There is renewed focus on realtor commissions amid a rebound in market activity in B.C. and a class action lawsuit against major Canadian real estate entities.
“I really felt that the practice by some of the people in the industry, where they mandated what charge, I think that’s coming home to roost both in the U.S. and in Canada, and I think it’s a good thing for consumers,” said Ross McCredie, owner of Sutton Group Realty Services Ltd. Realtors are licensed by the B.C. Financial Services Authority and are required to join a brokerage, to which they pay “desk” fees as independent contractors. Most brokerages will charge a monthly fee to “hang” one’s license there, which covers administrative costs and services for realtors.
Market conditions can influence commission rates The market is rebounding in B.C. after several successive cuts to the key interest rate. Dirks’ model could attract clients by saving sellers tens of thousands of dollars compared to traditional commission rates. The court has not yet ruled on the plaintiff’s certification motion, though a September 25, 2023 ruling struck the claims against some defendants, including Sutton, as having no reasonable prospect of success. Toronto law firm Kalloghlian Myers LLP represents the plaintiff, and did not respond to an interview request.
Now, U.S. agents will no longer discuss commission splits, a shift that could lower commissions across the board. While the Canadian and U.S. lawsuits have key differences, they raise some of the same questions, such as whether requiring listing agents to offer compensation to buyer’s agents distorts competition and results in higher fees.
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