What decisions and paths should the real estate industry be prioritizing? And how can you, whether managing a team or an entire company, bring those best lessons to bear where you work? In February, in advance of building an industry blueprint at Inman Disconnect, we’ll plumb the topic of leadership with Q&As with top industry leaders, contributions from esteemed Inman columnists and more.
The Canadian Real Estate Association, which currently wholly-owns and controls the most popular real estate listing website in Canada, will be spinning off the site into a standalone technology company, but attempting to avoid the fate of its U.S. counterpart, Realtor.com, according to the trade group.
CREA is the National Association of Realtors’ equivalent to the North and has 65 member boards and associations with a total of about 150,000 members — a tenth the size of NAR. CREA runs Realtor.ca while NAR’s official listing site is Realtor.com. But while Realtor.com is operated by a third-party company, Move Inc., CREA has always run Realtor.ca itself.
“Today, Realtor.ca is operated by a not-for-profit association, and as such, funding is limited and balanced with other association priorities,” CREA spokesperson Pierre Leduc told Inman via email.
“We feel now is the right time to transform Realtor.ca into a for-profit subsidiary as it will allow access to new types and levels of funding, especially considering the volume of capital moving into proptech.”
Unlike Realtor.com, Realtor.ca does not allow agents to buy ads next to other agents’ listings and sends all consumer leads to listing agents, according to Cliff Stevenson, past chair of CREA. The site is run almost entirely on member dues. CREA’s annual dues are $310 per member. About a third of those dues are used to operate Realtor.ca and other tech products, so less than a third are used for Realtor.ca, Leduc told Inman via email.
By contrast, NAR’s annual dues are $150 per member (plus a $45 assessment for consumer advertising) and Move pays NAR about $2 million per year in royalties for use of the Realtor.com trademark.
In a phone interview, Stevenson told Inman what lessons CREA learned from the sale of Realtor.com and its upcoming potential sale to CoStar for $3 billion, what CREA hopes to do differently when it spins off Realtor.ca into a for-profit company, and the competition Realtor.ca faces from other portals such as Zillow, Trulia and Redfin, some of which are CREA members.
This interview has been edited for length and clarity.
Inman: Most of our readers are in the U.S. and they’re not super familiar with Realtor.ca. What are the differences between Realtor.ca and Realtor.com?
Cliff Stevenson: Realtor.ca is very different from Realtor.com. First of all, it is owned and controlled by the real estate industry, Realtors in particular. It’s a national portal. It really collects all the listing data from the boards and associations across the country and presents as a consumer-facing portal. It’s the most popular real estate portal in the country with the largest market share. Obviously quite a bit different from Realtor.com. And that probably has to do more with leads. So leads from Realtor.ca to our membership are provided as a member benefit. Leads are provided to all the members for no cost, other than being a member of the Canadian Real Estate Association. That would be the fundamental difference.
A third-party tech company doesn’t run it?
No, it’s completely run by the Canadian Real Estate Association. It’s run in-house and has its own staff in the Canadian Real Estate Association. They’ve been running the site for many years.
Do you have any idea how many?
I don’t. I’m not sure how many years but a newspaper article I had access to talking about starting it was around 1996. So that’s roughly how long it’s been around.
It doesn’t run ads. Has it ever run ads?
Not to my knowledge, no. The consumers have been very vocal through feedback mechanisms that they like it without ads. It’s why they stay on the site and they view it as the most trusted site in the country.
Does that mean that a consumer can only reach out to the listing agent?
That’s correct. There’s no additional advertising on top of listings by other members.
So what’s the revenue model right now?
Well, there really isn’t one. It’s completely driven by member dues. So it’s a site that exists and it’s maintained and innovated all through member dues from the members across the country.
What are the member dues?
CREA members across the country pay $310 a year to be a member of the Canadian Real Estate Association.
So that’s what it’s like now. What’s the change that CREA is planning?
The plan is to turn it into a for-profit entity. The plan is to turn it into a standalone technology company. With that it would have its own board of directors and have its own CEO. It’ll still be controlled wholly by CREA. That part wouldn’t be changing. But we would be allowing additional investment from potentially outside the industry and within the industry as well. And then we would also make our boards and associations, they would have a stake in it as well.
When you say a stake in it, do you mean a monetary stake?
Yeah, absolutely. There’s absolutely a conversation happening right now about a monetary stake and shareholders and boards and associations that have an investment in the company for sure.
OK, so right now it’s not a separate company. It’s just within CREA, which is a nonprofit.
It’s association-run. And that really is where the big shift is. It’s going from completely association-run to association-owned with its own leadership group.
So it would become a totally separate company. It would still be owned by CREA, but it will also be owned by other investors.
Yeah, correct. Absolutely. The majority ownership would never leave CREA.
