CREA Makes Rule Changes, But Not Enough

The Canadian Real Estate Association (CREA) has offered to change its rules to allow agents to post listings on the MLS, through which 90% of Canadian house sales are done, for a flat fee charged to the house sellers. Previously if a seller wanted to list their house for sale on the MLS system they had to use an agent and pay anywhere from 3-6% of the sale value as a commission for the privilege. When you include these costs with securing a home mortgage, appraisals, legal fees, moving costs etc, buying a new house can be a daunting prospect.

Despite this move by CREA, the Competition Bureau has said the changes are still not enough to open up CREA’s grip on the MLS and still prevents innovative players from entering the market as a simple future vote by members could reverse these changes again. Competition Commissioner Melanie Aitken, said “There is nothing in these proposals that we haven’t seen before and they do not solve the problem. They are a step in the wrong direction. These amendments amount to a blank cheque allowing CREA and its members to create rules that could have even greater anti-competitive consequences.”

In addition, agents are now required to pass along a home phone number, if the seller chooses, directly to an interested buyer, so that they can negotiate directly.

The changes should be made soon at each of the local 101 real estate boards, but they must individually approve these changes themselves.

The Competition Bureau believes that the current system keeps prices artificially high, so hopefully future changes will bring down the price of selling your home. If you take a house value of $300,000, a 5% commission charge on that sale, amounts to $15,000 that the seller needs to pay. With the upcoming introduction of the new HST in the summer, any savings in the housing industry would be welcome.

Related Topics

Economic News / Mortgage News / Mortgages

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