The Canadian real estate sector has been attentively observing the legal dispute involving the National Association of Realtors (NAR) in the United States, where a substantial $418 million settlement has been agreed, to be paid over a 4 year period.

Speculation abounds regarding the potential impact on Canada’s real estate industry.

 

Despite the buzz and uncertainty surrounding the US legal case, doubts persist. However, I am confident that any alterations will not significantly effect our southern counterparts. Realtors® are renowned for their adaptability, and are adept at navigating industry transformations.

 

In the US, the recent regulatory adjustments which have been made, particularly concern buyer agency and commissions.

 

Now, buyers wishing to view a property must engage in a buyer’s agency agreement, which involves compensating their designated agent. This payment, whether upfront or through alternative means, must remain confidential and not be disclosed on the Multiple Listing Service (MLS).

 

Buyers Agency is a crucial document for the safeguarding both buyers and Realtors®, so I’m certainly all in favour of this, however, this new rule diverges from industry transparency norms.

 

These modifications might bewilder buyers, particularly first time buyers, as they may now be obligated to remunerate their buyer’s agent in addition to other home buying expenses such as land transfer tax, closing costs, inspection and appraisal costs as well as the downpayment.

 

Also, such changes may potentially elevate the occurrences of ‘double-ended’ transactions, known as LIMITED DUAL AGENCY, in which listing agents represent both parties. This shift contradicts past industry efforts to restrict or eliminate dual agency, raising doubts about its actual advantages for consumers.

 

In Canada, provinces like British Columbia and Ontario have already taken measures to prevent or limit agents from practicing under limited dual agency, with other regions likely to follow suit.

 

While some buyers may not object to dual representation, it leaves them exposed without dedicated advocacy for their interests. This predicament forces buyers to decide between having personal representation or not, particularly if it is financially challenging. If Canada were to outlaw dual agency and follow the new US rules, buyers would have zero choice!

 

Although the NAR settlement may not directly impact Canadian real estate procedures, it does encourage introspection on the core values of our industry, which is always beneficial to ensure constant improvement.

 

With regards to commissions. Buyers agents are, for the most part FREE! Listing agents negotiate their listing commission offering a percentage to buyers agents. There is no rule or price fixing to what they can offer, offering as little as a $1 if they so choose and have discussed with their sellers.

 

Buyers agents, including myself have a price for the work they do according to how they calculate their value in the transaction, like all working people. If that price is higher than the advertised listing agents offering, we will discuss with our buyers and negotiate with them to cover the difference.

 

Canadian buyers and sellers are accustomed to negotiating commission rates, with agents having the flexibility to offer rebates or reduce commissions to facilitate transactions. Many times it’s the flexibility of agents which keep deals alive, especially in emotional charged situations.

 

In my opinion the only people to benefit from this suit are the lawyers who brought action against NAR, resulting in huge compensations for them.

 

As we observe developments in the US real estate market, it is crucial to remember the distinct characteristics of the Canadian real estate sector and uphold the transparency and integrity so many of us work by to ensure the best welfare of our clients.

 

 

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Photo Source: Realtors® own and Canva

This article is not intended to solicit buyers or sellers currently in contract with other members of the PEIREA. Using this article in full or part without permission is a violation of copyright laws. Copyright © 2024 Melanie Press Real Estate at Impress Island Realty

Impress Island Realty is a Licensed Real Estate Brokerage and Broker Member of the PEI Real Estate Association (PEIREA)