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Zillow fans the winds of change in Canada’s housing industry – The Globe and Mail

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Rochelle and Rick DeClute, seen in their Toronto office on Feb. 13, 2020, say they saw potential in Zillow early on.

Christopher Katsarov/The Globe and Mail

At this time last year, many real estate agents were watching the arrival of the U.S.-based Zillow Group into the Canadian market place with a mix of curiosity and trepidation.

For lots of people, searching real estate listings is as all-consuming as following Raptors basketball or scrolling Instagram.

And Zillow is a giant online data portal that feeds that obsession.

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Consider the keen-eyed searchers looking at a four-bedroom detached in Lansing, Mich. who spotted the killer from the Scream slasher films lurking in some of the interior shots. It was actually the listing agent hiding in a bedroom closet with a butcher knife but the stunt worked: 209 N. Chestnut St. rocketed to the top of Zillow’s most viewed properties.

Last year a red-brick Georgian in suburban Maple Glen, Penn. blew up on Redfin.com when online house hunters spotted a sex dungeon in the basement. People are paying close attention to those wide-angle photos.

Some Canadian brokerages embraced Zillow’s arrival as an opportunity; others were spurred on to create more user-friendly websites for their own brand. The industry juggernaut, realtor.ca, undertook its own transformation as it prepared to face new competition.

Rick and Rochelle DeClute of Toronto-based Union Realty Brokerage Inc. are two agents who saw potential in Zillow early on. Because the portal is a marketing company that doesn’t employ any agents, they don’t view the platform as competition so much as another tool they can use to draw eyeballs to their listings.

Zillow also offers the property’s listing history and details about nearby schools. There are decorating blogs and walk scores. In the United States, sellers can tap into the platform’s use of artificial intelligence software to produce a “Zestimate” of a property’s market value.

“The power behind it is phenomenal,” says Mr. DeClute, who is a self-confessed real estate junkie, searching listings all the time, all over the place.

The DeClutes began supplying listings to Zillow last spring.

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Their listings also appear on the Canadian Real Estate Association’s realtor.ca site, which displays properties from the Multiple Listing Service of real estate boards all across the country.

“It’s not a platform people interact with well and look forward to using,” Mr. DeClute says of MLS. “It’s more of a sales tool than an information tool.”

The DeClutes started supplying listings to Zillow in the spring.

Christopher Katsarov/The Globe and Mail

The DeClutes say the database is designed to funnel users to the listing agent.

“That benefits realtors really well, and I don’t know that that benefits the consumer really well,” Ms. DeClute says.

She says she believes some Canadian agents are reluctant to embrace evolving technology and new industry players because they are uncomfortable with handing power to the consumer with a lot of information – including previous sale prices – that used to be provided only by real estate agents.

But she believes agents can add value in many ways. When she bought a property in Florida, for example, she hired a local agent to represent her at the table. Even though she has years of experience in buying and selling real estate, she knew the Florida agent would know the ins and outs of local transactions.

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She believes agents need to provide invaluable insight to buyers and sellers who can already find a trove of information online.

“It makes us up our game.”

Some Canadian agents are unsettled by Zillow’s practice in the United States of allowing real estate agents to pay a fee in return for the contact information of consumers who submit a query on the site.

So if a house hunter submits an online form asking for more information about a two-bedroom condo in Seattle, for example, the person who gets back to them may not be the listing agent, but a competing agent who paid for that lead.

“Agents who are afraid of the platform say, ‘they’ll take our leads and sell them back to us’ – which they may do,” Mr. DeClute says. “I think there’s a fear that it will diminish the control over the transaction a realtor will have,” he says.

“Speaking to colleagues in the United States, some of them are resentful of the investment they’re making every month,” Ms. DeClute adds.

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The bottom line for the DeClutes is that they know from talking to their clients that sellers would prefer to have their properties receive international exposure on Zillow. The client’s priority is the sale of their own home – not the business expenses of the listing agent, Mr. DeClute stresses.

From Vancouver, Zillow’s chief industry development officer Errol Samuelson declares the company’s foray into Canada a success so far.

After one year, property views on the Zillow site had increased 400 per cent and the number of inquiries to agents jumped 300 per cent, Mr. Samuelson says.

He adds that 80 per cent of respondents to an online survey of Canadians used a website or mobile app in their purchasing journey, according to research conducted by Ipsos on behalf of Zillow.

“Canadians have clearly shifted to looking online,” Mr. Samuelson says. “Our phones are becoming this lens through which we interact with or view the world.”

