The news is out – on August 23rd, the Supreme Court of Canada announced that it would not grant an appeal to the Toronto Real Estate Board to keep past sold data shuttered, effectively ending a seven-year legal battle between the board and those who wish to make such information public.
TREB has 60 days to absorb and implement the changes, which include granting online brokerages the ability to share past historical sold data (including, but not limited to, asking prices versus final sale prices, whether a home listing has ever been terminated and relisted, and a long-term snapshot of previous sales) with password-protected site users. Previously, this info could only be shared directly between individual agents and their clients, via phone, in person, or in writing.
That such data could not be shared by brokerages with the public was challenged in 2011 by the Canadian Competition Bureau, which cited the practice quashed innovation and was anti-competitive. The Competition Tribunal ruled in favour of the Bureau, and their decision was further upheld last year by the Federal Court of Appeal.
The Bureau’s victory means real estate shoppers and sellers will soon have past sold data at their fingertips – but how will this change the face of the market?
No more gatekeepers
Prior to the ruling, only real estate agents who were members of TREB could access past sold and comparable price data and provide it directly to their clients to inform their home searches. However, while agents will no longer be “gatekeepers” of this information, that doesn’t mean they will play a less important role within a real estate transaction says Lauren Haw, Zoocasa’s Broker of Record.
“By sharing more information, we are able to make for a more transparent buying and selling process,” she says. “Agents will provide value by interpreting price points, market trends and fluctuating data for their clients.”
Once the data is public, it can be leveraged by online brokerages, including Zoocasa, to create new real estate search tools and to enhance home listings with a property’s comprehensive history. This means prospective real estate clients will gain these market insights earlier in their research process, rather than having to commit to working with an agent before getting the full picture.
Fairer pricing strategy
One particularly frustrating hurdle for homebuyers are properties that seem to be within budget, but are actually priced with a low-ball strategy. This is a common tactic used by sellers to appeal to as many buyers as possible, with the hope of sparking a bidding war and fetching a much higher offer than what the home is listed for.
This is made possible by the fact that buyers don’t have access to comparable home price information – without insight into what similar homes are selling for within that neighbourhood, it’s challenging to know what a home is really worth.
This can lead to making an offer or overbidding to a price far above the home’s assessed value; not only are buyers paying more than they need to, but this can also raise issues during the mortgage financing process, should the lender feel the requested mortgage does not match the property’s value. With wide access to comparable sold information, buyers will be able to assess whether a home is fairly priced, and adjust their offer strategy accordingly, rather than going into a blind bidding process.
Access to past sold data will also mean prospective buyers can see how many times – and how recently – a home has been listed. This is expected to reduce the prevalence of relisting properties, a tactic used to revitalize a home listing that’s sat for too long on the market. By pulling the listing down altogether and reposting at a later date with a new MLS number, it appears as fresh inventory just hitting the market.
Sellers could also play around with the ideal listing price; if a home isn’t garnering interest at a certain price point, they could opt to list for lower – or higher – to appeal to a new buyer pool.
Now, buyers will have a full snapshot of a home’s listing history, and whether or not they resulted in transactions. That could help raise red flags over homes that are hard to sell, and prompt buyers to do their due diligence when investigating such properties.
Will the sharing of past sold data impact Toronto real estate prices?
While having access to past sold data will provide consumers with valuable insight, it’s unlikely to profoundly shake up home values in the Toronto real estate market. According to the latest data from TREB, the market has been rallying from this time in 2017, with the average price up 4.7% to $765,260, with 6,839 homes exchanging hands – an 8.9% increase.
That improvement is largely due to homebuyers overcoming the impact of tighter mortgage qualification rules, as well as the psychological fallout as a result of the Ontario Fair Housing Plan, and are supported by strong economic fundamentals in the city, rather than speculative pricing practices. So, while homebuyers will soon have better insights than ever before, don’t expect market cooling as a result.
Penelope Graham is the Managing Editor of Zoocasa.com, a leading real estate resource that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Buyers can browse homes for sale in a number of municipalities across Canada including Toronto real estate, Ottawa real estate, and Calgary real estate.