Industry leaders demand changes now

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In the photo:
Members of the Industry Leaders Group, representing most of Canada’s largest real estate firms, are demanding that organized real estate become more efficient and less costly for members, and that a national MLS system be implemented immediately. Recently six of the leaders met with REM to discuss their concerns. From left: Simon Dean, president, Royal LePage Residential Real Estate Services; Cliff Shillington, regional director, Re/Max of Western Canada; Bernie Vogt, president, Prudential Real Estate Affiliates of Canada; Pamela Alexander, regional director, Re/Max Ontario-Atlantic Canada; Peter Robinson, president, Coldwell Banker Canada; and Don Lawby, president/COO, Century 21 Canada Real Estate Canada. For more, click on the Stories button. (Photo by Marc Rochette)
 

As first reported in REM last September, the Industry Leaders Group (ILG), which includes most of Canada’s largest real estate companies, is pressing for dramatic changes to organized real estate. 
The group wants to see costs reduced, efficiencies increased, and a truly national MLS system put into place, which could be easily accessed for uploading and downloading listing information, by all Realtors and real estate companies across the country.  Members of the ILG conducted a survey of their salespeople and brokers, in part to see if there was enough support for the companies themselves to create such a national MLS system, if boards did not choose to establish it themselves. 
In January, the ILG presented a 12-point memorandum (see box below) to the Canadian Real Estate Association (CREA), outlining the concerns that emerged from their survey results.  Since then, members of the ILG have met with several Canadian boards to discuss those concerns. 
Recently, six members of the ILG held a roundtable discussion with REM editor Jim Adair and writer Kathy Bevan to explain their position.  Present around the table:  Simon Dean, president, Royal LePage Residential Real Estate Services; Don Lawby, president/COO, Century 21 Canada Real Estate Canada; Pamela Alexander, Regional Director, Re/Max Ontario-Atlantic Canada; Cliff Shillington, Regional Director, Re/Max of Western Canada; Peter Robinson, president, Coldwell Banker Canada; and Bernie Vogt, president, Prudential Real Estate Affiliates of Canada. 
 
REM:   Are any of the recent CREA and board initiatives addressing the issues you have raised?
 
Peter Robinson:  We are encouraged by the new direction that CREA and organized real estate is embarking upon.  And we’re hopeful.  We are pleased with CREA’s national information network (IEN) aspect.  The urgency of the timetable and costs are still unclear.
 
Simon Dean:  I think we’ve seen the beginnings of sensitivity to the issues being raised.  In Quebec these days we see a consolidation of board efforts, and look at some parts of the Atlantic Provinces where some consolidation has taken place.  I think that’s working toward the ultimate goal of being far more streamlined.  So there is some evidence of progress.  I think it’s difficult to measure the rate at which we might expect this transformation to take place, and which technology can deliver a better product if re-engineering was adopted by real estate associations as a group effort. 
 
Pamela Alexander:  We would like to see a national MLS system that all boards are part of, with state of the art technology that would greatly reduce costs and increase efficiencies across the country.  We feel that CREA has made every effort from the very beginning to satisfy some of our needs – they have been stellar. 
However, the new system (IEN), although it is a step in the right direction, will end up continuing to increase costs, as opposed to bringing them down.  The cost of delivering MLS has been greatly reduced over the last four or five years, going from approximately 50 cents on every dollar to 20 cents on the dollar. We haven’t seen the balance of that passed on to our membership. 
 
Don Lawby:  There may be movement, but it’s difficult when everyone is protecting their own turf.  We’re competitors in this room, but we’re more in line with our thinking about what has to happen than organized real estate is. 
I think organized real estate has come a long way, and I’m not sure they would have done it without the pressure from a group like ours.  But the timetable is not evident at this point. 
There are words that lead us to wonder who is going to control what:  who controls the listing?  We believe the broker owns and controls the listing. Does the board control it? Those issues still have to be dealt with.  I think that we’re farther along now than we were in December.  We’re not as far as many of us thought we should be.
 
