Following a class action claim in the GTA, a second lawsuit alleges that real estate brokerages and boards in every Canadian province and territory have conspired to inflate commission fees paid by sellers.A legal battle alleging price fixing in the real estate industry has been expanded to every Canadian province and territory.
Both cases stem from rules brokerages agree to when they join their local real estate board and CREA, including that a seller on an MLS system must pay a commission fee to their own brokerage as well as the one used by the buyer, typically of 2.5% of the sale price to each firm. McFall’s lawsuit argues that with the seller on the hook financially, there is no incentive for buyers to negotiate on commission price, or to forgo using a brokerage altogether. As such, the arrangement “eliminates normal competitive market forces” that would otherwise dictate the price of a service, driving up the commission fees paid by sellers.
“In effect, the Arrangements reward and incentivize marketing efforts by Buyer Brokerages directed at procuring the highest volume of clients possible, over optimizing the service quality and the value proposition provided to their clients.” “ proposed a class action related to any seller within the geographic region of the GTA. Virtually the same rules are applied across Canada by CREA and other local real estate boards. If the Toronto rules are an illegal form of price control, then so too are the rules applicable to every other seller of residential real estate who listed on an MLS.”
“That would have, I think, a really beneficial impact for everyday people who are struggling to afford the purchase of homes.”Why Is New Home Construction Down? Simple, It’s Too Expensive For Builders And Buyers
Source: Real Estate Daily Report (realestatedailyreport.net)
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