A home that Zillow bought for resale in Phoenix on April 26, 2019.

Caitlin O’Hara/The New York Times News Service

He adds that after going live with listings of resale properties in Canada, the platform added listings for rental properties and new construction. That way users can peruse a developer’s plans and lots for a subdivision before it’s built.

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The goal is to let consumers see all of their housing options on one site, he says.

Mr. Samuelson says agents in Canada who supply listings to Zillow can currently add their own profiles free of charge. Zillow also plans to launch a service in Canada that allows agents who specialize in representing buyers to advertise to users, but he doesn’t have a date for the rollout.

“A lot of times it’s good practice to have a buyer’s agent who specifically represents you instead of dealing with the listing agent.”

Another line of business currently up-and-running in 21 markets in the U.S. is Zillow Offers. Sellers with a property on the platform can submit information about the home’s size and condition and so forth

“Typically, within 24 to 48 hours, we’ll come back to you with an offer,” Mr. Samuelson explains.

If the homeowner finds the offer acceptable, Zillow sends out an evaluator to check that the property measures up to the homeowner’s description. Then Zillow makes a final offer, minus a service fee.

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The service appeals to sellers who don’t want to worry about cleaning the place up for showings or finding somewhere to take the dog, Mr. Samuelson says.

The seller can choose a closing date anywhere between five and 90 days.

“It seems to tap into this consumer desire for ease,” Mr. Samuelson says, explaining that the service fee of 7.5 per cent is higher than the fees an agent charges but some people prefer to opt for certainty and low hassle.

“It’s a fascinating business in the U.S. right now,” he says.

Mr. Samuelson says it’s too soon to say if Zillow will import that business to Canada but no plans are in the works.

“It’s early days – even in the United States.”

In Ottawa, the Canadian Real Estate Association says the competition heating up the industry is good – the pace of change at its realtor.ca site is quickening as a result.

Realtor.ca, which contains listings from real estate boards across the country, has vast amounts of information plus high recognition with consumers, CREA president Jason Stephen says.

“No question the private sector has a lot more money to throw at those portals, but what they don’t have is the data,” he says.

Mr. Stephen says a house hunter submitting a form for information on a property will always hear back from the listing agent.

“The consumers want the most knowledgeable person on that property.”

CREA’s members stress that what they’re looking for from the site is the ability to generate more and more leads, he says.

Mr. Stephen, who represents Royal LePage Atlantic in Saint John, makes note of the huge shift in recent years as house hunters use technology to search for information that was previously only available from an agent.

Prospective buyers can search themselves for the previous selling price of a property since the courts in Canada cleared the way for the sharing of those data. They also use Google’s street view to check out the neighbouring houses and anything else they can find.

“Buyers scrutinize what they’re looking at more and more and more,” he says. “It’s the biggest purchase they’re going to make so they do a lot of research.”

But agents have a chance to provide guidance that isn’t available online, he says. They have local knowledge and experience in negotiating, among other skills.

A consumer searching online might see one of Mr. Stephen’s listings and send a query on realtor.ca to ask about the heating costs, for example. If the searcher isn’t already working with an agent, he has the opportunity to turn that lead into a client.

He adds that he is hearing from residents of British Columbia and Ontario these days who are considering a move to New Brunswick, where real estate is more affordable. Many of them are launching their search from their home province.

One of Mr. Stephen’s neighbours is a recent transplant from Toronto who compiled a shortlist of places in Saint John and Moncton just by looking online.

“That person did all that research before they even had a plane ticket to come down.”

At Royal LePage, president Phil Soper and chief operating officer Carolyn Cheng both have backgrounds in information technology. As a result, the nationwide company has a tech bent, Mr. Soper says.

“We pour a ton of effort and resources into it.”

Mr. Soper says Royal LePage has taken advantage of the gradual liberalization of rules that has allowed competing brokerages to co-operate in sharing listings. The company has beefed up its own website to make it more appealing to searchers.

Ms. Cheng says the firm looks outside of the real estate industry to what the tech giants are doing. This year, Royal LePage will be serving up listings to searchers in the same way that Netflix suggests your next binge watch based on your viewing history and Amazon makes reading recommendations based on books you and people with similar tastes have bought.

So a house hunter might see a pop-up saying “people who looked at this house also looked at this one over here.”

Royal LePage already caters to consumers who want an online assessment of the value of their home, Mr. Soper points out, because of the data available through other divisions under the Brookfield umbrella. Royal LePage is owned by Brookfield Asset Management.