Bernie Vogt:   One of the frustrations I’ve had, and many of us around this table have had, is that what is a given in the rest of the world – information movement, reduced costs, taking advantage of technology, not hoarding information, but rather making sure that you satisfy the universal customer need of readily accessible information – what’s a given in the rest of the world is something we’re struggling to attain here.  Why is it that when the whole world understands what’s happening with information, it’s a struggle for us in the Canadian real estate industry?  Why?  Why do we have 54 different real estate boards trying to fund themselves out of what the whole world is trying to give away, information?  You cannot build your organization based on the control of information – it’s everywhere.  The consumer today knows more about real estate in Kelowna than a lot of salespeople in Kelowna do.  And for any organization to attempt to hoard the information is absolutely swimming upstream.
 
REM:  Some people within the industry wonder if the changes your large companies propose would benefit small independent companies as well.
 
Don Lawby:  Things that we’re talking about do not benefit Century 21 or Royal LePage any more than they benefit a small company.

We’re looking for an efficient and effective way of running this business.  If the current 112 or 114 boards unbundled their services and the industry decided to support it, that would be wonderful. We are now seeing boards and associations that are trying to find a way to increase revenue, to run their own system.  They’re selling the data outside — that’s providing competition inside this industry. 
I don’t believe that that’s how boards were structured.  I don’t believe that’s the purpose of them.  I think what we’re asking organized real estate to do is what it structured itself to do originally.  And it needs to be efficient. I think it’s moving that way. 
I’m excited by what took place at CREA.  I’m dismayed that Vancouver and Toronto are not part of it, because they are significant players in this marketplace.  They are leaders. They should lead toward a unified industry, not toward a split industry.
 
Cliff Shillington:  The reason we got together is because we want to take our industry in a direction that is in the best interests of organized real estate. We want to make certain that the sales associate is still at the centre of the transaction. 
We’re all competitors sitting around this table, very fierce competitors, but we also know what this industry needs and the protection it needs.  Those sitting on the boards I believe have the right intentions as well, but maybe the implementation of it is somewhat narrow.
 
REM:  What is the biggest misconception about what the ILG is proposing?
 
Simon Dean:  The commerciality of a national MLS site – that what we’re proposing would profit our companies.
 
Bernie Vogt:  The national site we’re discussing has never been for profit.  And in any discussions this group has, it’s always predicated on universal accessibility. 
 
Don Lawby:  We believe the site should be funded by dues.  It should be a fee for use by salespeople.  Let’s say for the sake of discussion, if we were going to create a site that is a consumer site, and then sell advertising to banks, that sort of thing, or create links, we believe that revenue needs to be in the industry.  If it gets funneled off by organized real estate, it will never pass through to the brokers in the same fashion as if the brokers do it themselves on their own site.  That’s what we’re saying. 
And when we talk about ownership of a national MLS site by companies and organizations, we are including boards as Canadian organizations that can have ownership.  We would like the real estate industry in Canada to rest in Canada, if we can have it that way, not to rest with Realtor.com or HomeSeekers or somebody from outside our country. 

I have no problem with organized real estate owning a central system.  What I have a problem with is, three years ago the big boards got together and said, “We want CREA to state that it will not get involved in a MLS system.” Well, who better to get involved in an MLS system?  Everybody’s protecting their own area at a cost that all of our members have to bear.  And now they’re saying, “Let’s find another way to take revenue out of your business and let us manage it.  We’re going to sell advertising, we’re going to create links, and we’re going to take the money out, and with our great expertise that we have demonstrated to you, we’re going to show you how we can do good for you, because we’re going to give it back to you.” 
Well, I’ve never seen the federal government giving anything back to me.  And I don’t think the boards are going to give it back to us. 
 
