Competition is one of the key elements of a free market and keeping pricing fair for the end-users of a product or service. As we’ve seen in Canada in recent years, many people have raised concerns over the perceived monopoly many Canadian telecommunication companies seem to enjoy in Canada. Some feel that the ‘big 3’ telecom companies in Canada (Bell, Rogers and Telus) don’t have to worry about competition and therefore are free to set prices unreasonably high for internet, cable and mobile phone services. While this debate continues, the world of real estate transactions is facing a potential increase in transaction fees due to a reduction in the number of software providers for real estate technology across the country.
Major Real Estate Software Companies Consolidate
In December, legal software giant Dye & Durham announced that it had acquired another legal software company, DoProcess for $530 million from Teranet. With this acquisition, Dye & Durham now faces less competition in the market and as such has announced it will be increasing fees to law firms who use a program called The Conveyancer, which is estimated to have over a 90% market share in the province, by over 400%. A transaction that once cost $25.00 will now cost $129.00. These fees form part of the disbursements pass on to clients, as part of their overall transaction costs, as mandated by the Law Society of Ontario.
Given the increase, consumers who complete real estate transactions can expect to see a jump in costs in a year where housing prices have steadily increased while employment has been on a decline. While there are other options for similar services, there are concerns with moving to a smaller provider. Some, for example, don’t have in-house IT departments to troubleshoot if there’s an issue, which can be an extreme detriment when dealing with a time-sensitive transaction.
Further lawyers who have invested in building their business suing one particular provider may have issues retaining the data they have stored in one product if they decide to move to another. In other cases, it can be a painstakingly slow process to port the necessary data over from one product to another.
A representative of Dye & Durham provided a response to the complaints to the Globe and Mail:
The company believes that its software is priced appropriately to reflect the significant value that it provides to its customers.
Dye & Durham has had success growing its business through acquisitions and consolidations. Since acquiring D&D in 2016, the owners have since purchased 14 other legal software entities. The company went public in July of 2020, with share prices nearly doubling on the first day of trading.
Housing Prices Have Steadily Increased as Well
Given the fee increase, homebuyers can expect to see closing costs rise slightly at a time when housing prices are also at record highs. Perhaps owing to residual effects of the pandemic, home resales increased by 13% in 2020 over previous years and the average price of a property has increased by over 8%. Without the need to live close to the city, there has been a trend of families leaving heavily populated areas such as Toronto for more remote locations such as Oshawa, Barrie and Kitchener. Now that proximity to work is less of a concern, homebuyers, especially those looking to purchase their first home, are seeking out more affordable options.
Contact GLG LLP in Toronto for Residential Real Estate Transactions Throughout the Greater Toronto Area
At GLG LLP, we work with clients to ensure their residential real estate transactions run smoothly from start to finish, and as lawyers, we stay involved with a file all the way through rather than leaving the details to our admin staff. We work to ensure we provide top-level service to clients throughout Toronto and the surrounding areas including York, Markham, Mississauga, Etobicoke and beyond. We make use of simple-to-use technology to meet with clients ahead of closing and to sign all necessary paperwork, so our clients don’t have to make a trip downtown.
The real estate lawyers at GLG LLP in Toronto assist clients with a full range of residential real estate services, including purchases and sales, financing and even litigation if necessary. To learn more about how our team can help you with your real estate transaction, call 416-272-7557 or complete the online form to arrange a consultation.