The Battle for Transparency and Choice in Canadian Real Estate: Understanding CREA’s Cooperation Policy

In a significant move impacting the Canadian real estate landscape, the Canadian Real Estate Association (CREA)’s Realtor Cooperation Policy came into effect in January. This policy fundamentally alters how residential properties are marketed across the country. It mandates that realtors must list publicly marketed residential properties on the Multiple Listing Service (MLS) within a maximum of three days, or as stipulated by their local board or association, unless specific exemptions apply. This directive aims to centralize property listings, primarily channeling them onto platforms like Realtor.ca, rather than allowing them to reside solely on diverse, less visible platforms.

The term “publicly marketed” is crucial here. CREA defines it as any representation of a listing to individuals or entities not directly associated with the listing brokerage or office in a business capacity. This means widespread advertising – through social media, public websites, or signage – falls under the policy’s scope. However, direct, one-to-one communication between an agent and a specific individual or another agent remains exempt, preserving a narrow avenue for discreet property discussions.

At its core, the policy seeks to ensure greater market transparency and broader exposure for most residential listings. While this intention is clear, its implementation has ignited a contentious debate within the industry, pitting advocates for market centralization against proponents of diverse marketing strategies and consumer choice.

The Rationale: Promoting Market Efficiency and Fair Access

CREA’s primary justification for the Realtor Cooperation Policy centers on addressing the perceived negative consequences of limited exposure marketing tactics. In a statement to REM, CREA articulated that these tactics, such as the misuse of “Coming Soon to MLS” signs in front of homes that often never made it to public listing, can ultimately disadvantage both sellers and buyers. For sellers, it might mean missing out on optimal offers from a wider pool of potential buyers. For buyers, it restricts their access to available properties, making informed decisions more challenging.

The association champions the MLS system as a cornerstone of an efficient and equitable real estate market. They argue that a higher concentration of listings on MLS systems means more choices for buyers, which, in turn, translates into a larger pool of potential buyers for sellers. This cooperative model, according to CREA, enhances the overall value and effectiveness of the MLS for both the industry and its clients. For instance, comprehensive competitive market analyses (CMAs) – crucial for accurate property valuation – become significantly more robust when the vast majority of listings are readily available on MLS systems, providing a complete picture of market activity.

CREA acknowledges that not all sellers wish for their property to be publicly listed. The policy includes provisions for opting out, requiring sellers to complete a disclosure and consent form. This form explicitly notes that sellers who choose not to publicly market their property can decline to place their listing on an MLS system. This opt-out clause, however, has become a point of contention, with critics arguing it is overly restrictive and may not adequately serve diverse seller needs.

Despite passing with over 80 percent support from voting delegates at CREA’s 2023 AGM, the policy has met with significant pushback. While the majority vote indicates a consensus among a segment of the organized real estate community, the dissenters highlight fundamental concerns regarding competition, consumer choice, and the evolving nature of real estate marketing in a digital age.

Industry Reactions and Emerging Challenges

The practical implications of the Realtor Cooperation Policy are already being felt, particularly by platforms specializing in off-market listings. Eric Skicki, founder and CEO of BrokerPocket, describes his company as Canada’s largest real estate agent-only marketplace for off-market residential properties. For businesses like BrokerPocket, the new policy represents a direct challenge to their operational model.

Skicki points out that CREA, with its approximately 160,000 members, effectively holds a near-monopoly over residential real estate transactions in Canada. He contends that outside of BrokerPocket, there is no significant secondary market player offering a distinct alternative to the MLS system. This perception of monopolistic control is central to the arguments raised against the new policy, suggesting that it further entrenches CREA’s dominance at the expense of competition and innovation.

Interestingly, Skicki reveals that discussions with various leaders in organized real estate have indicated a lukewarm interest in enforcing the new rule. Many leadership figures, he claims, see “zero incentive and zero interest” in stringent enforcement, with some even expressing concerns that rigorous application of the policy could expose their board or brokerage to potential liability. This internal resistance suggests a lack of industry-wide consensus on the policy’s efficacy and desirability, potentially leading to inconsistent enforcement and further market confusion. CREA, for its part, states it continues to receive input from various sources regarding policy enforcement, indicating an ongoing evaluation of its impact.

BrokerPocket’s stance is not about seeking a special exemption solely for itself. Instead, the company advocates for a broader principle of competition and consumer choice within the real estate sector. In an ideal scenario, Skicki argues, the policy’s restrictions on competition would be removed entirely, allowing all platforms, including BrokerPocket, to compete freely. This open market environment would, in theory, provide realtors with a wider array of marketing tools and strategies, ultimately leading to more product choices and potentially more competitive pricing for consumers.