While many industry players fought against change for years, he says, he pushes for transparency and the sharing of information.

“If you share, consumers will reward that trust.”

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Will the NAR, U.S. case impact the CREA lawsuit in Canada? – Business in Vancouver

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Two North American court cases are taking the real estate industry to task over commissions paid out to Realtors.

While the Canadian lawsuit has the potential shake B.C.’s housing market, experts don’t agree on what the fallout might mean just yet.

“The fundamental issue … is that there’s a belief that a buyer’s agent will steer their client to listings that have higher commissions offered by the listing agent,” said Tom Davidoff, an associate professor at the UBC Centre for Urban Economics and Real Estate.

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“Somebody who buyers are trusting should be looking out for the buyer’s best interest, not shopping offered commissions. So anything that can be done to avoid that, I think is helpful.”

A proposed class-action lawsuit filed in January alleges that the Canadian Real Estate Association (CREA), alongside dozens of provincial and local real estate groups “conspired, agreed or arranged with each other to fix, maintain, increase or control the price for the supply of buyer brokerage services for residential real estate.”

South of the border, the National Association of Realtors (NAR) agreed two weeks ago to a $418-million settlement, as well as changes to the standard six per cent sales commission. This brings an end to a lawsuit that accused the industry association of artificially inflating real estate agent commissions.

“This is about fair play between participants in the real estate industry and in the public, and these rules are just not fair,” said lawyer Garth Myers, a partner at Toronto-based Kalloghlian Myers LLP, who filed the proposed class-action lawsuit in Canada.

There are 10 B.C. real estate boards named in the Canadian suit and eight brokerages.

Myers said that changes to the standard commission in the NAR case “eviscerates any defence that the Canadian defendants will have in relation to the necessity of these rules.”

“The fact that NAR walked away from these rules in the States, we think is very important,” he said.

“The main defence that we expect in Canada … is that these rules are so important to the proper functioning of the system, the whole system would break down in their absence. And the fact that the NAR was able to walk away from these rules in a system that is virtually identical, is proof positive that this system can function just fine without them.”

Trevor Koot, CEO of the British Columbia Real Estate Association, said that there is no question that the NAR case has captured the attention of the real estate industry and Canadian consumers. 

“Canada however, is a different country with a differing legal and business framework than the US. As the CREA has indicated, they deem the case in Canada to be without merit,” he said in an email to BIV

In Canada, real estate commissions can vary from three per cent to seven per cent of the sale price, however, there is no set commission or standard. However, because this is a percentage of what a home sells for, as home prices rise so too is the price of commission, said Myers.

“People are queued up to be upset about anything to do with the real estate market, mostly because housing is a human need and there’s a lot of people who see themselves at risk of not having the housing that’s going to make them reasonably happy,” said Davidoff.

“I don’t think this litigation is really fundamentally about housing affordability.”

If successful, Myers said that the case will put money into the pockets of sellers who have overpaid for commissions.

“I think it will make it less costly to buy and sell real estate generally. Will that have a downstream effect on the buyer? I don’t know. But we’re seeking to represent sellers and that’s who we’re acting on behalf [of],” he said.

When it comes to whether or not the CREA lawsuit will result in lower home prices, Davidoff said that it may not be the case.

“If there’s more homes on the market, there’s lower prices, but the people who are selling their homes are very likely moving to another owner-occupied unit. It’s not common for people to transition from owning to renting. So the net increase in houses available isn’t great and with more transactions, usually prices are actually higher,” he said.

“Buyers may have to start compensating Realtors out of their own pocket. I don’t see this as a win for first-time buyers. … This is not a silver bullet or magic carpet ride to affordability.”

This is not the first time that the Canadian Real Estate Association or other real estate boards across the country have been challenged when it comes to commissions.

A 1988 order of prohibition from the federal government’s Competition Bureau states that the CREA and all real estate boards that are members of the association are prohibited “from fixing, establishing, maintaining, suggesting or controlling in any manner commission rates or fees for MLS.”

“The real estate industry at various times in various forms, both here and in the U.S., has faced various legal actions on that. And usually the end of these agreements [is] not to do that, but the world doesn’t seem to change much. Every once in a while somebody comes along with a new law, a new lawsuit, a new government action,” said Ron Usher, general counsel for the Society of Notaries Public of B.C.

“It’s a front-page story that’s been going on for 30 years.”

