New Rules for Selling Your Home

Just in time for the holiday season the Canadian Real Estate Association (CREA) and Competition Bureau have gift wrapped a new deal that impacts the housing market in Canada.

In October, amid complaints of anti-competition, the Competition Bureau and CREA ratified a deal that provides that REALTORS® can choose to offer all their services as individual options to home sellers. The new deal addresses the concerns that previously, people who wanted to list their homes on Realtor.ca (the MLS) had to pay for several services CREA required agents to offer. The new rules allow consumers to choose a listing only option and negotiate for additional services if they wish.

The Old Rules

Under the old rules sellers contracted with full service brokerages or flat fee brokerages to sell their home. At minimum CREA required:

• all its members to assume responsibility for the accuracy of the listing info,
• the listing agent to present and negotiate all offers,
• agents to submit closing info to Board (when sold, how much, who bought, etc.).

Realtors® were then free to negotiate any other additional services with the seller.

The New Rules

The change allows consumers to use a Realtor® to simply list their home (“a mere posting”) on Realtor.ca without purchasing any additional services. Under the new regulations:

• an agent who simply posts a listing to Realtor.ca is required to assume responsibility for the accuracy of the listing info, and
• an agent has to submit accurate closing info (when sold, selling price, name of buyer, etc.) to the appropriate provincial board; in this case, the Newfoundland and Labrador Association of Realtors® (NLAR). This is to insure that the national MLS data base continues to accurately reflect real estate activity throughout the country.

Once this requirement is met it is up to an individual agent how they choose to operate their business. There has been some confusion around this point. The new rules do not require agents to offer an a la carte menu of services that a seller can choose from.

The Impact to Consumers

The change ignited a new wave of discussions about the real estate industry, fees and competition that left consumers and real estate professionals perplexed as to how the changes would impact the buying and selling of homes in Canada.

Under the new rules, a for sale by owner (FSBO) property can be listed on Realtor.ca by a Realtor® for a flat fee. The consumer is then free to negotiate for additional services or take responsibility for all other aspects of the sale, which includes amongst others – setting a price, marketing and showing the home, staging for sale, and negotiating a deal.

For savvy property owners, this change is most likely beneficial. As a seller, it is important to remember who is assuming the upfront risk. As a seller using a fee for service business model, it’s you. If your home doesn’t sell, you still pay the Realtor® for the services you use. In a full service model, the Realtor® assumes the risk and s/he does not get paid until your home sells.

If you choose to work with a fee for service agent, amongst other matters you,

• may pocket more money,
• need to assess your strengths and your weaknesses, for example, are you a good negotiator, can you write a description of your home that will attract buyers,
• need to monitor market conditions. Is it a buyers or seller’s market? Has there been instability in prices? Are homes in your area selling quickly at market value?

Most importantly, if you choose to work with a fee for service Realtor® it’s critical that you select a reputable, experienced agent, since you will be paying for their services upfront.

Unbundling the Confusion for Home Sellers

Since these rules are new it is not clear how much of an impact they will have on how homes are bought and sold across the country. However we do know that:

• A Realtor® is legally obliged by CREA to confirm the accuracy of the property information posted on Realtor.ca,
• A Realtor® has to submit closing data in an accurate and timely fashion,
• Realtors® are permitted, but not required, to offer their services a la carte,
• A full service agent will only get paid if your home sells, and A fee for service agent will get paid whether your home sells or not.

Remember that if you choose the FSBO option you are not simply a home owner, you are also the real estate agent for your home. You must have the time and comfort to handle the process from marketing to closing the deal. If you are unsure about an aspect of the process, or if market conditions are not entirely favourable, it may be more beneficial to hire a full service Realtor®.