Since time immemorial, the general public has only been privy to the listing price of real estate. If you were curious about a house and what it sold for, either a real estate agent or brokerage would provide the information, or you could access the information from Teranet or the local land registry office for a nominal fee. That was then.
As of last month, the Supreme Court denied the Toronto Real Estate Board (TREB) an appeal to keep sales data private amongst its members; agreeing with the Competition Bureau’s 2011 statement that privatizing sales data impedes competition and innovation. This means TREB is required to grant myself and fellow realtors the option to publish sale prices in places other than MLS. For example, this could include brokerage and personal websites that are password protected. As we work through this change I’m confident that password protection will go by the wayside.
Despite the ruckus this policy change caused for TREB, the implications for consumers aren’t as substantial as you may expect. In my eyes, the legislation does not change how real estate agents should conduct business. In the interest of transparency, I would expect most agents have been providing their clients with this information, all along. Good agents should provide a full analysis on a property, including past sales on both the property of interest and the neighbourhood, as well as the number of times the house was listed (including prices, and whether the property was ever flipped).
By this logic, access to historical data about a property will only benefit consumers who are weary of their realtors intentions and want to self-validate, or those who have chosen to forgo working with an agent altogether. While there are numerous tools that aim to facilitate an agent-less real estate transaction, this remains something I advise against – and not because it’s my line of work.
More importantly, historical sales data is just that, historical data. In a market of buyers and sellers, the previous sale price isn’t the only thing to dictate future purchases. As per the basic economic formula, supply and demand play a substantial role when it comes to price. In many ways, using a past sale price as a basis for determining an offer is like asking a prospective employee about their previous earnings to benchmark their worth to your company today. This is a big no-no.
Where the reversal of TREBs policy may get interesting is the process by which consumers choose an agent. In my niche, many clients are brought to me by referral from past clients and friends. That said, I can understand how the ability to pseudo-publish sales data opens the door for more creative and boastful marketing that may sway potential clients in one way or another.
For example, an agent who constantly showcases headlines of “Sold for $100K over asking!” may be perceived as a better agent than someone who sells just as many properties but doesn’t advertise the sale price. I urge you to take this with a grain of salt. Why does this agent consistently oversell? Is it because he or she is blatantly underpricing the property? Is this necessarily a better strategy than the agent who is overpricing properties that sell for under asking, but still arguably a great price?
A great real estate agent provides tremendous value, but, remember that like all markets, there is a degree of luck in real estate. The best way to ensure you’re working with a great agent is to get to know him or her before signing an agreement. How does he work? What can she provide in terms of marketing and consultation? Has he sold properties similar to yours? What do her clients have to say? If you think a testimonial sounds too happy-go-lucky, ask the agent to connect you with a past client directly.
Despite the initial fuss about the ruling to make sales price data slightly more accessible to the public, I don’t expect we’ll see any substantial change to Toronto real estate prices or processes. What do you think?