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In March of 2010, the Canadian Competition Bureau was successful in forcing the Canadian Real Estate Association (CREA) to change its rules governing real estate "agency" in Canada. CREA is the national association that represents more than 100 real estate boards and over 100,000 Realtors® across Canada. CREA, its member boards and all of their Realtors® own and operate the Multiple Listing Service® (MLS). An agency relationship is when two parties agree to have one party act on behalf of the other. Therefore, in real estate, an agency relationship is created when homeowners agree to have a Realtor® act on their behalf.
Although it was reported by the media that the Competition Bureau was seeking open access to the MLS® for the public, this was never case. In fact, what the Bureau was trying to achieve was to provide Canadian homeowners with more choices when they did choose to hire a Realtor® to sell their home on the MLS®. They reasoned that if the rules were changed to allow alternative real estate models to exist within the MLS®, then commission rates would be forced down. The Canadian government has long believed that the MLS® effectively holds a monopoly on resale homes in Canada and consequently Canadian homeowners are forced to pay higher real estate commissions when it comes time to sell.
Prior to the changes, all Realtors®, by virtue of their own rules, essentially had to offer "full service" when listing a property. Whether the Realtor® belonged to a discount real estate company or a traditional brokerage, if a home was listed on the MLS®, that Realtor® was required to enter into an agency relationship with the seller until either the contract expired or the home was sold and the transaction was completed. The most significant outcome that resulted from the aforementioned rule changes is that Realtors® are now able to post a property on the MLS® without ever entering into an agency relationship with the seller. The Realtor® can simply enter your listing into MLS® and then have no more involvement with you or the sale of the property. Such a listing within the MLS® is called a "mere posting".
Mere postings allow Realtors® to limit their involvement on a MLS® listing to a relatively short and definable time frame. Essentially what a mere posting amounts to is a For Sale by Owner (FSBO) that appears in the MLS®. After the home is listed, the homeowner takes complete control of the selling process. Any cooperating buyer's agents would call the home owner directly, rather than the listing agent, if they wanted to show the property to their buyer. Additionally, if a buyer's Realtor® wanted to submit an offer on behalf of his client, the offer is given directly to the seller, not the listing agent. In other words, the listing Realtor® is finished immediately upon entering a mere posting into the MLS®.
As a result of the very definable work that a Realtor® does for a mere posting, the traditional commission-based remuneration has given way to a comparatively small "pay in advance" flat fee. This flat fee only compensates your listing agent and it is left for you to decide what, if anything, you want to offer out to any and all cooperating buyer's agents. The amount of cooperation you receive from those Realtors® will depend, in part, on the amount of buyer's agent commission you offer. Obviously if you choose not to pay a buyer's agent commission, Realtors® will not bring their buyers to your home and you will be relying on unrepresented buyers only. Additionally, if you want to do a mere posting on the MLS®, you will have to find a brokerage that offers this limited service. Most traditional and full service discount real estate companies have chosen not to offer this option to their clients.
The success rate for mere posting listings is decent when compared with other MLS® listings, providing the home has been priced properly and there is a fair buyer's agent commission included. Obviously, the success rate diminishes if the home is over-priced and/or there is no buyer's agent commission being offered. Primarily, there are two reasons why mere postings do not succeed as often as normal MLS® listings. First, as previously mentioned, a mere posting is essentially a FSBO and homeowners are dropping the ball when it comes time to fielding all the calls on their property. In a fast paced real estate market like Calgary, a missed showing can very well amount to a missed sale. Secondly, because the listing Realtor® is being paid in advance and therefore has no risk, they don't really care what price you ask for your home. The result of this is that mere postings on the MLS® are commonly over-priced and consequently not competitive. That said, if you are willing to deal with the calls on your home in a timely and professional manner, and you are smart enough to properly price your home, you stand a reasonably chance for a successful sale.
Surely the Competition Bureau had good intentions to help the average Canadian homeowner, however, the end result of the MLS® rule changes has only benefitted the for sale by owners. The average person in Canada who wants to sell their home does not want to do it themselves, they lack the time and/or expertise that are necessary to successfully sell a home. For this reason, unless you have the time and the skill necessary to negotiate top dollar from a buyer's agent, a well established full service discount real estate company is still your best choice to save on commission costs.
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