Re/Max Canada’s decision to settle the Sunderland and McFall class-action lawsuits represents a major development in the Canadian real estate industry. The lawsuits challenged traditional commission structures, alleging that sellers were unfairly required to compensate buyer brokers, thus inflating costs and limiting competition. With Re/Max agreeing to a $7.8-million CAD settlement, the industry is left wondering what’s next and whether further settlements or legal challenges will follow.

Looking south of the border, the Sitzer/Burnett case in the U.S. offers a glimpse of what could be in store for Canada. That landmark antitrust case led to over $1-billion in settlements, policy shifts, and increased consumer awareness around agent commissions. 

Could Canada see a similar transformation?

The U.S. experience: A precedent for Canada?

A wave of lawsuits and settlements

After the Sitzer/Burnett verdict found the defendants guilty of conspiring to inflate commissions, dozens of similar lawsuits were filed across the U.S., leading to widespread settlements. This wave of litigation has also reached Canada, where copycat lawsuits have emerged, further intensifying scrutiny on commission structures and industry practices. 

The National Association of Realtors (NAR) alone paid $418-million and agreed to major practice changes, including eliminating the requirement for listing brokers to offer compensation to buyer brokers through the MLS, mandating written buyer representation agreements, and increasing transparency around agent compensation.

The verdict also triggered significant industry shake-ups, including leadership changes at NAR and heightened scrutiny on agent compensation. The mainstream media spotlight on commissions led to greater consumer awareness, with more sellers negotiating agent fees than ever before. Additionally, the wave of litigation prompted subsequent settlements by other brokerage defendants, further reshaping the industry landscape and reinforcing the momentum toward commission structure changes.

Policy changes and a shift in consumer behaviour

One of the most notable changes in the U.S. has been the introduction of mandatory buyer representation agreements. However, in Canada, these agreements are already required in most provinces before an offer can be submitted on behalf of a buyer. As a result, this shift in the U.S. is unlikely to have the same disruptive effect in Canada. 

While some sellers in the U.S. are opting out of offering compensation to buyer agents, Canadian regulations already support a structured approach to buyer representation, making such a transition less dramatic.

Early data suggests that commissions are beginning to decline in the U.S., though not as drastically as some predicted. Redfin has reported a slow but steady decrease in commission rates, while Zillow’s 2024 report found that over half of sellers are now negotiating fees, compared to just 19 per cent a year earlier. However, in Canada, commission structures have historically been more flexible, with tiered commissions, flat fees and other alternative payment models widely available. As a result, the impact of legal and policy changes on commission rates may be less pronounced in the Canadian market.

The role of MLSs and regulatory oversight

MLSs in the U.S. have had to make sweeping changes, including removing commission offers from listings. This shift has led to increased competition and new business models, as agents adapt to a marketplace where compensation is no longer standardized. 

Additionally, large national brokerages, such as Compass, have responded by creating their own private MLSs to control exclusive inventory and attract both agents and clients. This trend could be mirrored in Canada, where brokerages may look to establish their own listing platforms to provide unique value, justify commission rates, and maintain a competitive edge. Furthermore, regulatory bodies like the Department of Justice are closely monitoring these changes, ensuring compliance and further influencing industry practices.

What does this mean for Canada?

Will more defendants settle?

With RE/MAX Canada’s settlement, attention now turns to other defendants, including the Canadian Real Estate Association (CREA) and major brokerages. CREA has vowed to fight the allegations, but if more settlements follow, we could see industry-wide shifts similar to those in the U.S. Notably, in the U.S., brokerages that settled early often secured better deals than those that went to trial. While Canadian cases are not heard before a jury, Re/Max Canada may have looked to the U.S. and realized that a more predictable and controlled outcome through settlement could be preferable to prolonged litigation.

If litigation continues, brokerages and real estate boards may choose to settle to avoid the uncertainty and financial burden of prolonged court battles. This could lead to changes in commission structures and increased pressure on MLS organizations to adapt their policies. 

Additionally, increased litigation could draw media attention, amplifying consumer awareness of the claims in the Sunderland case and further eroding public perception of Realtors and their value in the marketplace. Even if the case does not ultimately succeed, the fact that it is proceeding signals a shift in consumer expectations around commission structures, potentially leading to greater scrutiny and negotiation of fees.

Consumer awareness and commission negotiation

The U.S. experience has shown that legal battles and media coverage can dramatically influence consumer behaviour. However, Canada already has a diverse range of commission structures, including tiered commissions and flat fees, which are widely available. As a result, the impact of legal scrutiny in Canada may differ, with less disruption to commission rates than in the U.S. Instead, the greater risk may lie in the erosion of public trust in real estate professionals, as increased media attention on litigation shapes consumer perceptions of agent value.

Potential regulatory changes

One key difference between Canada and the U.S. is regulatory oversight. Canadian real estate commissions are governed by provincial laws, which could play a crucial role in shaping how these cases unfold. Provincial regulators may step in to introduce new guidelines on transparency and fee negotiations, potentially mirroring some of the changes seen in the U.S.

A ‘generational shift’ for agents?

Legal and industry experts suggest that these changes won’t happen overnight. In the U.S., real estate professionals are still adapting to new norms, with some arguing that it will take a generational shift for the industry to fully embrace a more consumer-friendly commission model.

Similarly, in Canada, agents will need to adjust to a landscape where commission structures are more flexible and consumer-driven. Those who can clearly demonstrate their value to buyers and sellers will have a competitive edge, while those resistant to change may struggle.

A new normal for Canadian real estate?

Re/Max Canada’s settlement is likely just the beginning of a broader reckoning for the Canadian real estate industry. While Canada’s legal framework differs from the U.S., the trends south of the border suggest that greater transparency, increased consumer negotiation, and potential regulatory changes could be on the horizon.

It’s important to note that the Sunderland case is moving forward on a narrower basis than its U.S. counterparts, as the court has struck broader conspiracy claims and instead focused on whether existing brokerage and MLS rules exert control over pricing. Unlike the U.S. cases, which involved jury trials and sweeping allegations of collusion, the Canadian litigation hinges on a legal interpretation of industry rules rather than an outright conspiracy claim.

For now, buyers and sellers should stay informed and work with professionals who prioritize transparency and value. As the industry navigates this evolving landscape, adaptability will be key to thriving in a shifting market.