As you start on your real estate investing journey, you might hear a bunch of terms thrown around. REALTORs (often written all in caps, which, as a self-proclaimed word geek, made no sense grammatically to me) and MLS are a couple of terms. And, if you were snooping around the Canadian real estate scene about five to ten years ago, you probably would have noticed that listings were kept on mls.ca, which was then switched to realtor.ca – so what is the difference? Then there are other terms you might have heard, such as real estate boards or TREB. What is a real estate board and why do real estate boards matter?
(Dis)Organized Real Estate?
Did you know that approximately 85 percent of all real estate agents in Ontario are currently members of “organized real estate”? Probably not. As an outsider, this concept of “organized real estate” is obscure and, if ever, seems more confusing than organized.
Real estate agents help people buy and sell properties. Full stop. Right?
The above statement is only half true. When a person completes their real estate education, they have the option of signing up with a brokerage that can either be part of – or not part of – the “organized real estate” scene. Organized real estate basically refers to a hierarchical structure of real estate associations in Canada, starting with the Canadian Real Estate Association (CREA) at the top, going to the provincial/territorial associations (the Ontario Real Estate Association in Ontario) and then leading to the real estate boards.
So What is a Real Estate Board?
Real estate boards are non-profit corporations that operate in provinces/territories, set up for the benefit of members. Basically, real estate agents who want to participate in organized real estate need to pay a fee to a real estate board, which then offers MLS (listing services) and other member services such as training. There are currently 39 real estate boards in Ontario, witht he largest one being the Toronto Real Estate Board (or TREB).
Why Does It Matter?
Perhaps one of the biggest advantage of being part of a real estate board is the Multiple Listing Service (or MLS). Agents that are associated with a real estate board have backend access to the MLS for that board. So all TREB members can share/access information with other TREB members through their MLS. MLS listings are then surfaced to the public via Realtor.ca (if the listing is not exclusive – exclusive listings to be discussed in a future blog post). If a real estate agent is not part of a board, they can still post listings to realtor.ca, but for a separate fee.
Real estate boards also help coordinate the use of bylaws, forms and guidelines to protect all involved in a deal. They also keep a list of up-to-date clauses to ensure buyers and sellers are protected (trust me, this doesn’t sound like a big deal, but there are HUNDREDS of clauses). All of this is important because, when investing in real estate, one small error on a form or document can make a huge difference and these forms/agreements are all legally binding and signed under seal, so it is definitely a game changer having access to the type of information that is designed to protect you and your interests.
But, who cares? I can just buy/sell properties myself (think Property Guys)
Trust me, I was once in your boat. How hard could buying/selling property be? The concept itself is not complex, but the occupation of real estate sales has grown up around the transaction and, with it, a number of best practices that have been put in place to protect clients. If you don’t have access to a real estate board, you don’t have access to the tools that will most set you up for success.
The fortunate thing for real estate investors is that they generally will have a real estate agent to work with. It is the real estate agent’s job to ensure all of this material is at hand for their clients and that they are up-to-date with the latest bylaws and rules as indicated by their board. The real estate agent is the one that swallows the large costs associated with being part of organized real estate to gain you access to the forms, information and listings that you need to secure the best deal.
Where can I find more information?
If you’re a real estate agent, you can find more information about the real estate boards in your area by visiting your provincial/territorial associations website. For example, Ontario’s can be found here. 9.9 times out of 10, however, you will likely be told which boards your brokerage is affiliate with and that you have the option of joining when you are looking for initial employment.
If your a real estate investor… believe me when I say, don’t worry about finding more information out about real estate boards. Instead, find an agent that is affiliated with a real estate board and part of organized real estate. The bigger the board, the better. For example, TREB is the second-largest real estate board in all of North America. The resources available for TREB members is par to none in Canada, simply because it is the biggest one and has the largest member base (and therefore, more staff, more funds, and more of everything).
Any questions or thoughts about real estate boards or organized real estate? Shoot them over in the comments below.