family, various sports, and the outdoors. Check out his popular real estate podcast The Real World of Real Estate here.
This is my reasoning as well, Gerald.
Provincial laws restrict real estate practitioners providing services to the consumer that benefit and protect the consumer. Consumers then have a much broader freedom of rights in common law in what they do as they go about purchasing and selling real estate, none of which is curtailed by laws governing the industry.
Organized real estate however can, by virtue of limitations placed upon its members, directly restrict or curtail those consumer rights.
For example, while builders often do allow buyers who do not yet own the new build to assign their purchase contract, they will often restrict the advertisement of that contract from being placed on the MLS System so as to not have buyers compete against their unsold units. That’s fair to the builder and since there are literally dozens of builders and hindreds of new build to choose from, also fair to buyers.
These buyers in turn are allowed by common law to assign their purchase contract just as they are allowed to choose if so wish to use the services of a Realtor and one they pick. Many Realtors and brokerages have accommodated those assignors by offering the exclusive listing which is marketed broadly without restricting co-operation to Realtors.
Crea’s new policy does not state these as an exclusion thus the majority of new build consumers – not just those who knew they couldn’t assign, have now had their common law right to assign indirectly and severely limited if not curtailed.
This is not a plus for the industry which is all restricted membership driven and does nothing to further an organization itself whose reason for being is to serve the restricted membership that funds it rather than as its independent, stand alone going concern, as suggested in a recent REM column.
Well said and very correct
I have listed many assignments on an MLS not sure what your point is.
CREA only has the ability to control the business decisions of those that license the realtor trademark and believe in 2023 that access to an mls system is still needed when listings are openly broadcast to the public within 2hrs of being listed for many mls systems through the ddf.
CREA has chosen to attempt to control the consumer in the same way they control those who license the realtor trademark through mls system rules, membership rules and a code of ethics that CREA refuses to enforce itself.
How many realtors did CREA remove from membership in 2022 because of Code of Ethics violations? We all know the number is ZERO in spite of the 1000s of breaches we see online today each and every day.
CREA as a non-profit corporation is legally required to protect CREA and CREA alone first and foremost and this play to force realtors to market homes in a manner the realtor and their client may choose not to do is just unethical.
Do you not question why CREA once again is trying to move realtor.ca into a separate for profit techco at the same time they are trying to force every realtor in the country to put their listings on the mls and of course realtor.ca ?
We are not really this clueless to what is going on here?
CREA wants a dataset it can sell to 3rd parties and the more complete that dataset is the more value CREA creates in the dataset itself.
We see more and more boards now requiring sq.ft measurements and more detailed property identification fields being added to Mandatory Listing Requirements. This is strange since sq.ft. measurements open the door to lawsuits by buyers who find the stated sq.ft is incorrect. Removing the onus on the Buyer Broker to check the sq. ft. themselves only serves the interests of one party either CREA or one of its mls system licensees.
It is Unethical to demand a consumer market their property on a universal strategy employed by all realtors. This watering down of the diversity of choice in realtors is clear and flagrant.
CREA as always only looks to protect CREA and the staff whose numbers grow and grow each year as new ways to drive revenue to CREA just serve to add better pensions and benefits that 90% of realtor members will never see themselves when sick or retiring.
Hey, Go for it.
Your observations are dead on and yes let us be suspicious of the motives
as it has been said that there is a proposed division. Perhaps we need to cut off the head of the snake to keep realtors in charge and not Mega Boards. CREA should be for realtors and not a separate entity to propagate like government , Federal & Provincial.
What about the majority of consumers relying on a database such as mls as a key and primary factor in their ability to confidently form an opinion on the value of a property?
What about buyers being given fair opportunity to learn about a property for sale and the option to make an offer on it?
Neither of these points seem to be properly addressed in your piece.
Not to mention MLS being the primary way that realtors evaluate property for both their sellers and their buyers.
Why in the world would anyone – realtors or consumers alike – want to dilute/destroy that benefit?
So a “seller can choose how they market their property”? That seems… absolutely preposterous.
Ultimately, realtors exist specifically and exclusively to fairly serve the consumer in their quests in property ownership. The database realtors build and contribute to is one of the best ways they provide that service.
Finally, this has worked so well in the States that even non-NAR MLS’s have adopted the policy.
And we are against this because apparently the majority of sellers don’t want to be on MLS? Really? Don’t believe it for a minute.
Show me a client that willingly chooses to leave money on the table. I don’t think I have ever met a seller that wants to leave money on the table so your arguments don’t fly. I see realtors convincing clients this is the “best way”, “we have proven methods”. Proven to leave money on the table. Sophisticated clients will sign the waiver and proceed with leaving money on the table and it will not bother them. Unsophisticated will will list their property on the MLS and bank max money.
I totally agree. Coming soon is a Realtors idea not the sellers. If the seller was advised of the possible loss because all buyers were not made aware of the listing due to this marketing ploy, I seriously doubt they would be okay with with it.
Your comments don’t pass muster. Here’s why:
The majority of Realtors will represent sellers and buyers, There are very few listing only or buyer only brokerages. While the MLS is for the purpose of advertising seller client listings, your comment fails to recognize that the buyer client is not in it to make sure the seller doesn’t leave “money on the table” as you put it. No buyer’s agent every congratulates their buyer for spending the most money.
By insisting sellers advertise on the MLS so that they can maximize their sale price because CREA and some boards have decided this is what is what’s best for sellers, CREA members ignore the buyers they also represent who are pretty much being told, you’re going to be forced to pay the max you can now. I’ve never seen a Realtor advertise that they’ll assist buyers with spending the max they can and it’s best for you or one erect a sold sign congratulating the lucky buyer for having paid the most they could. Have you? Do you?