So at least 51 percent would always be with CREA?
I can’t talk about the actual percentages. The gory details are still being ironed out right now. There’s a lot of work to be done still. But yes, the majority of ownership for sure would be definitely with CREA.
So this would be opening it up to minority ownership stakes.
Potentially, yes.
And this will be to companies within the industry but also outside of the industry.
Absolutely. The conversation is still happening on who the investors might be.
You’re saying also that local and provincial boards could choose to invest in Realtor.ca as a separate company.
Yeah, and the plan is right from the outset to provide them with a stake in the company. But there’s absolutely a conversation about the ability for them to further invest in the company.
OK, so they would initially already have a stake without having to put up any money?
Correct.
How big would that stake be?
Really don’t know yet. Again, there’s so many details that are still being discussed and ironed out, that a conversation like that hasn’t been brought to the board yet.
Would their stakes be separate from CREA’s stake? Like CREA would still have the majority and then those local or provincial boards would have stakes on top of that?
Yeah, that’s my understanding of the plan right now.
It wouldn’t dilute CREA’s stake.
No, that’s correct.
What’s the timeline for this? Does it need to be voted on by CREA or its board or does there need to be a member vote or what’s the process?
That conversation is still happening right now. That’s a fluid conversation in the industry, on the expectations of boards and associations of the process going forward. The board of directors has made a decision to create this company, but how we get there, there’s still a long journey ahead. The timeline is really to be determined.
The CREA board of directors has made the decision to create the standalone company.
Correct.
Do you have a name for it yet?
No, we don’t.
But it hasn’t been created yet.
That’s correct.
Is the board vote final, like this is definitely happening, or does something else need to happen in order for the company to actually be created?
That is still to be determined. The board has made its decision. But how we engage and how we communicate with the boards and associations is something that’s happening right now. The board is very excited to share the vision on this. How we work with the boards and associations, obviously that’s of paramount importance to us. This isn’t an initiative that is not going to involve them.
So, the decision has been made, it’s happening. You’re going to get feedback from boards about how to do it?
Yeah, that’s pretty much where we’re at right now. There are a lot of questions in our industry right now: people questioning whether we have the ability to do this, open dialogue on what this means for members and how are members involved in this process. But ultimately, the decision was made at our last board meeting, and we’re moving forward with the initiative, and we’re really looking forward to doing this with the boards and associations, not independently of them.
When was the board vote?
Our last meeting was earlier this year, January timeframe.
What sort of mechanisms are you using to get feedback?
We’re planning on meeting with every single board and association in the country. This isn’t a ‘let’s throw the conversation out there and see what kind of feedback we get.’ This is intentional dialogue and intentional meetings with all of them. There are a lot of questions that come up as a result of this announcement and we totally get that. But we wouldn’t be doing this properly if we weren’t engaging individually with every single board and association in the country. It’s a necessity.
Why do you want to make this change?
We have well-funded competitors that are entering the real estate portal space here in Canada or they’re already here and they’re investing in their platforms. It’s much like when you’re thirsty, it’s too late you should have been drinking a lot earlier. We have the no. 1 position in the country, the no. 1 market share in the country. We’ve built a wildly successful platform for consumers to benefit our Realtor members, which is also the objective of the site. And now is the time to invest to keep it as the no. 1 platform but in addition to that, to further invest in and almost unlock some additional potential the site has.
Who are your competitors?
I can’t name them by name because some of them are members. I’ve got to be very careful with that. But there are a number of consumer-facing portals that are active and attempting to grow their market share in the country.
Which ones are the most popular sites? You say Realtor.ca is the most popular.
Most popular by far. If I told you any other platforms, now I’m getting into the membership conversation. What I will say is we have some of the same portals that you guys have got in the U.S. that are growing and are trying to invest in their platforms here. The exact same portals in the States.
So you’re talking about Zillow and Trulia?
Yes, sure.
And Redfin?
Sure.
Homes.com?
Yeah. In a lot of cases, they’re brokerage members of the Canadian Real Estate Association. So they are platforms that are growing in popularity, and based on what they have to invest in their platforms compared to what we have to invest in ours, that makes sense, their growth.
Why is it important to you to keep Realtor.ca as no. 1?
Because we built it as an industry. Realtor members on the ground built this site, and they built it into the most successful platform in the country. In 2022, we handed out 5.7 million leads to our Realtor members. We have 150,000 members in the country. That’s a significant number of leads for our members. That is a member benefit, the benefit of being a member of the Canadian Real Estate Association. When you’ve built something so successful, in addition to defending the position and defending the site that we built, we want to see it grow because there’s additional potential for the site that we really need additional investment for.
When you say additional potential, what do you mean?
