The Canadian Competition Bureau is investigating certain policies and practices of the Canadian Real Estate Association (CREA) to determine if their rules discourage buyer agents from competing by offering lower commission rates.

The Issue with MLS Listings and Commissions

Under current regulations, real estate listings on the MLS system must include an offer of commission to the buyer’s agent. When a listed property is sold, the buyer’s agent is often paid by the seller’s agent. This system has raised concerns that buyer agents may not offer lower commission rates since buyers do not directly pay their agent. As a result, buyers are less likely to choose an agent based on the commission they charge.

The Competition Bureau is concerned that these rules may incentivize buyer agents to steer clients away from listings offering lower commission rates, potentially limiting competition in the market.

Concerns Over CREA’s Collaboration Policy

The Competition Bureau is also examining whether CREA’s collaboration policy is anti-competitive. The policy could potentially favor larger mortgage brokerage firms that can advertise to a broader network of real estate agents. Additionally, the Bureau believes this policy may disadvantage other listing services, limiting their ability to compete on factors like privacy protection or property inventory.

CREA’s Response

In a statement, CREA confirmed its cooperation with the investigation. James Mabey, president of CREA, stated that “CREA believes these regulations and policies promote competition and benefit consumers.”

Looking Ahead

As the Competition Bureau continues its investigation, the real estate industry and consumers alike will be watching closely to see if changes to commission structures and listing policies are implemented, potentially leading to a more competitive market for real estate services.