The Competition Bureau said it is aware of the proposed class-action lawsuit.

“We remain focused on ensuring that consumers benefit from innovation and competition in the provision of real estate services and will take action whenever we find evidence of conduct that is prohibited by the Competition Act,” the agency said in an email to BIV.

Andrew Carros, managing broker of Engel and Völkers in Vancouver, said that he is not concerned about the case and that for him, nothing changes.

“It doesn’t worry me one little bit, because I have always disclosed agency, my clients know exactly what I get paid, they understand my value. … In fact, it gives guys like me the ability to be able to explain this better and be able to get better documents out there,” he said.

Oakwyn Realty Ltd. broker Steve Saretsky said that while there is some uncertainty among real estate agents, it’s too soon to tell what the impacts will be.

“People are drawing massive conclusions, but I don’t think we know enough yet,” he said.

“What’s going to happen is you’ll probably see a bunch of different business models coming out of it, lower fee structures, things of that nature.”

[email protected]

Editor’s note: This story has been updated to include comments from Trevor Koot. 

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NAR settlement explained: Why Realtors like me are scrambling

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One of my favorite “Modern Family” episodes depicts the hilarity and nonsense of a real estate agent’s daily life as Phil Dunphy rattles off deed restrictions and the proper pronunciation of the word “Realtor” (real-TOR).

A registered trademark of its originator, Realtor is a title only real estate agents who pay membership to the National Association of Realtors (NAR) are allowed to boast.

Today, after more than 10 years as one myself, the “Realtor” prestige has lost its allure.

Just when it felt like NAR was bouncing back after a sexual harassment scandal in 2023, we real estate agents and brokers now find ourselves in the aftermath of this month’s multimillion dollar NAR settlement.

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While I am nervous about what these NAR settlement changes mean for my residential real estate business and community, I am pleased that we’re all turning our eyes and ears to a company whose pockets have gotten too big and too dark for too long.

But enough about NAR.

Brokers, their agents and our local associations are scrambling to decide how to restructure serving residential buyers fairly without undervaluing our work. It feels a bit like a bomb just went off, and we’re running up to each other screaming, “Can you hear me talking? Are you talking? What are we going to do about this?!”

We have only until mid-July to figure it out.

Here’s what we know now: Buyer broker compensation is no longer allowed to be included on the Multiple Listing Service (MLS). And buyers are now required to sign a Buyer Representation Agreement, which includes the buyer broker’s compensation.

Real estate agents are worth it. So how do we get paid?

Buyer services are harder and more unpredictable, I think, than seller services (even in a buyer’s market!). Some buyer clients take years to find a property, while others take only a few weeks.

The stories we agents could tell would make anyone roll with laughter or cry – probably both. Being a real estate agent is like a reality TV show. How will we divide our whole job into billable hours? Billable tasks?

As an agent, I’m not only giving advice about market data and negotiating terms for sale. I’m also an on-call therapist, a babysitter, an interior designer, a cleaner, an exterminator … agents gladly do an endless list of tasks for our clients. Just ask your favorite agent what she keeps in her car for emergencies!

One thing I can predict with much certainty: Buyers will have to do more work to buy a property in the future. Private tours will be less common and replaced by 3D tours, video tours and open houses. Buyers might also have to meet with their inspectors, contractors and others without their agent.

Maybe buyers really will do it all themselves without losing money.

Buying a house?Don’t go it alone. A real estate agent can make all the difference.

If you’re hoping to buy in the next three months, my recommendation would be to close by July 1. Most first-time homebuyers have no idea what has happened or how it will affect their ability to negotiate.

In the past week, I’ve had to explain the NAR settlement to every friend, neighbor and client outside the industry. I can only tell you that we’re all racing to get it figured out by the time it does affect everyone.

NAR settlement explained: How will this impact home sellers and real estate prices?

Seller-paid buyer broker commissions were created with equitable rights to good representation in mind. Specifically, so that first-time buyers could afford to have a fair negotiation, instead of being swept under the rug by a seller’s agent signed to protect the seller (a law in most states).

My heart breaks for those sellers who were swindled into commissions. As much as I’d like to blame NAR, this error is also on agents, brokers and local boards who clearly violated our ethical code. It’s maddening to watch agents and brokers feed right into the stereotype that real estate agents are lazy and just in it for the biggest paychecks.

So, who will pay the buyer’s agent now, and how will this affect home prices?

Real estate prices:Will home prices fall after Realtor lawsuit settlement? You shouldn’t count on it.

