Landmark Agreement Changes Face of Realty Industry in Canada


More than four years of feuding between the Competition Bureau and the Canadian Real Estate Association has resulted in an agreement that will have a major impact on the realty industry as well as Canadian homeowners.

This past February, the Bureau formally challenged CREA’s practices, claiming they “ limit consumer choice” and prevent real estate agents from offering lower cost services to their clients.

CREA’s main advantage over private sale companies or the average homeowner wishing to sell a home privately is the Multiple Listing Service ( MLS), which is actually owned by CREA and responsible for 90% of home sales in the country. With exclusive access to the most effective tool for home sales in Canada, CREA created a virtual monopoly in the real estate industry.

The new agreement, which has yet to be ratified, will essentially allow for home sellers to pay for only those services they want from their real estate agents, including simply listing their home on the MLS system and nothing more. Up to now, under the rules established by CREA, in order to access the MLS system, customers usually had to sign on for full service which resulted in full fees. The Competition Bureau saw this practice as “ anticompetitive”.

“Since challenging CREA’s rules, the Bureau’s goal has always been to achieve a long-term solution that would strengthen competition in the residential real estate brokerage services market,” Melanie Aitken, commissioner of competition, said in a release.

“This agreement is welcome news for Canadians”, said Melanie Aitken, Commissioner of Competition. “If ratified, the agreement will ensure that consumers have the ability to choose which services they want from a real estate agent when selling their home, and to pay for only those services. It also provides much-needed flexibility for real estate agents by ensuring that they have the ability to offer the variety of services and prices that meet the needs of consumers.”

CREA maintains that their current rules don’t actually restrict other business models and that the agreement is unnecessary and costly. Some would say, however, the that it was actively discouraged and many discount realty brokerages were driven to closure in the past.

The decision could be potentially devastating for some in the realty industry however, given the direction of the economy, perhaps more Realtors may have been pushed into offering discounted fees anyway. In a housing market downturn, where homeowners have lost a lot of their equity to the crisis fallout, fewer and fewer would be willing to part with what equity is left to pay for hefty Realtor fees. The agreement could encourage a bit of a resurgence in the market and create sales for Realtors where there was none, albeit at a lower price point.

After the agreement is ratified, a copy of the legally binding consent agreement will be posted on the Competition Tribunal Web site. The agreement will remain in force for 10 years.

As the company’s first employee, Jennifer has been a Licensed Mortgage Associate since 2004, but her current role is not focused on mortgages. She is the resident blog writer and…

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