There has been an awful lot of information being passed around about what the new rules agreed to by the Competition Bureau and the Canadian Real Estate Association. The new agreement which was ratified in October of 2010 was voted on by elected directors of the real estate boards across Canada. The directors were allowed one vote for every 500 members in their organization. There was no mechanism for soliciting the opinions of industry members to my knowledge.
To the best of my understanding, the most notable change to the previous agreement was that pay-for-service models have now specifically been addressed. The Canadian Real Estate Association has never denied any member from offering any fee schedule they like so it is uncertain if the consumer will see any change at all.
There have always been pay-for-service models available to consumers. It's not a secret and yet the full service brokerages continue to dominate the market. Where the problem comes in is that most brokerages are not set up to administer that type of service. There is no system in place for their agents to enter in progress billings such as non-refundable retainers, comparative market analysis, telephone time, amendments, price reductions etc. Most do not even accept credit cards!
I have reviewed the model myself and discovered an additional risk to consumers in that the fee is usually charged up front. At the end of the day a fee-for-service price list by necessity almost always is more costly than an all inclusive package, in almost any business.
I would love to be able to offer fee-for-service. There is a lot of comfort in knowing that I will get paid for the services I provide, whether the home sells or not. In fact I really like the idea! Under the current system, in a cooling market, real estate agents often end up taking a big loss on homes that do not sell. When sellers get stuck with big upfront costs, it will also bring home the fact that there is more to selling a home than sticking a sign on the lawn and putting it on MLS. Nobody likes to throw good money after bad.
It will be interesting to see if the leading brokerages in Canada will embrace this model or determine if it is not worth their while to pursue.
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