Beyond Profit: The Imperative of Privacy in Home Sales

One of the most compelling arguments against the blanket application of the Realtor Cooperation Policy revolves around the diverse motivations of home sellers. Eric Skicki challenges CREA’s implicit assumption that profit is the sole driver behind every sale. He argues that CREA’s policy appears to be framed with the notion that “when someone sells their house, the only thing they’re seeking is profit.” However, he underscores that privacy can often be a paramount consideration, sometimes even outweighing financial gain.

Consider, for example, a divorce scenario. A homeowner navigating a separation may be highly reluctant to have a conspicuous “For Sale” sign on their lawn, endure open houses, or have their property extensively documented and searchable online. Such public exposure can exacerbate an already sensitive personal situation, inviting unwanted scrutiny and potential emotional distress. In these instances, a discreet sale, often facilitated through an off-market platform, becomes not just a preference but a necessity.

Beyond divorce, numerous other circumstances necessitate a private sale. Individuals dealing with significant physical or mental health challenges may find the intrusive nature of traditional public listings overwhelming. High-profile individuals, those with unique security concerns, or even sellers of exceptionally high-value or distinctive properties may opt for a more targeted, private approach to maintain confidentiality and control the narrative around their sale. Convenience also plays a substantial role; avoiding the often-disruptive cycle of showings and public open houses can be a strong motivator for many homeowners seeking a smoother, less stressful transaction. The policy, critics argue, fails to adequately account for these legitimate and varied seller needs, forcing a one-size-fits-all approach onto a diverse market.

Legal Scrutiny: Competition Law and the Real Estate Sector

Recognizing the complex legal implications of CREA’s policy, BrokerPocket has sought the expertise of John Syme, a prominent lawyer specializing in competition law. Syme’s involvement brings a weighty legal perspective to the debate, given his extensive background. For two decades, Syme served as in-house Department of Justice counsel to the Commissioner of Competition and the Competition Bureau, where he was lead litigation counsel in several precedent-setting cases before various Canadian courts, including the Supreme Court.

Syme expressed surprise upon learning about the Realtor Cooperation Policy and its potential to restrict realtors’ ability to offer a full spectrum of service options to their clients, including those provided by platforms like BrokerPocket. He views the policy through the lens of competition law, questioning whether it might constitute an undue restriction on trade and innovation within the real estate market.

Since his retirement from the Department of Justice in 2019, Syme has continued to provide competition law counsel to both private sector and government clients. Crucially, he is also co-counsel in two ongoing real estate industry class actions. These cases directly challenge rules created and enforced by CREA and local real estate boards, such as the Toronto Regional Real Estate Board (TRREB), alleging that these rules impose restrictive practices on brokerages and realtors. Syme highlighted a significant victory in one of these cases, where the Federal Court “green-lighted” the case to continue after defendants attempted to have it dismissed, a decision now subject to appeal. His involvement with BrokerPocket, where he has also taken an equity interest, stems from his belief in Eric Skicki’s vision for the company as a competitive tool and his conviction that he can help address the competition issues raised by CREA’s policy.

The Evolution of Pocket Listings: From Informal to Optimized

Pocket listings, or off-market sales, are far from a new phenomenon in real estate. As Syme explains, they have been an informal yet integral part of the market for many years. Traditionally, agents and brokerages communicated about these listings through word-of-mouth, email, or private networks. This highly decentralized approach meant there was no comprehensive database or centralized platform where realtors could easily discover or market properties available off-market.

While offering discretion, this traditional model presented significant disadvantages. Sellers opting for a pocket listing might receive a lower price for their property, as many potential buyers who would have been interested might never become aware it was for sale. Similarly, buyers were at a disadvantage, potentially missing out on properties perfectly suited to their needs simply because they weren’t publicly listed. This informal system lacked the reach and efficiency to truly serve a broad market effectively.

Modern platforms like BrokerPocket emerged to address these shortcomings. By creating an organized, agent-only marketplace, they professionalize the pocket listing concept, offering a structured environment for discreet sales. These platforms maintain the privacy and exclusivity desired by some sellers while simultaneously expanding the reach beyond a single agent’s immediate network, connecting off-market properties with a larger pool of serious, pre-qualified buyers from across various brokerages. This evolution represents an attempt to optimize the benefits of private sales while mitigating the historical disadvantages of limited exposure, thus offering a valuable alternative to the traditional MLS system.

