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Discounters becoming respectable

Discount brokerage leads a trend in Toronto real estate

Consumers are leading the way in what some in the real estate industry feel is an inevitable route for the business: cheaper commissions. While other industries, such as travel agents and stock brokerages, have gone the discount route, the real estate industry has largely held steadfast.

Realtors have been successful at holding their commissions at a standard 5 per cent in recent years, although that is already down from 6 per cent a decade or more ago. But in a market where homes are selling in record numbers and at record prices, some consumers are wondering why commissions are still so high in the real estate business.

Prices for homes have also appreciated significantly in the last decade, from $198,000 in 1996 for the average home in Toronto to $365,000 this year, meaning a 1 per cent difference could result in thousands of dollars more in commission.

Meanwhile, the Canadian Competition Bureau, is investigating the Canadian Real Estate Association to see if the CREA's guidelines discourage discount brokerage houses from using the Multiple Listing Service (MLS), which the association owns. CREA officials say they are simply protecting their trademark.

The MLS, a computerized database of available homes, is used for 90 per cent of residential real estate sales in Canada.

April 10, 2007 in Save on Comission Fees | Permalink

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