Everyone agrees that MLS sold data is valuable. One of the reason it is so valuable is because it’s a protected resource. While there would be immediate consumer benefits to releasing the data, the long term impact could potentially be detrimental to the very system that created it both from a consumer privacy and data integrity perspective . While no system is perfect, Canada has one of the best real estate systems in the world. Protecting the sold data is an intricate part of providing you with a great buying or selling experience.
If 100% of the data was made available, the seller, your address and what you paid for your property would be made available to anyone who wanted it. Arguably, it wouldn’t take much to cross reference your address with another database (i.e. the WhitePages/phonebook) to get your name and with a little more social engineering other sensitive data about you.
I believe that consumers should have access to aggregate sold data. If privacy is truly the issue, it wouldn’t take rocket science to aggregate the data to give consumers the information they need without exposing sensitive consumer data.
With that said, what would happen if 100% of the data was available to anyone (or entity) that wanted it?
Here’s One Theory:
If you have ever bought, sold or traded real estate in Ontario, then at least one of the following statements will probably resonate with you:
“Sloppy, careless, lazy, uneducated, good-for-nothing Realtors”
“Pushy, cheap, non-responsive, know-it-all consumers”
“Old school, archaic, out-of-date technologies & systems”
“Invaluable data, that if released to the public, could completely transform the way we trade real estate. Forever.”
We know that sold data is by far-and-away the most important information required in determining how much you should pay for a house or how much your home is worth. Without it, we may as well be using the barter system. Yet, in Ontario, that information is kept under lock and key — and YOU can’t have direct access to it without a real estate license.
Aside from strong opinions about the Canadian economy, and what a buffoon Donald Trump is, real estate is one of the hottest topics of discussion. In 2015, there were several articles published, including these ones by The Globe & Mail, The Toronto Star, CBC News and REP Magazine among many others; all on the increasingly popular and controversial topic of sold data.
Should historical sales data be made available to the general public, or should it continue to only be accessible by a licensed Realtor?
Before we dive into answering this question, please take a moment to scroll to the VERY BOTTOM SECTION of this article to familiarize yourself with “The Industry Players”.
Go ahead, I’ll wait ————
Welcome back. If you’ve been following the sold data controversy over the past year, you’ve likely read dozens of different opinions on whether or not sold data should be shared.
Here is a general consensus of what we know:
Consumers – Sold Data For Everyone!
90% of home buyers started their search online in 2015. In the corporate world, 74% of business buyers conduct more than half of their research online before making an offline purchase. The message is clear: In a world with instant access to information, consumers want to be educated and do their homework before engaging a salesperson.
Without access to sold data, how the heck are consumers going to figure out what their property is worth and/or what they should be paying for property? Inconveniently (especially if you’re considering the For Sale By Owner (FSBO) route), you have to fire up an entirely new research project to figure out which knucklehead Realtor you’re going to call — your buddy Bill, Aunt Susie or that guy that keeps mailing useless flyers every month with his mug all over it. After some not-so-serious consideration, and at the risk of feeling pressured or pissing off Bill or Susie, maybe it’s better to just ask the neighbour what they know instead.
Brokerages – Six of One, Half-a-Dozen of The Other
A Brokerage owns their own listing data. They ultimately approve what information is allowed to be marketed and shared with the public. Sold data empowers salespeople to provide valuable information to consumers. Sold data is also a great reason for a consumer to call on them for help, and as a result, you will see two different camps when it comes to deciding who should have access.
Camp A – Does not want to give up the data. If made public, it will devalue their agents, create more competition and potentially make it a heck of a lot harder to market properties when there is inevitably more than one MLS system that Realtors will need to list properties on and for consumers to search. Not to mention privacy issues (we’ll talk more about this in a bit).
Camp B – Everyone should have it! And why the heck not? Consumers become more educated, shortening the sales cycle. More educated consumers will leverage the strengths of the good Realtors. Oh, and it just so happens that providing access to sold data makes for a great lead generation tool forcing consumers to sign-up to access it. In some cases, there are brokerages with almost 30K subscribers that are making a pretty penny of the data.
TREB – What part of “not a chance” did you not understand?
The non-profit group, run by elected board members, has a hard stance on keeping the data protected. While there are many reasons to consider, the most important are:
(1) Privacy. Do consumers really want their name and address made available to the public along with who bought/sold and how much was paid for the house? Maybe Mom and Dad (or someone else) owns your home and you don’t really need people knowing. We can go deeper on this, but you get the point.
(2) Unfair Competition. The MLS® system as we know it would change forever. It is run and maintained by CREA and funded by the annual dues that Realtors pay each year. If companies like Rogers had been successful with Zoocasa.com, bottomless pockets could quickly erode the system by offering lower commission fees (although it sounds good at first, there’s a catch – keep reading), better technology and ultimately offer an alternate place to advertise properties. For TREB, who works on behalf of brokerages and Realtors, it would be counter intuitive to give away the brokerages’ data to competitors.
(3) Mayhem Would Ensue. With sold data available to anyone to commoditize, there would be many new ways for consumers to buy and sell real estate. The general public could become market experts, potentially feeling comfortable cutting out Realtors (and fees) entirely. Companies could create nifty new tools to analyze the data, repackage it and sell it back to consumers. There is potential for the total number of Realtors to decrease because the number of private sales(FSBO) would increase, creating more competition, lessening the number of commissioned sales (arguably a good thing for consumers, not for brokers). This in turn would reduce the amount of annual dues collected, reducing the investment made into the tools and services REALTORS® offer their clients.
Similar to, let’s say Canada’s Telco industry, would it not be in their best own best interest to protect the data and ultimately their revenue source from competition?
