Access to real estate sales, listing data benefits competition

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Millicent Wong
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Real estate portals generate competition, inform buyers and draw even more attention to advertisements

There is a for sale sign in front of a house in Toronto. There is a for sale sign in front of a house in Toronto. Photo by Carlos Osorio/Reuters files

Owners of real estate sales data in Canada have gone to great lengths to limit unauthorized access to and use of that data, but the Competition Bureau and many in the industry have long advocated open access to data to increase competition.

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The matter appears to be far from resolved, despite years of litigation and judgments. As a result, some real estate authorities continue to file legal notices against real estate technology companies trying to gain access to their data, reminding them of the integrity of their digital infrastructure.

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Real estate transaction and listing data in Canada is disseminated through the Multiple Listing Service (MLS) systems owned and operated by the real estate authorities. A cooperation agreement facilitates the exchange of data between and between boards. Real estate agents typically register with one or more boards and are then authorized to list properties in the MLS system, which can then be reviewed online by potential buyers and their agents free of charge.

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The bodies are naturally motivated to protect the integrity of the data they collect, maintain and disseminate, either themselves or with the help of others. The improper use of this data or access by unauthorized parties is a legitimate concern of the industry, but also an obligation to promote competition and prevent monopolies.

A recent industry-sponsored paper by Paul Johnson and Anthony Niblett pointed out that the success of the MLS system lies in its “network effects”. The more homes listed in the system, the more buyers are attracted to them, which motivates more sellers to list their properties. This reinforcing loop of more offers leading to more buyers, which in turn leads to even more sellers, creates what is known as the network effect.

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The authors make three recommendations to maintain and enhance the value of this system. First, it recommends that real estate agents be required to list all properties on MLS. Currently, the system operates as a voluntary listing service, allowing brokers to decide whether they want to handle the transaction on their own or as part of their brokerage.

Before the real estate industry embraced the internet, the practice of keeping listings off the MLS system was widespread with large brokerage firms double-ending the sale with agents from the same brokerage firm representing the buyer and seller. However, such practices are unlikely to be in the best interests of consumers, so requiring that all properties (with some exceptions) be listed is worth considering.

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Her second recommendation is that MLS “must continue to use highly effective portals” through which real estate data is disseminated. The most well-known real estate portal in Canada is Realtor.ca, which is operated by the Canadian Real Estate Association, the sponsor of the study.

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At the same time, proptech companies and digital-first brokers are also providing listing data with additional information about neighborhoods and past transaction prices via virtual office websites. Portals generate competition, inform buyers and draw even more attention to advertisements. The industry therefore benefits from such portals.

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The third recommendation concerns restricting access to MLS data. The authors said that full access to listing data could discourage sellers from listing their property with MLS, but we believe such privacy concerns are a red herring.

Sellers readily agree that when they list their properties on MLS, photos of their bedrooms and washrooms are made available online for free to anyone in the world. If privacy was an issue, sellers would be more cautious. But the millions of homes listed on MLS, which include photos, 3-D renderings of floor plans, and videos, suggest privacy concerns aren’t a deterrent.

The authors said, “Any company whose access to MLS systems is used to transact real estate would likely create value and should (continue to) have access.” But real estate agents aren’t the only ones creating value. Most real estate transactions do not happen without the involvement of home inspectors, attorneys, financial institutions, and others.

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With advances in artificial intelligence and communication technologies, the real estate sector is ripe for constructive changes that benefit consumers while protecting the intellectual property rights of those who collect and store real estate data. Limiting the definition of value-added units to those who market real estate is not in the best interests of consumers.

Murtaza Haider is Professor of Real Estate Management and Director of the Urban Analytics Institute at Toronto Metropolitan University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website, www.hmbulletin.com.

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