Additional data layering. The prospect of providing the consumer with even more information than we do, well beyond the basic listing information. Whether it be neighborhood info, municipality info, provincial info. Data that the consumers are using to make their decision on what house makes sense for them and where. There’s lots of opportunities to add additional data to the real estate listings on our site. We need additional investment to make that happen. That’s our North Star.
You want to turn it into a for-profit company. How will the revenue model change? Right now you don’t really have one, right? It’s paid by member dues?
We do have some non-dues revenue that comes from the site and it’s really technical in nature. We have a data distribution facility. Basically it’s a feed of Realtor listings that comes to CREA, and it’s provided by the brokerages and members across the country that are willing to participate in this feed. So if you were a third-party website provider, for example, and you wanted to provide a data feed to show listings on a Realtor website, they can subscribe. It’s not a very large revenue-generating initiative, by any means. Nothing that would contribute to our overall initiative. So there’s a little bit of one that we have, but it’s nowhere near the amount that we think that we need to really make some strides with the site for sure.
Sorry, I missed your question.
I was just wondering how the business model would change once it becomes for-profit.
Totally to be determined. Ultimately, the site is not being removed from Realtor control and our industry control. The Canadian Real Estate Association is maintaining control over the company. We’ve always had a great partnership with the National Association of Realtors, and we learned a lot from their sale of Realtor.com years ago. Really great for us to have that resource and understanding of the sale of the site previously. That’s not what’s happening here. We’re not selling it off completely. But it’s definitely something that we’re looking for additional investment into a standalone company, for sure.
What did you learn from NAR sale of Realtor.com?
I think it’s safe to say that a lot of Realtor members and potentially the association itself would still like to have that site under its ownership. When you start looking at the talk of the CoStar acquisition, and you see the number they’ve been talking about, I think everybody recognizes the value of that site now, and that’s something that we’re very cognizant of. We are acutely aware of the fact that our site is valuable. So being good stewards of the site, ensuring it is still the trusted site for consumers because that’s super important, while benefiting the Realtor members and helping keep them at the front of consumers’ minds with respect to real estate transactions. That’s ultimately what we’re trying to accomplish here.
Do you foresee ads coming to the site?
No. That’s feedback directly from the consumer. They appreciate coming to the site without ads. The other part that we wouldn’t be doing either and it’s not on the table for discussion is selling these ads back to our Realtor members. That’s not how we’re going to generate revenue. That’s a core principle for us for sure.
Do you know who you will be selling to, if not your Realtor members?
Sorry, selling what?
Selling whatever the site is planning to sell.
I don’t know. That kind of conversation on how we’re going to generate revenue, that roadmap hasn’t been drawn up yet. I’m sure there are lots of conversations happening. But that is something that will be decided going forward for sure.
Right now, CREA controls everything. They own everything. The CREA board of directors makes decisions over the site. Is that right?
The staff and the board of directors. Yes.
How will that change?
Well, it’s gonna potentially have its own board of directors and its own CEO. But the plan is also to have an advisory board of Realtor members that will advise the new board of directors. Having Realtor input into this going forward is critically important to us as well. It’s not just unleashing a skills-based board and new CEO without a very close connection to the Realtor members, and that’s where the advisory board would come into play. But this is still to be determined. And we’re open to suggestions from our partner boards and associations for sure.
Do you know how big the [advisory] board is going to be? Is it going to have any voting power?
Haven’t had that discussion yet at all.
Who will be on the board? Because it’s not going to be just CREA owning the whole company, right? There’s going to be other investors. What’s the ratio going to be of who gets to be on the board?
Haven’t had that discussion either. Still in its infancy from that perspective.
Do you have any idea when this will be a done thing, like there will be a separate company, there will be a separate governance structure set up, it’ll be done and the company can start innovating?
No timeline, no idea on that yet either.
Do you think it’ll be sometime this year?
Hopefully sometime this year, but I really don’t know. I think there’s a lot of work to be done. This is a fundamental shift for us for sure.
I think you’ve covered all my questions, is there anything else you’d like to add?
This is an exciting initiative for us. I think that boards and associations and Realtor members are going to share in our excitement when they see our entire vision. Not all of it’s mapped out yet and not all of it has been communicated yet, but we’ll take our time to engage with them one-on-one and share this vision and we’ll move forward with it.
I do want to make sure I clarify this, that if this were happening in the U.S. — I don’t know if this is the same for Canadian agents — they would want to know if the site is going to try to make money off of them.
I’ll be clear about that one point. There is no additional revenue generation expected to come from members. This is a site the members built themselves and this is something that absolutely will continue to be a member benefit to the Realtor members for sure without additional expenses to make money off of them.
Will all the leads continue to go to the listing agent?
Absolutely. No change in that whatsoever. Those are some of our key principles in all of this that are non-negotiable.
