Gabrielle Jeans’s Weblog

Several years ago, a Toronto real estate professional named Stephen Moranis (son of Toronto area real estate legend Sadie Moranis) teamed up with Lawrence Dale (a real estate lawyer) to try a new approach to selling real estate in Canada.  They realized the Toronto area’s extremely hot real estate market (which enjoyed an unprecedented 8 years of consecutive growth until recently), along with the increasing maturation of the internet and technology, had made the average home seller faster and for more money than ever before.  When homes almost sell themselves, it’s natural the public will call for changes in how real estate professionals get compensated for their work.

With so many Toronto area houses selling so quickly for at or above asking price, along with the empowerment in selling on their own the internet has brought to consumers, Dale and Moranis responded by launching a brokerage called Realtysellers.  They claim they were the first in Canada to offer a la carte discount services including a flat fee service whereby FSBO home sellers could get their home listed on MLS and avoid paying any percentage based commissions.  Flat fee services were already being offered by US brokerages when Realtysellers launched.

This discounting didn’t sit well at all with the Canadian real estate powers that be, CREA and the Toronto Real Estate Board (TREB).  Moranis and Lawrence allege TREB created new rules to prevent their innovations to pricing structure.  TREB then blocked Realtysellers’ access to the Toronto MLS since they weren’t following the new rules, inevitably causing the brokerage to go out of business, which it did in 2006.

Where most would have let CREA win, Moranis and Lawrence fought back, a cause no doubt aided greatly by Lawrence being a real estate lawyer.  The partners filed a $100 million lawsuit against CREA and TREB.  It was recently announced a federal Competition Bureau probe into this matter and CREA in general has forced CREA to relent in this type of matter and change.  The specific terms of this settlement haven’t been made public yet, but they’re expected to open the door for flat fee discount brokerages like Realtysellers to exist in Canada.

The same thing has happened in the US.  The US Department of Justice’s antitrust division filed a lawsuit against the National Association of Realtors last year, accusing NAR of discouraging competition and free-market discounting.  A settlement was reached.