Most importantly, however, is TREB’s argument that it would ultimately hurt the consumer. Eventually there would be several MLS systems (similar to the United States). The companies with the deepest pockets and best technology could compete to be the #1 or largest MLS system, but never have 100% of the data.
So would sharing sold data help or hurt consumers?
Let’s take a look:
If sold data was made public, CREA would lose it’s competitive edge and companies like Zoocasa would have been successful in growing their MLS system. And in turn, so would the next dozen companies that would inevitably follow suit. These companies would be competitors, constantly battling for eyeballs and listings in order to monetize the data. You would see boutique websites popping up, offering listings for niche areas, neighbourhoods and cities.
For brokerages, to maximize a property’s exposure, uploading data to many MLS systems would become a full-time job. In theory, Brokerages could take kickbacks or sell their listing data. Technically, they could create exclusivity agreements in exchange for money. The largest brokerages could entertain the idea of building their own MLS systems and provide exclusive access to their Realtor’s only. If successful, being able to advertise on their MLS system would be an incentive for consumers to list with them, but would be one more system consumers would have to check.
Instead of having a single source of truth (like we do today), sold data would be spread across many systems and it would be extremely difficult (if not impossible) to aggregate the data. The accuracy of the data would be limited to the percentage of listings each MLS system contained. This is what is happening in the United States, where there are nearly 900 MLS Systems today. Could you imagine having to create a dozen accounts on a dozen different websites just to search for properties? Now imagine the complexity of book marking, saving and trying to remember which listing was on which site.
Arguably, sharing the sold data would quickly reverse the benefits that consumers experience when kept under lock and key.
Top performing Realtors (and consumers) utilize the sold data to accurately price properties for sale as well as to negotiate for buyers. By limiting their ability to accurately analyze and price property, it will ultimately hurt the consumer. In many cases, buyers would over pay and sellers would get less than they should. The term “market value” would be determined by a combination of a limited sample of recent sales and what consumers are willing to pay, not what the property is actually worth.
Imagine going into a multiple offer situation without a clear picture of the property’s value and having to bid against other buyers who also don’t have a clear picture of what the property is worth. Depending on the scenario, you might find yourself over paying significantly to win the pricing war and potentially taking years to recover the cost of paying an inflated price.
When I first sat down to write this post, my goal was to prove why consumers should have access to sold data. I put myself in the shoes of a consumer who has the desire to perform their own market analysis and the potential frustration of relying on a Realtor to provide the data. Like licensed drivers, there are many Realtors “on the road” who shouldn’t be. Without the ability to do your analysis, you need to interview multiple Realtors to get a common opinion. And if you’re not ready to buy or sell, you’re not going to waste your time with a futile exercise.
For the record, I believe consumers should have access to sold data. There is no reason why aggregate data can’t be made available to allow consumers to do their own market analysis and still protect the interests of the consumer.
The good news is that there are more and more competent Realtors who are willing and capable of providing an accurate market analysis. Teams (like ours) are looking for ways to provide value added services on an ongoing basis, not just when you’re buying or selling. We want you to have the information at your finger tips and if it’s not available, we’re happy to get it for you. In lieu of having access to the sold data yourself, I highly recommend finding a Realtor you trust and leverage the relationship — they will be happy to provide a detailed report on what your home is worth and an explanation as to how they got there.
Should consumers have full access to the data? What do you think?
The Industry Players
(Many Realtors fumble around explaining these, so read up)
Real Estate Brokerage
A Real Estate Brokerage (not to be confused with a Real Estate Broker) is authorized to trade in real estate on behalf of the consumer. In turn, the brokerage (Chestnut Park, RE/MAX, Royal LePage, etc.) as an owner employs or appoints salespeople to perform day-to-day listing/selling functions in the real estate trading process. Such activities are always performed under the guidance and direction of the Broker of Record. Real estate listings are owned by a real estate brokerage. The brokerage has sole discretion over who can access, advertise and share listing data.
Real Estate Broker
A Real Estate Broker is a person who has taken education beyond the agent level as required by law and has passed a broker’s license exam. Brokers can work alone or they can hire agents to work for them.
The trademark REALTOR® and all related graphics are trademarks owned by The Canadian Real Estate Association and the National Association of REALTORS®. In Ontario, all real estate salespeople are licensed Realtors. The brand represents a standard of professionalism and knowledge. It is possible to be a real estate agent and not a REALTOR®.
Toronto Real Estate Board (TREB)
The Toronto Real Estate Board (TREB) is a not-for-profit corporation acting as the collective voice for both its commercial and residential REALTOR® Members and operates under the direction of an elected voluntary Board of 16 Directors.
Ontario Real Estate Association (OREA)
The Ontario Real Estate Association (OREA) help’s Ontario Realtors, Member Boards (i.e. TREB) and Associations succeed.
Canadian Real Estate Association (CREA)
The Canadian Real Estate Association (CREA) works on behalf of the public and its REALTOR® members. They assist Realtor members to better serve their clients.
Real Estate Council of Ontario (RECO)
The Real Estate Council of Ontario (RECO) is a not-for-profit corporation that regulates the trade of real estate in Ontario in the public interest. On behalf of the Ontario government, RECO administers and enforces the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and its regulations.
Multiple Listings Service
Multiple Listings Service. In Canada, MLS® is a registered trademark. The service, owned and operated by CREA, is a suite of services that enables real estate brokers to establish contractual offers of compensation (among brokers), facilitates cooperation with other broker participants, accumulates and disseminates information to enable appraisals, and is a facility for the orderly correlation and dissemination of listing information to better serve broker’s clients, customers and the public.