Re/Max Canada confirms it has reached a “substantial agreement on monetary terms and business practice changes” to settle two class-action lawsuits challenging real estate commission structures, marking a significant development in the ongoing legal battle over commissions in Canada
According to the public company’s Q4 earnings report, the agreement includes $5.5-million USD (approximately $7.8-million CAD) to address allegations in the Sunderland and McFall cases, which claim that existing rules mandating homesellers to pay buyer brokerage commissions inflate costs and limit competition.
Re/Max continues to deny any wrongdoing
While firmly denying any wrongdoing, Re/Max Canada says in a statement, “This decision was made in the best interest of the Re/Max brand in Canada, including its franchisees and their sales associates, after carefully considering the significant risks and costs associated with continued litigation.”
The company adds that a settlement would remove “the uncertainty of ongoing litigation related to these cases,” and declined further comment “given confidentiality agreements and ongoing proceedings.”
CREA responds
The Canadian Real Estate Association (CREA), also named in the lawsuits, acknowledged Re/Max’s decision in a statement to REM. CEO Janice Myers says, “This news doesn’t change CREA’s own ongoing position and defence against these claims. We continue to believe they are without merit and remain committed to standing in support of our REALTOR members.”
CREA says it “will continue to defend these actions alongside our co-defendants, who include boards and associations, franchisors, and brokerages.”
The Toronto Regional Real Estate Board, among the defendants, declined to comment on the ongoing legal proceedings.
What’s next
This development follows similar settlements in the United States, where Re/Max and other major real estate companies, as well as the National Association of Realtors, agreed to financial settlements to resolve claims of anticompetitive commission practices.
Re/Max Canada’s settlement is subject to court approval.
Update (Feb. 23) – A statement from CREA, TRREB and additional information from Re/Max Holdings Inc.
Update (Feb 21., 1 pm EST): This article has been updated to reflect a revised statement from Re/Max Canada. The previous statement suggested that a settlement had been reached.
Jordana is the editor of Real Estate Magazine. You can reach her by email.
So what are the ‘business practice changes’? Are they following the U.S and no longer posting buyer agent commissions? I feel this is the way practice will change in Canada.
It’s funny they have to defend the norm. Will it change practices not sure, remains to be seen. I think the industry will altimately decide that, if sellers continue to pay a buyers agents commission or not, and if not will they be at a disadvantage to ones that do.
Until Canadian Mortgages change to allow the Buyer’s Agent commission to be added to a mortgage, the commission still needs to come from the proceeds of the sale of the home. Easily explained to any Seller.
This is a new business model. File a law suit and hope some will payout. What a wonderful world.
I honestly believe the judiciary has encouraged and lead the public to believe they can feed from free enterprise businesses.
In all honesty real industry was built on the backs of those who funded and built an MLS system.
Once it was established as the go to too find your dream home it was sued by a lawyer. Now the mls system is open to other new businesses who steal the info and offer all that free information to the public. The leads those new companies compile are now offered back to the real estate agents if they pay a huge referral fee. Now get this the information about your home of which the real estate agent spent all his or her money in advertising to get and offered on their exclusive MLS site is offered to others to build businesses and pay nothing.
When it comes to commissions they have been negotiable for years.
Yet there are those agents who maintain a higher commission of 4.5 5 or 6% might give the sale of your home an edge in the market.
If a seller doesn’t like the commission he or she is free to walk away sell it yourself or use another company. Maybe it’s actually time to be looking at the source of the cause and Sue the judiciary who hold a true monopoly with fees structured that are undeniably without competition.
If we continue to let this judiciary monopoly continue to challenge businesses who have built industries we will soon have non.
Who will be next our grocery stores, our auto industry or how about google etc etc.
Exactly. These parties “think” they know” but they know nothing.
The new business model is BODE – with AI and digital savvy the next generation will no longer feel the need to use traditional models; not unless there is substantial change to the commission payment structures. We have made it so difficult for the young generation to buy, and the amount they spend just to cover the mortgage… they will not see the benefit of using a traditional buy/sell model the way it stands. Remember, this generation is making its own content, so it has displaced even traditional media. Anyone who thinks the current structure will stand over time is not reading the tea leaves.
I spent 30 years in Real Estate and have NEVER added commissions to the probable selling price… NEVER!
These boards AND management are made up of “clerks” who were not successful Realtors!
Most sales in most areas are around 95% of list… looks like buyers believe they are removing the commission!
The zoo that is called organized Real Estate now makes me very, very happy I retired!… it is all BS!
I spent 30 years in Real Estate and have NEVER added commissions to the probable selling price… NEVER!
These boards AND management are made up of “clerks” who were not successful Realtors!
Most sales in most areas are around 95% of list… looks like buyers believe they are removing the commission!
The zoo that is called organized Real Estate now makes me very, very happy I retired!… it is all BS!
Well said Mike Posavad.
More realtor abuse. Realtors have to be paid – the vast majority of buyers realize commission norm is simply a pay mechanism. Realtors have costs, taxes, no benefits, no holiday pay, no pension and so on; and need what’s left to live. But for the other buyers do they go to work for an undisclosed wage or willy-nilly chop their salary etc?
it’s a service. it should be a set fee just like the lawyer’s closing costs. It shouldn’t be a percentage of the home value. It’s an exchange of property, the realtor adds nothing to that. All those board fees are higly inflated and protectionist in nature that are pandering and only serving these kind of practices. This is where the problem lies. For a 1 milion dollar property the commissions are $50,000 +tax. Why? What exactly was produced or offered for these money? Honestly if it was just like any other industry, that would be a flat rate and the likelyhood of committing fraud/dishonesty greatly reduced.
Being a realtor should be just like any other profession, and basically correlated to how much time you put in not “schemes” you use. Just like anywhere else. You work more, you get paid more. It shouldn’t even be devided into seller’s and buyers agents.
That’s what you get when division is created and $$$$ are followed. Look at how things were done before agents came into place. Notary and lawyer that was it.
HI, I’ve been a realtor for 21 years and Regina Saskatchewan and I tend to agree with you that somebody getting paid $50,000 to sell a property is absolute lunacy. Here in Regina we don’t really see those kinds of commissions or pay days. Do I believe that I should get paid at least $6,000 per deal ..absolutely.. just because of the amount of overhead, advertising, gas consumption and so on and so forth. Not to mention the broker fees, association fees. So there are things the public doesn’t consider when they make comments. Change doesn’t necessarily need to be with one swift stroke of the paintbrush but separated into individual provinces because our Market here is Saskatchewan is not remotely close to anything in British Columbia or Ontario, same goes with interest rates.