It’s commonly acknowledged that the 5-6% sales commission was “baked into” the sales price. Investor agents and builders have been using low-to-zero percent buyer broker commissions as leverage for years.

While I do think that 5-6% sales commissions will be a thing of the past, there is a chance that sellers will find a way to simply advertise buyer broker commissions through a different medium. This compromise walks a fine line with the new restriction.

Seller-paid “buyer credits” is my favorite idea bumping around. Buyer credits would be offered on the listing, and could be distributed as the buyer sees fit at the closing table. The buyer could use the funds for themselves, their broker or both.

If buyers are responsible for the buyer broker commission on top of other purchasing costs, the sales prices will have to come down. Lower sales prices should not affect the sellers’ net proceeds in this instance, since the sales price deficit should roughly mirror the now absent buyer broker’s commission.

In short, even though most sellers think they should be celebrating now, these new rules probably won’t affect sellers much, if at all, once the dust settles.

What does the NAR settlement mean for buyers?

Gone are the “Let’s go tour this house for fun!” days.

A signed Buyer Representation Agreement is now required before a property showing. This has always been best practice. For some states this will be a big change.

For example, I usually complete a buyer consultation and one or two property tours before requiring a buyer’s agreement. I do this to be sure we’re a good match for each other. A successful client-agent squad requires a lot of trust and a common communication style.

Take the tours off the table, and I think things will get awkward. Now I spend one hour with a potential buyer and then prompt, “So do you trust me to guide you through your biggest life purchase? Sign here.” I’m sure thankful many of my clients are referrals.

How will the commission change impact real estate agents in 2024?

The part-time agents and small brokerages will likely diminish over time, which will either be great or horrible for the industry. Agents will have to do more with less, and our 60 to 70 hour work week will feel impossible without high sales volume.

Once in escrow, the brunt of the work usually lands on the buyer’s agent, too. If there are more transactions without buyer’s agents, then the seller’s agent will have to pick up the slack.

Emily Ross

I often joke that as a 1099 real estate agent, I’m either overpaid or underpaid on each property. Still, my annual income mashes up into a worthwhile sum despite the work-life balance.

Without that 2-3% buyer’s commission propping up half my income, I am not sure the 11:30 p.m. phone calls, 6 a.m. texts, missing my daughter’s basketball game for an impromptu showing, and never having paid time off or maternity leave will be worth it.

Maybe I ought to go back to copywriting.

It feels like most brokers and Realtor associations are strategizing how to make the buyer agent obsolete with new technologies. I think they’re focusing on the wrong solution, but that’s a story for another day.

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A settlement in a U.S. lawsuit could upend the cornerstone of real estate industry: commissions

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The cost of selling a home in the United States may be about to change dramatically.

A real estate trade group has agreed to a landmark deal to drop what was once a cornerstone of the industry: the six per cent sales commission paid to agents.

In Canada, two lawsuits filed against various real estate bodies want the courts to come to the same conclusion and force wholesale change in the way Realtors charge their fees when a home is sold.

“We got here by a cartel of brokerages and real estate associations that control the rules, and they’ve done it for a very long time,” said Garth Myers, a litigator with Toronto law firm Kalloghlian Myers.

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He filed the proposed class-action lawsuits in Federal Court on behalf of plaintiffs who allege that the Canadian Real Estate Association, the Toronto Regional Real Estate Board and several local brokerages and franchisors conspired to set fees and illegally drive up the price of real estate commissions.

At the heart of both the U.S. and Canadian cases is the opaque way in which real estate agents charge their fees.

Lawsuits revolve around Competition Act

In Canada, there are different fee structures in different jurisdictions. In Ontario, for example, a commission of five per cent of a home’s sale price is split between the buyer’s and seller’s agents.

With the average price of a Toronto home at $1,225,000 last month, Realtor fees would amount to $61,250.

In Vancouver, Realtors charge seven per cent on the first $100,000 of the sale price, and between 2.5 and three per cent on the balance. So agents would split between $29,500 and $34,000 in fees on a $1-million home.

A real estate 'For Sale' sign outside a single-family home.
In Canada, there are different fee structures for real estate agents in different jurisdictions. In Vancouver, Realtors charge seven per cent on the first $100,000 of the sale price, and between 2.5 and three per cent on the balance. (Ben Nelms/CBC)

In the U.S., agents generally charge a commission of five or six per cent.

