Toronto’s real estate industry has been bustling with activity, from class actions against alleged price-fixing to the battle over preserving historic buildings.
Two years ago, the Ontario real estate world was shaken when a class action alleged that real estate sale commissions were price-fixed in Toronto. Fast forward to last week, industry defendants tried to toss the case out, but a federal judge wasn’t having it.
The crux of the class action? The claim is that since the listing agent sets the commission, buyers might be shelling out more than they should. In a market without restrictions, buyers could have the freedom to haggle over the commission paid to their agents. While the ruling doesn’t scream “price-fixing is happening!”, the class action’s progression could usher in a more flexible commission scenario down the line.
Similar to the proceeds in Toronto, several similar suits are unfolding across the US. Sellers and buyers are challenging industry rules, combined with continued pressure from US antitrust officials are threatening to disrupt a compensation model that hasn’t had any meaningful change in decades.
One problem – home buyers rarely pay their agents. Instead, buyers agents split commissions with sellers agents, which are deducted from the sellers proceeds upon successful sale of their home.
Problem two – Buyers agents try to avoid introducing homes to their buyers that don’t offer a full commission to them. This is against real estate industry rules in most jurisdictions (agents are supposed to act honestly and in the best interests of their clients at all times) yet it is a common practice.
Services such as homeFree, where we provide the tools and services to return control to homeowners vs agents in a real estate transaction, allows buyers and sellers to connect directly. This means no commissions escaping the successful real estate transaction, allowing greater pricing and negation flexibility, and most importantly, more money in homeowners pockets!
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Courtesy of Whatever Else Marketing
Class Action Against Toronto Real Estate Industry Price Fixing Gets Approved
The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by CREA and identify the quality of services provided by real estate professionals who are members of CREA.
* Only when the buyer comes direct, otherwise the seller may choose to negotiate a commission with the buyer’s agent.
