The Alberta Real Estate Association plans to hold an online vote for its members Oct. 1-3, asking whether they are in favour of AREA investing a portion of their existing annual dues to protect commissions for all members. Sounds great on the surface but is it really?
The stated reason behind this ongoing debate is the 2015 closure of two brokerages in Calgary, that left a large number of Realtors out of work and many without commissions they were owed. These brokerages did not carry on the good business practice of paying out commissions to their Realtors immediately upon receiving the funds, as most brokerages do. If that practice was followed by all brokerages, the tragic loss to the affected members would have been minimal.
AREA mentions that Ontario and B.C. both have commission protection insurance in place. In an article from REM in 2016, the cost effectiveness to Ontario Realtors was questioned. At a cost in excess of $400 per member annually, insurance companies would have taken in almost 100 times more than the $4.5 million they have paid out during the term of that plan to date. It’s a windfall for insurance companies on the backs of Ontario Realtors.
AREA states that, due to operational efficiencies and improvements since 2015, it can now afford to cover the cost of insurance for all members from their existing annual fees. Although I applaud the streamlining of AREA’s operations, let’s not forget the massive increase to AREA’s annual fees that helped facilitate its current financial situation. Perhaps a reduction in those fees might better serve the members in Alberta, verses commission insurance being forced on Realtors, the vast majority of whom will never need it because their brokerages follow the good business practice of paying out commissions as soon as the funds are received.
Perhaps worst of all, by conducting a direct vote and “majority wins” attitude, AREA is eliminating the voice of independent boards throughout the province. Our Board of Directors voiced their disapproval of forcing commission insurance upon its members more than a year ago and we weren’t alone. However, although there are 10 boards in Alberta, the Calgary Board, where the brokerage closures took place, has the majority of Realtor members in Alberta and can carry the motion on its own, even if all the remaining members in Alberta speak out against it.
AREA would like you to believe that there will be no cost for the insurance coverage for its members. Nothing is free. When was the last time you saw your car or home insurance policy decrease in price? It’s easy to hide the insurance cost increases within AREA’s annual dues and blame the increase on other operational costs. Alberta Realtors need to look a little deeper, past the sugar-coated pill that AREA is offering. Loss of commissions from brokerage closures, though tragic, are rare, are preventable and not worth the additional cost of the fees, hidden or not, to Alberta’s Realtors.
Darrell Lloyd is a Realtor with Re/Max 2000 realty in Hinton, Alta. He has served on the Board of Directors of the Alberta West Realtors Association for eight years and currently serves as past president. Prior to his real estate career, he was a member of the RCMP for 25 years.