But what is common among those different jurisdictions is that the fee paid to the buyer’s agent is baked into the price of the home, while a seller can negotiate with their agent and get a better fee.

A potential buyer can look up the details of a home on something called the Multiple Listing Service (MLS). The listing includes everything they would want to know about a property — from size and taxes to upgrades and amenities — but it doesn’t disclose the amount a buyer will pay in Realtor fees.

Myers said the existing system enables agents to steer clients away from homes that aren’t paying the full commission.

“It’s clear to us that consumers are being ripped off, it’s clear to us that the rules elevate the cost of buyer brokerage commissions,” he said. “Now the open question that the court is going to have to resolve is whether this is criminal conduct under the Competition Act. And that’s what we’re fighting about in court.”

It will likely take years before the cases are resolved.

WATCH | How sweeping U.S. real estate changes could impact Canada:

How sweeping U.S real estate changes could impact Canada

15 hours ago

Duration 6:22

A landmark legal settlement is upending the U.S. real estate market. CBC’s Peter Armstrong breaks down the possible ripple effects for home buyers and sellers in Canada.

U.S. industry pushes back

In the U.S., there is already fierce disagreement over what the court settlement — which ends legal claims from home sellers over real estate commissions — actually means.

On March 15, the day the $418-million US settlement was announced, the National Association of Realtors said fees have always been set by the market, not by collusion among agents. Besides, the group said, those fees have always been negotiable.

“Offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers,” the association said in a statement outlining the broad points of the agreement.

Rows of houses are shown in a subdivision.
A housing subdivision is shown in Middlesex Township, Pa., in April 2023. In the U.S., there is disagreement over what the $418-million US court settlement — which ends legal claims from home sellers over real estate commissions — actually means. (Gene J. Puskar/The Associated Press)

Since then, high-profile brokerages have pushed back against the notion that the industry will be forced to change as a result.

“Since the settlement announcement, there have been numerous articles and stories in the media on what this means for buyers and sellers,” Budge Huskey, president and CEO of Premier Sotheby’s International Realty in Naples, Fla., said in a statement released on Tuesday.

“Regrettably, most reflect a profound lack of understanding of the real estate business as well as mistaken claims.”

Huskey said the notion that sellers will no longer pay a fee to the buyer’s agent is simply false.

“There has never been any obligation for a seller to pay buyer agent compensation at any time, yet it has been a historical practice that’s worked exceedingly well since the advent of modern residential real estate,” he said.

Realtors in Canada, such as ReMax, aren’t saying much publicly while the cases work their way through the courts. A spokesperson for the organization would only say that “we do not comment on ongoing litigation.”

U.S. reaction watched closely here

“It’s important to note the litigations in Canada and the U.S. occur in different legal and factual contexts, and the litigations are at a much earlier stage here in Canada,” the Canadian Real Estate Association said in a statement to CBC News, adding that “we’ll continue to review U.S. developments.”

The statement goes on to say that buyers and sellers in Canada “have always been able to negotiate commissions with their agent…. On the buyer side, buyer representation agreements are required in at least seven provinces in Canada. These agreements set out terms like services and fees between an agent and their buyer. This represents more than 80 per cent of homes sold in Canada.”

Real estate experts on this side of the border have been watching the U.S. reaction very closely.

A man with grey hair and a grey beard, wearing a blue overcoat and tie, stands outside a building.
Murtaza Haider, a professor of real estate management at Toronto Metropolitan University, says he thinks the lawsuits in Canada will lead to the same outcome as those in the U.S. because the two real estate systems are so similar. (Pelin Sidiki/CBC)

Murtaza Haider, a professor of real estate management at Toronto Metropolitan University, said the two systems are so similar that he believes the court cases here will lead to the same outcome as those in the U.S.

But, he said, people should temper their expectations.

“We won’t have a system blow up. It’s basically giving the buyer the rights to negotiate with the agent, a commission for the services they may or may not use,” Haider said.

Down the road, he imagines a system where some buyers pay an agent a full commission to help them find a home, figure out a price and close the sale, while others will simply need someone to help them file the paperwork.

Haider warned that there may be some unintended consequences to changing the system. Currently, he said, the fee paid to both the buyer’s and seller’s agents is essentially included in the price of the home. Fees are not an extra closing cost outside the home price.

“Right now it’s baked into the mortgage amount, so you don’t have an out-of-pocket policy. But [if you] have the flexibility and freedom to negotiate, that amount [may be] coming out of your own pocket right away,” Haider said.

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