Engagement with the Competition Bureau: Seeking a Level Playing Field

Given the significant competition concerns, BrokerPocket’s team has engaged in discussions with the Canadian Competition Bureau, providing a comprehensive overview of the policy’s multifaceted impact. Syme emphasizes that the issue extends beyond how the policy affects alternative platforms like BrokerPocket. It raises critical questions about competition among CREA’s own members, potentially falling under the purview of restrictive practices, and ultimately limiting consumer choice in the broader market.

While the Competition Bureau operates under strict confidentiality rules regarding ongoing investigations, Syme indicates that he understands the investigation into these matters is active. He highlights the Commissioner of Competition’s repeated willingness to take enforcement action where competition concerns are identified. As an example, he cites the recent settlement agreement between the Commissioner and the Yukon Real Estate Association, which addressed concerns about membership practices within the real estate sector. This precedent offers hope that the Commissioner and the Bureau might similarly intervene to address concerns raised by CREA’s Cooperation Policy, potentially leading to its modification or abolition.

Despite these legal avenues, Eric Skicki emphasizes BrokerPocket’s preference for a collaborative resolution. “We encourage dialogue and we’re seeking a peaceful resolution to this,” he states. Rather than immediately pursuing legal action, BrokerPocket urges CREA to conduct a member poll to ascertain the true sentiment of its agents, suggesting that a lack of full consultation might have contributed to the current impasse.

The Agent’s Dilemma: Dissent Amidst Compliance

The Realtor Cooperation Policy places agents in a difficult position. Skicki believes that many in the industry fundamentally disagree with CREA’s authority to dictate how individuals choose to sell their homes. He argues that the policy is “not only legally wrong, (but) it’s also optically wrong.” From an agent’s perspective, it risks sending a negative message to the public, fostering perceptions that agents are seeking more control, pursuing hidden agendas for increased commissions, or attempting to “entrap” the public into a single marketing channel.

BrokerPocket has actively engaged with realtors to discuss the policy’s impact. At a meeting in February, organized with the help of Mark Jensen, broker owner and broker of record of The Jensen Team, approximately 15-20 realtors from diverse companies and business models gathered. While the policy affected them in various ways, a common thread was a reluctance to speak out publicly due to fear of reprisal. Skicki notes that many agents are hesitant to have their names mentioned, fearing disciplinary action from CREA or their local boards, both of which wield significant authority over their members.

The meeting solidified BrokerPocket’s commitment to being a voice for these agents. Skicki reports a significant increase in inbound inquiries, with agents seeking not only information but also BrokerPocket’s opinion on the fairness and justification of the policy. This collective sentiment highlights a profound discomfort within the agent community, many of whom feel caught between client needs and compliance obligations.

Prioritizing Consumer Choice and Free Market Principles

Mark Jensen, a seasoned broker and long-time user of BrokerPocket, underscores that the debate surrounding the policy, while complex, is crucial and often misunderstood. He argues that its implications can adversely affect consumers by limiting their options and potentially undermining their best interests. Jensen asserts that in real estate, the concept of exclusivity holds immense value, often surpassing price as the primary consideration for some sellers. “Sellers should rightfully have a choice in determining how their properties are marketed,” he firmly states.

Realtors, Jensen contends, should have a full toolkit of marketing options, including both MLS and off-market listings, to cater to the unique needs of each property and client. He criticizes the idea that emphasizing unique selling points *only* on MLS constitutes effective marketing, arguing it restricts strategic flexibility. He points out that preparing a home for optimal MLS exposure – involving painting, renovations, and staging – can take weeks or months. Offering an off-market “for sale” option could eliminate this inconvenience and potentially save sellers money, providing a distinct advantage now being curtailed.

Jensen further elaborates on several key benefits of not implementing the policy, which he notes were notably absent from CREA’s whitepaper, the study that informed the policy’s creation:

• Targeted Exposure: Reduced exposure to “tire kickers” ensures the home is marketed primarily to serious, qualified buyers, saving time and effort for both seller and agent.
• Minimized Disruption: Fewer showings translate to less disruption for sellers, allowing them to maintain their privacy and daily routines with greater ease.
• Premium Offers: Buyers often appreciate exclusivity and may be willing to pay a premium for properties not widely available, potentially leading to better offers and conditions. This mirrors the marketing strategies of luxury brands like Gucci or Rolex, which thrive on exclusivity rather than mass distribution.
• Convenience Over Price: Many sellers prioritize convenience and a streamlined process over achieving the absolute highest price, much like consumers choose services like Uber Eats or Carvana for their ease of use.
• Enhanced Privacy and Security: Avoiding mass distribution websites can significantly increase privacy, protecting homeowners from casual viewers, potential security risks, and unwanted attention.
• Data Control: Sellers retain greater control over their property’s data, avoiding permanent public records of price changes and days on market, which can sometimes negatively impact future valuations or perceptions.

