September 4th - 2012

Movement toward mergers in some real estate boards

Real estate in cottage country often attracts more attention in warmer months, but this year several areas piqued the interest of more than just consumers -- real estate professionals were watching closely too.

Real estate in cottage country often attracts more attention  in warmer months, but this year several areas piqued the interest of more than just consumers --  real estate professionals were watching closely too.

Merging the pieces of the puzzleIf all goes according to plan, this month will see a merger of the Orillia and District Real Estate Board with the Muskoka-Haliburton Association of REALTORS®. And although mergers are unusual in real estate, there’s reason to believe more may occur in the near future.

The Southern Georgian Bay Real Estate Association and Georgian Triangle Real Estate Board are in serious discussions about a merger of their own. As well, four other boards – in Cambridge, Kitchener-Waterloo, Guelph and Brantford – are exploring the idea of a common MLS® database.

There are good reasons for some boards to consider joining forces, says Susan Pond, executive officer (EO) of the Muskoka & Haliburton Association of REALTORS® and interim EO of the Orillia and District Real Estate Board.  “Organized real estate has to work together -- we need to work more closely at the local, provincial and national level in order to thrive.”

The time crunch and demands faced by REALTORS® and boards -- both large and small – have led boards to explore the idea of mergers and shared services, says Pond. As the industry evolves, she says more and more is being asked of members, who in turn have less time to volunteer.

“People in this industry have to work so hard to make a living that they just don’t have the time they once did,” she says. “In the past, if you wanted to hold a trade show you could count on 15 people to volunteer, but now it’s often down to two. They have to work more to put food on the table.”

In 1999, Pond was EO for Muskoka when it merged with Haliburton. Economic realities drove the process back then as well, she says.  The Haliburton board had about 60 members and approached the 360-member Muskoka board about the possibility of teaming up, and she recalls that both sides were eager to join forces.

“Our board has always been fairly progressive and jumped at the chance,” she recalls. “The merger made sense and both sides thought it was a good move.” Pond says it led to the development of some successful programs to serve more remote areas -- programs that have since been put in place in other boards with similar structures.

A familiar story is playing out a decade later. This time, Orillia approached the Muskoka-Haliburton board. Orillia was without an EO, and with the Canadian Real Estate Association (CREA) encouraging boards to consider joint services, a call went out.

Casual conversations led to more discussions and eventually several boards expressed at least some interest in restructuring. Some were interested in buying or sharing services.  Representatives of interested boards have met to discuss options -- with the view that mergers and shared services could be beneficial.

Although the idea of merging boards is not new, it is uncommon. A handful of mergers occurred in Ontario about 10 years ago, particularly because it seemed economically feasible. With another weak economy, everyone is again looking to save money. New acts and regulations are putting increased pressures on REALTORS®. Meanwhile, there are greater risks associated with operating a board and therefore more staff oversight and monitoring is required, so boards are looking for proactive measures to stay on top of it all.

Underpinning these merger talks is an industry-wide discussion about the future of organized real estate (ORE) that began at CREA’s 2011 annual general meeting. Members across the country were asked about their vision for the industry in five to 10 years. At subsequent meetings, members outlined their priorities and in March they approved a strategy and futures implementation team to frame decisions for this fall’s special general meeting. Participants directed CREA to make recommendations to optimize ORE’s governance structure and reduce duplication. Among the recommendations, a report suggested regional, provincial and even national MLS® Systems and more shared services. It also promoted exploring the idea of merging where it would benefit neighbouring boards.

Those behind the Muskoka-Haliburton-Orillia proposals recognized there could be some resistance to mergers and shared services. Some members might fear a loss of local identity while others – perhaps long-time practitioners – might be less open to change.

“I’ve heard that viewpoint but I try to show people the benefits,” says Pond. “Boards of directors have a responsibility to plan -- it’s about what’s best for the future.”

Debbie Gilbert, president of the Orillia and District Real Estate Board, says her members are looking forward to the merger. “We’ll be able to benefit from some economies of scale so the merger is a good fit for us,” she says. “We want an excellent MLS® System that we can afford and a strong staff complement that can provide great support services. Once everything is in place, our new board can concentrate on member services so we can keep doing what we do best -- provide great service in our area.”

David Reid, president of the Muskoka-Haliburton board, feels that the work done to allow for the merger will pay off. “A lot of demands are put on REALTORS® today, so streamlining governance makes for a more efficient system,” he says. “We went from two boards with two EOs and 21 directors down to one organization with one EO and eight directors.”

Increased membership means enhanced buying power and additional services for everyone, says Reid. “The merger has positioned us much better for potential changes that may come along in our marketplace.”

Everything is progressing on schedule, says Pond. Six members from Muskoka-Haliburton and two from Orillia have been nominated to a transitional board representing both areas. “All kinds of decisions are happening, and we’re pleased that it’s all moving forward.”

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Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

416-445-9910 ext. 246