One of Canada's largest discount real estate brokers suspended operations yesterday, saying it could no longer operate in the face of proposed changes to how homes are listed for sale on the Multiple Listing Service.
Toronto-based Realtysellers Ltd. announced it was shutting down "pending resolution of the Multiple Listing Service issues." The company also vowed legal action to block MLS system changes that are under consideration by the Canadian Real Estate Association, or CREA.
The 86,000-member association owns the MLS trademark and individual real estate boards operate the system in their areas. The association is reviewing several proposals that would tighten the rules governing how brokers list homes on the service.
"CREA has been working to implement rules that would restrict Realtysellers' access to the MLS systems of local member boards," the company said in a statement.
Katherine Kay, a Toronto lawyer representing CREA, said the association is still consulting members about the proposed changes and added that nothing will be decided on the issue until a convention in March.
"In CREA's view, there is simply no basis for an allegation that anything CREA has done has had any impact on any member company, whether it's Realtysellers or anyone else," she said. "The MLS rules have been in place for several years and there have not been any changes to that that would have an impact on any member company."
The MLS system is more than 50 years old and it has become a key resource for real estate agents. On average, the MLS website receives 2.8 million unique visitors each month, according to CREA.
Since launching in December, 2000, Realtysellers has become a leading online real estate service, offering clients low commissions and an opportunity to list homes on the MLS for a $695 fee. It was co-founded by Stephen Moranis, a former CREA director and former president of the Toronto Real Estate Board.
But the company has also raised the ire of many full-service brokers who complain that Realtysellers and other discount firms are misusing the MLS system and damaging its effectiveness. They argue these agents provide few client services and flood the system with homes.
The issue came to a head earlier this year when CREA's board announced a series of changes that it said were designed to protect the MLS trademark. The proposals included requirements that agents inspect homes before listing them on the MLS and work with other agents throughout the sale process.
The proposals infuriated many discount brokers who argued the changes would curtail their business and force them to increase fees. The Competition Bureau also expressed concerns, saying the proposals could be anti-competitive.
Delegates to a CREA meeting were supposed to vote on the changes in September. But they opted to seek more input from members and address the issue at the CREA convention in March.
Realtysellers has fought similar changes before. In 2002, it launched a lawsuit against the Toronto Real Estate Board over proposed changes to the MLS system it operates. The suit, which also named CREA, ended in a settlement that permitted Realtysellers to continue listing properties.
"Despite this earlier settlement, CREA is again attempting to restrict access to MLS," the company said in its statement yesterday.
Mr. Moranis was not available for comment yesterday. But a source close to the company said it couldn't carry on given the uncertainty over the pending changes. "How do you operate in a landscape where your means of production have said that they can put you out of business at any time?" the source said. Late yesterday, the company's website was no longer accessible.
Ms. Kay, representing CREA, said the association has received legal advice that it needs to protect its trademark. "There have been no changes to the rule," she said, "and there will be no changes to the rules until the members meet in March, 2007."
© The Globe and Mail