Jensen draws a stark analogy: “Can you imagine the car industry telling the public that they have to list their car for sale only on AutoTrader?” This comparison powerfully illustrates the perceived overreach of the policy and its potential to stifle a dynamic market. Skicki echoes this sentiment, emphasizing BrokerPocket’s pro-choice stance: it should ultimately be up to the consumer to decide how and when they sell their home, free from CREA’s prescriptive dictates on listing platforms.

Skicki, himself a former realtor and brokerage owner, stresses his support for the industry and organized real estate. He believes agents offer immense value and hopes for collaboration rather than confrontation. He points to a fundamental contradiction within CREA’s own Pledge of Competition, which states: “A brokerage may offer any variety of services e.g. exclusive, open, MLS listings, etc.” This pledge, he argues, directly conflicts with the restrictive nature of the new policy, further highlighting the inconsistencies at play.

The Missing Piece: A Robust B2B Model for Real Estate

Skicki believes the crux of the issue lies in a gap within the existing real estate ecosystem: the absence of a robust, widely accepted Business-to-Business (B2B) model for off-market listings. “There’s a need for a B2B model — that’s what’s missing,” he asserts. He envisions a scenario where CREA and the private sector can collaborate to serve both the industry and the public more effectively. BrokerPocket, he clarifies, is not seeking to disrupt the industry or diminish the role of the agent, nor does it aim to interfere with CREA’s mandate or Realtor.ca’s operations. Instead, it seeks to complement them by providing a valuable tool for specific market needs.

When REM posed the question to CREA about the potential need for such a B2B model and whether it would threaten the current framework, their response remained somewhat ambiguous: “Realtors cooperate and collaborate, making MLS systems more efficient, valuable and effective for the industry and for clients. It remains a business decision for brokerages or realtors to adopt or subscribe to other services.” This statement, while acknowledging the existence of other services, doesn’t directly address the perceived gap or the desire for integration, suggesting a cautious or perhaps uncommitted stance towards alternative models.

“There are numerous grounds that CREA’s up against, and I don’t feel that fighting this, even if they win, will gain them anything.”

– Eric Skicki, founder and CEO, BrokerPocket

Charting a Path Forward: An Appeal for Dialogue and Progress

Despite the operational challenges posed by the Realtor Cooperation Policy, BrokerPocket continues to advise its users on the policy’s requirements and the necessity for agents to comply with CREA’s rules when uploading listings. This approach underscores BrokerPocket’s commitment to operating within regulatory frameworks while simultaneously advocating for their evolution. The company prides itself on being one of the few national real estate portals in Canada that actively encourages CREA compliance, even as it challenges the policy’s breadth.

CREA acknowledges that the policy, having only come into force in January, is still relatively new. The association states it continues to work with boards and associations, providing them with the necessary tools and information for implementation. This suggests an ongoing process of adaptation and evaluation, offering a glimmer of hope for potential adjustments.

Eric Skicki believes there is still a window of opportunity for CREA to reconsider its stance. “There’s still time to reverse course, open discussions and take appropriate measures not only to avoid legal repercussions, but also to be seen as progressive and pro-competitive,” he asserts. BrokerPocket remains open and prepared to engage constructively with CREA to find a mutually acceptable path forward, one that balances market transparency with consumer choice and healthy competition. Skicki fears that without such reconsideration, the policy may “further alienate their own members and ultimately the public,” undermining the very trust and efficiency it aims to foster.

The Canadian real estate market stands at a crossroads. The Realtor Cooperation Policy, while ostensibly designed to enhance market efficiency, has inadvertently sparked a critical debate about the balance between regulation, competition, and consumer freedom. The call from platforms like BrokerPocket and concerned agents is clear: for a vibrant, innovative, and client-centric real estate market, policies must evolve to embrace diversity in marketing strategies and empower consumers with genuine choice, rather than restricting them to a singular path.