REM:  Your survey was completed early last fall, and yet your proposals are just coming forward this year.  With the delays your group itself has experienced in trying to find common ground, is it realistic to expect boards to move quickly toward a single system, national MLS, as well as make the other changes you are calling for?
 
Cliff Shillington:   Because they work in a committee structure, boards are probably slower to react. 
But let’s call a spade a spade.  Some executive officers are protecting their territory and don’t want to see some of these changes take place, and it’s up to the membership of those boards to get those changes to take place, to stand up and be counted. 
The industry has changed dramatically, as we’ve all discussed.  The technology is available, the real inefficiencies are there.  It’s time to grasp it and run with it and become efficient with it, and stop being so territorial and protecting your turf and protecting your own interests.  And that’s why we’re very happy to see what’s taking place with the CREA site, and very disappointed to see Toronto and Vancouver still not get on board.  So I can’t help but sit here and think, what’s their agenda?
 
REM:  If the boards in Toronto and Vancouver joined the CREA site tomorrow, where would your proposals go from there?
 
Cliff Shillington:  That would certainly lead us to the point where we’re looking at a national MLS system, if we have all the boards working in that direction. 
However, we’re still lacking the technology, the software, to create efficiencies.  We don’t need the 54 different software systems that are out there.  The boards have to adapt – choose one system and make it simplistic and easy to go to. 
But the number one step is to have all the boards on side with that, and the two biggest boards in Canada are not at that point yet.   It’s encouraging to see Toronto is reconsidering it, but Vancouver hasn’t given any indication at this point, and we want to sit down with them and we want to discuss with them the importance of being part of this.
 
REM:  Is it your hope that by discussing these proposals publicly, the Toronto and Vancouver real estate boards will respond positively to your ideas?
 
Simon Dean:  It’s that, but more importantly, there is a shared consensus about the issues associated with a Multiple Listing Service as we’ve presented them to you.  And one of the reasons we did want to present them to you is to be sure that your readership had a clear understanding of what we are presenting, and perhaps use REM as a vehicle to get their feedback and endorsement for the fact that the leadership of the large franchise brands in Canada are representing their views.
Don Lawby:  It would have been simple for us in October, when we were being presented by suppliers of technology, to endorse one, to sign an agreement with one and to start a system.  And at that point to start a war in our industry.  We were ready.  We were there.  We had providers. We knew we could sign up – we could move forward tomorrow.  But I think every one of us is very concerned about the impact of what we do on our industry.  Do we want to have a war?  We want the industry to win – we don’t want to win.  We don’t want the Toronto board to win – we want the industry to win.  And I think that’s why there’s been patience.  And there have been degrees of impatience at this table, fighting among ourselves about what do we do next.  Do we go out and do it, or do we continue to try to push the train uphill?  And at this point we continue to try to work by influence, instead of going ahead with our own system. 
 
Pamela Alexander:  We are firmly committed that if these 12 points do not come to fruition over a reasonable period of time, that we will put the other option on the table, where we can deliver a state of the art MLS system across this country for about $20 per person per month.
 
REM:  How do you define “reasonable period of time” before you will feel you have to act unilaterally?
 
Pamela Alexander:  I don’t like setting deadlines, but at the end of the day what we would like to see from all the real estate boards across the country is some sort of a plan of how they are going to meet these needs.
 
Cliff Shillington:  Once they show us that plan, that they are prepared to move in that direction, we will be prepared to be patient.
 
Don Lawby:  There are a large number of boards that have contracts that come up over the next two years.  If at least the major ones could find a direction, a system, a way to go and they can make commitments that that’s the way they are going, I think we’d feel a whole lot better than how we feel today.  This is a huge issue for all of us.
 
REM:  A number of you have agreements with major Internet players – HomeAdvisor.com, HomeSeekers.com and Realtor.com, for example – that other companies in Canadian real estate have been loathe to see enter the Canadian real estate marketplace.  Don’t these agreements increase the threat that some third party will move in and take over the multiple listing information and distribution system, to the detriment of our industry?
 
