The Future of the Online Real Estate Search in Canada

John Pasalis in Real Estate Trends

The Globe and Mail interviewed me for an article published this weekend about a local real estate site called Housing123.com that the Canadian Real Estate Association (CREA) threatened to sue if it wasn’t shut down.

Housing 123 was downloading MLS information to their site allowing their users to search and browse homes on a Google map interface.  MLS.ca, the real estate search site operated by CREA, does not have any mapping functionality making it difficult for users to search for homes in a particular area.  The sites founders, Travis Fielding and Kevin Lai, launched Housing123 to ease their own frustrations with searching on MLS.ca 

The problem with the site was that the entrepreneurs were downloading MLS data without the permission of the real estate boards or the brokerages who own that data.  This violates the copyright laws that protect MLS information.

While I am a supporter of innovation in the real estate industry, CREA’s decision to shut down the site was ultimately the right one.  An entrepreneur may not agree with all of the laws or policies that govern the real estate industry, but they are obligated to work within them.   Housing123 wasn’t doing this.

What I find a little more interesting than the story about Housing123, is an issue that the writer, Hayley Mick, touched on in her article.

Unlike the US market, Canadian real estate brokerages are not allowed to display all available homes for sale on their own brokerage websites.  This means that if you go to a Re/Max site for example, you’ll only see Re/Max listings on that website.  Most people who are searching for homes use MLS.ca because they want to see all available homes for sale, not just the ones from a particular brokerage.

Why is this a problem?  Because the policies that prevent brokerages from displaying all MLS data on their sites also restrict brokerages from competing against each other on the basis of technological innovation.  Let me explain.

Re/Max has had mapping functionality integrated into their home searches for quite some time now.  Here’s a screen shot of their website.

Century 21 also has an innovative mapping interface as part of their site.  See below.

Both of these companies have invested heavily into building innovative websites that are effectively useless to the average home buyer because they only display a subset of the available listings on the market.  Just to be clear here, it’s the missing data that limits the value of these sites, not their technology.  If consumers don’t see the value in these websites than it’s hard for brokerages to differentiate themselves by building an innovative website.  No matter how innovative their site is, it will never be seen as a substitute to MLS.ca or any other brokerage site for that matter.

If real estate boards allowed brokerages to display all available listings on their websites, they would be allowing competitors to challenge MLS.ca?  Brokerages could use technology as a way to differentiate themselves from their competitors.  Brokerages would be competing against each other to be the dominant real estate search site in Canada.  The brokerage with the most innovative website would have more home buyers searching for homes on their site.  If these brokerages had all of the listings on their map-based sites today, two frustrated home buyers would probably never have created Housing123.com. 

The policies that allow brokerages to display all available listings on their websites have existed for some time in the US and many new innovative websites have been built as a result.  The difference between Canada and the US is that the Department of Justice in the US is far more litigious when it comes to ensuring fair competition in the real estate industry.  Our competition bureau, at least up until now, is far quieter about these types of issues.

Most realtors cling to the belief that the best thing for our industry is to keep our listings as close to our chest as possible, not even sharing them with our own members. I firmly believe that allowing brokerages to display all available listings on their websites is not only good for consumers - it’s great for brokerages.   As brokerages build better and more innovative sites, they will inevitably have more people on their sites.

For now, consumers will have to stick to MLS.ca, which will be integrating a new mapping interface this summer.  According to the Globe's report, consumers shouldn't anticipate any more changes to the site beyond that. 

John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John

Subscribe to the Move Smartly blog by email 

Comments

[Dan Zrobok]

Your argument is a little weird. You argue that Housing123 should be shut down because it misappropriates mls.ca data. Then you say that it would never have been an issue because each Realtor already has a great site. You talk about how great the functionality is and about how they are providing the information in ways that are inherently more useful than mls.ca.

Yet, you don't make the logical conclusion: That MLS.ca should just be in the business of providing the consolidated data (along with a simple search engine) and allow the power of market forces to create the most informative site to aggregate that data. It could be Zillow.ca, Housing123 or Remax. More competition is always better for the end user.

It doesn't really make sense that consumers should have to wait for mls.ca to arbitrarily catch up to what the market actually wants. They say the mapping functionality is coming 'soon', yet we've already got websites that do it.

"According to the Globe's report, consumers shouldn't anticipate any more changes to the site beyond that."

That is ridiculously unacceptable.

Open up the information, stop making mls.ca the bottleneck and give the power back to the innovators in the real estate space.

[John Pasalis]

Hi Dan,

Thanks for your comment. Let me clarify one thing first, from your comment:

"You argue that Housing123 should be shut down because it misappropriates mls.ca data. Then you say that it would never have been an issue because each Realtor already has a great site."

Actually what I did say was that IF every real estate brokerage had access to all the MLS data and IF they were allowed to display that data on their own websites, then Housing123 would probably never have been built because at least a couple of the brokerages have decent real estate search sites.

With respect to your logical conclusion, this unfortunately isn't possible. First of all, the Canadian Real Estate Association that runs MLS.ca, doesn't own the MLS data. The MLS data is actually the property of each individual real estate board. This means that CREA does not have the authority to just hand over the MLS database to anyone who wants to build a cool real estate mashup.

Besides as I mentioned in my post, real estate companies don't even share the MLS data amongst themselves. There's no way they are going to just hand over the MLS database to a third party company.

A third party company like Housing123 or Zillow would have to go to each brokerage individually to get access to their listing data. This is exactly what Zillow and Trulia are doing in the US. It's a very slow process.

Right or wrong, it is what it is. The challenge for entrepreneurs is to find a way to innovate given the constraints of the industry. Not an easy task.

[John]

What I find most frustrating with the MLS site are the listings without street addresses, which require one to contact a broker merely to find out where they are.

At least where addresses are included, I can google the location myself.

Speaking of google -- as a house hunter I LOVE being able to take a peak at aerial photos and "bird's eye views" (MS Live Searh) at properties from the comfort of home...

[Toronto real estate agent]

Hi, I'm a Toronto real estate agent. I think that not sharing information (like for example all available listings) is a kind of monopoly that, in itself, is against the free market principles. It is something that resulted in unhappy, unsatisfied customers (as wee can see in the creation of housing123). It should be in the interest of CREA to share information in order to forestall people to become unhappy.

[Stephen]

Just some comments on the newly launched Realtor.ca site. I must say I am a bit disappointed in the new offering. Although the map function is a welcome addition, it does not function properly on Safari or Firefox, leaving me to think the site was only tested on Windows and Internet Explorer. Also, the basic search criteria has remained more or less unchanged, as has the way the search results are presented. Not much of a change at all in my opinion.

[Fred]

Terrible. The Realtor.ca site is supposed to be the solution? It is mls.ca with a buggy map that only works in IE. Open competition is the only solution. The day can not come soon enough.

Love Realosophy John. Keep up the good work!