Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

April 28, 2016 | Ethics

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

 

When I sold my pile in beloved Lunenburg last winter, the young couple who took it knew everything. They knew when I bought it, and how much I’d paid. They knew how many days it had been on the market when I made my offer. They also knew how long the previous owners had been there, what they paid, and how long it took to find me. They had the property’s tax history going back years, plus they could do their own comparables by tracing the sales history of neighbouring properties.

In short, these two were informed buyers, able to judge whether they were paying a fair price or not, and knowledgeable in advance about price trends and the time it might take them to sell in future. And they still bought it. We all won.

Of course, Lunenburg is on the South Shore of Nova Scotia, a province where realtors are far less anal about things and the real estate board releases its data freely. So house-shoppers can log on to ViewPoint.ca and see everybody’s undies. It’s the future, of course. A big step to breaking down a realtor-designed system which, in most of the country, profits by keeping consumers blind and ignorant.

Until now.

This week the country’s biggest real estate cartel took a mortal hit. After five years of fighting the inevitable, trying to hold back the digital tide sweeping through all of our lives, it’s the Feds, 1, and TREB, 0. Soon buying a house might be a whole different, and vastly more informed, experience.

The realtors argued that the MLS system (and its trove of data) belongs to real estate board, and they can control it as they wish. They also argued releasing sales histories, days-on-market numbers, relistings, price reductions and so on could infringe on the privacy of a seller, past and present. But the Competition Bureau pressed on with its case that the Toronto Real Estate Board was “abusing its dominance” by shutting down agents who tried to publish sales history data on their websites, or make such key information public.

As you understand, buying a property is hard enough, now that you have to pay a ransom for it. Buying it without any historic context only fuels bidding wars, cranks up emotions and leaves inexperienced buyers with no useful, statistical context for their actions. In short, blinded buyers spend more. They can be more easily swayed, influenced, manipulated and goaded.

By preventing purchasers from knowing what the current owner paid, when, and what the market action has been, they go into an offer heavily influenced by the listing agent, unless they’ve been smart enough to enlist their own guy. Most aren’t. Just one more reason we now have average house prices that average people can’t afford – and yet keep reaching for more debt in order to do so.

The ruling Thursday could be a total game-changer. Says the competition watchdog: “TREB restricts how its member agents provide information to consumers, such as previous listings and previous sale prices, thereby denying agents the ability to introduce new and innovative real estate brokerage services using the Internet… The restrictions the have had, are having and are likely to have the effect of preventing competition substantially in a market.”

You bet. There are lots of agents itching to publish reams of data on area houses, allowing prospective buyers to sift through it on their own, coming to an informed decision on what listings they want to chase. To date, the cartel has threatened to shut them down entirely by simply cutting off their feed of MLS data, unless they comply.

Things won’t change overnight, but by the end of this year (or sooner) there may finally be some clarity delivered to a market which has relished the dark corners. Just imagine if the stock market operated this way, with investors forced to guess what shares traded for yesterday, last month or last year, and expected to simply pony up whatever the seller was asking. It would collapse.  Financial regulators have worked hard to ensure there’s transparency, disclosure and complete information disseminated to all parties at exactly the same time. Anything else amounts to insider trading. And that sends you to jail.

It’s a good week with ethics.

Finally.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

April 28th, 2016

Posted In: The Greater Fool

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.