Don Lawby:  With the structure of organized real estate being what it is in this country, using an outside source such as HomeSeekers becomes, for some people, their amalgamator.  That’s the aggregator, because we can’t even get the boards to give it to us.
 
Pamela Alexander:  Or we’re paying a fortune to a board like Toronto, to ‘steal’ our own stuff.
 
Don Lawby:  What’s happened is that organized real estate has forced some companies to do some things that they may not normally have done. 
 
Cliff Shillington:  If we were able to get all the information we wanted from MLS.ca, we would have no need to go to an outside source.  Because of the lack of agreement, the lack of progress to MLS.ca, it did force us to go to an outside party.
 
REM:  Aside from what your hopes are for change within the industry, what do you think organized real estate will actually have in place one year from now?
 
Peter Robinson:  I’ve always been an optimist, and I think that, given the momentum and the rethinking of the Toronto and Vancouver boards, that we will have some boards outside the system for a bit, but eventually they will have to provide a seamless national information network.  It’s not terribly complicated how to do it, it’s just the will to do it.  So it’s more of a political issue, exacerbated by the fact that they are organizations working for organizations, as compared to the boss, who says this is what we have to do.
 
Cliff Shillington:  Realistically, I believe we will have all the boards on the MLS.ca site and moving in the direction that we think is best for the industry.  It still may not be one, state of the art technology system – they’ll still be uploading from their systems to the MLS.ca.  But I really, firmly do believe that they will be working towards establishing a world-class technology system.  Because if they don’t, we will.

 
Pamela Alexander:  A year from now, I would like to see them very close to rolling out a national, state of the art MLS site.  I would also like to see a business plan from the real estate boards – I don’t have to see it personally, but I think it should be presented at least to CREA – about how they are going to become more efficient, unbundled services and deliver a superior product.
Bernie Vogt:  I think a year from now we will have taken pretty significant steps toward a national, quality listing information distribution program.  As it relates to costs and the efficiencies of running a system, I think real estate boards are going to realize that at the street level, the salespeople are going to demand lower costs.  Everyone is going to focus on the cost of being in business.  It’s happening in Vancouver, it’s happening in Toronto, it’s happened in the Okanagan-Mainline, it’s happening everywhere.  I think a year from now, there will still be a lot of frustration with how do you rationalize 54 different real estate systems.  When the technology is there to do it in a month, why aren’t we doing it?  I think that frustration will still be there, but I think we’re a long way down the road.
 
Simon Dean:  I think technology offers us all challenges and great opportunities.  And I guess I’m a believer that the cost of technology in providing a world class MLS system has been available now for a little while.  The ease of single entry listing loads, and the very fact that there are a number of entities interested in providing an MLS alternative, will create the wisdom that will embrace speedier change.  Otherwise competitive forces and low cost technology will pose the threat of splitting the provision of multiple listings into many providers, directly to the consumer.  Which, if that begins to take place, will again accelerate the wisdom of organized real estate to put aside more parochial issues.  And I don’t say that in a critical way, because clearly they rely on funding that has been there to provide the services they provide.  But perhaps a recognition that that source of funding is going to go away and that they have to restructure their boards and the services that they provide, rather than fight the inevitability of better service and lower costs.
 
Don Lawby:  I think one of two things will happen by June of next year.  There will be a written business plan for a national MLS system, endorsed by most of the real estate boards of this country, including the major boards.  Or, we will start a national system ourselves. Because I think that by June of next year we will either have seen dramatic evidence of organized real estate moving that way, and agreeing that they are moving that way – it will no longer be words.  Or we will move. 
 
Peter Robinson:  It’s not so much the year that’s important, but if the movement is there and we feel they are doing the best they can, given what they have to work with, that would be good.  If we see it stall, we have everything in place to move very quickly. 
 

 

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