You’ve conveniently chosen to ignore as stated by others, including those within the upper echelons of ORE, as well as the White Paper’s writers, that there are many logical reasons swhy ome sellers do not want their homes advertised on MLS. It is not just money. More on that later.
Hordes of listings sell within a few hours of hitting the MLS without ever having been listed exclusively. A listing sold in under a day can do nothing more than an exclusive would given your view. Furthermore, the quick and ready buyer doesn’t offer so that the seller can “bank max money,” their offer is so they wouldn’t have to part with “max money” in a competition and too, it’s often to make the seller believe they may not get one better. Neither you nor CREA can possibly defend this quick sale practice as being best for the seller since by yours and CREA’s reasoning, the MLS open market maximizes the number of eyeballs perusing and feet traversing a house – thus the sale price, all of which requires more than just a mere few hours.
To an earlier point, a couple years ago I took an exclusive listing for very humble, very well connected people within Canada, the USA, one other country and with ties to several philanthropic organizations. They absolutely did not want their home displayed on the MLS especially since prior to their buying it, it was plastered all over social and gawker web sites. I sold that property for significantly more than any property of that class and style had sold for in that quadrant of Toronto. And like every one of my listings ever taken, including the many from a TV known designer, all references and pictures to are scrubbed from my web site, because I value the right to privacy of all of my clients, even if they don’t ask me to do that. Know how much money they “willingly chose” to NOT leave on the table? 6 digits more than the highest MLS sale.
There are Realtors who actually think advertising a listing means advertising its address or can only sell for less. Why is a mystery. As an industry we seem too many times to not actually know the full range of our duties, to whom they lie and don’t realize the actual abilities to promote our clients’ best interests that frankly we should know and have.
Unless a property is a custom build and usually high end in a luxury enclave, the address of most homes cannot be identified just by a photograph and the likelihood that it will be found by someone who knows the seller is slim. I am confounded by the fact that so many anti-exclusive detractors who ought to know better use that argument – it’s jusy become one more oft repeated statement.
Industry members individually love to offer up motherhood statements as promises that they, as professionals, know how to sell property and negotiate the best deal for the client, yet when push comes to shove, their major defense to that aim is all about posting the listing on a national listing service followed by hiring third parties to stage and photgraph. Perhaps they too are your “proven methods.”
As the author says ~~ an overly ambitious (2nd) attempt by an upper-level national trademark-holder to limit the “Coming Soon” Hot Market pathway to double-ending (before-some other co-op Brokerage sells it).
Surely the provincially-regulated industry associations could have crafted a provincial legislation-backed policy if they wanted to actually solve the problem.
Why TREEB changed its position is what we have to discover.
If TRREB continued to have the reservations it held regarding the First attempt by CREA to halt “Coming Soon” the measure (no matter if/how it was shrouded in “co-operation”) would not have passed at the CREA assembly of Associations meeting.
Double ending should be illegal as it is in many parts of the U.S.A. One agent cannot ethically represent two separate parties. This is why a professional sports team does not have an agent represent the team as well as the player. And in all this discussion it is assumed the consumer is only the Seller. This article is terrible. Just a bunch of useless verbiage by a non-qualified individual( as he clearly states) First off the definition of “exclusive” is not clearly defined. Therefore no further discussion can be made. Second this CREA change allows for exclusive listings. Which allows any business model to exist. A “coming soon” is “coming soon to somewhere, it is not an exclusive listing. It is designed to build market interest, not an opportunity to “double end” Does “coming soon “ benefit any consumer? Or only benefit a sales rep? And to disguise an exclusive listing as a “coming soon” is considered to be misleading advertising and against REBBA soon to be TRESA legislation. At least in Ontario. If I am a consumer that requires an exclusive listing to market my property that is exactly what I would want for privacy reasons. I would not want my property public facing at all. I would only want qualified buyers to know and most likely use a NDA for any showings and negotiations. That is exclusive. Exclusive is not putting up for sale signs, running ads in news papers and all over social media. That is listing on the open market. Very different. In my own opinion all these articles and comments are from the perspective of the real estate sales rep that are all self serving individuals that want to be able to manipulate a consumer for their own benefit. Not any benefit to a consumer.
Double ending is only possible in BC under the strictest of exceptions.
I completely agree with you Gerald, and I am sure this rule will be changed when it is successfully challenged in court.
I’ve had numerous situations throughout my career where an exclusive listing was appropriate, and yes, I still needed to promote the listings.
I think CREA’s concern with “coming soon to the MLS” issue is valid but this can easily be dealt with under current MLS rules.
Gerald, I totally agree with you. We have lost our focus on the client and protecting the client’s interest beyond all others. Instead the “collective” is interested in protecting it’s own wallet. It seems to be about the money.
Totally agree with this article.
This is CREAs lame attempt try to hoard data and prevent Facebook groups, what’s up groups and companies like BrokerPocket from operating.
This will come back to bite us (realtors) hard.
Thank you Gerald. Your article sums up my feelings on this exactly.
I totally agree that the consumer should have the right to choose.
The article is right on ! The problem in mls is number of mls boards and the non interplay of mls data bases between the boards . In Hamilton area there are a LARGE number of TRREB mls listings that do not show in the RAHB mls system – worse the mls listing info in TRREB listings is far less detailed then required in RAHB and as such TRREB listings are far less specific – eg list a residential farm with a secondary rental home component and inter board that property ( 😫)
The battle to force agent clients to use the mls is idiotic when we do not even have a centralized and unified provincial mls system –
As such get the mls system up so a one time loaded listing will show in all agent mls info systems – which will make all our lives far easier and productive
Gerald . . . you are the long-awaited voice of reason in response to this ill-conceived policy. Thank you for prioritizing the various interests and helping us see the light that it is the clients (and their freedom of choice) who are #1.