Investigation by the federal government into CREA’s commission rule and Cooperation Policy

It’s no surprise that the Competition Bureau (CB) is currently investigating the Canadian Real Estate Association (CREA)’s MLS commission policy, which requires a commission to be paid to buyers’ agents, as well as the Cooperation Policy that mandates all listings to be on the MLS within three days.

I anticipated both investigations, and while I find the Cooperation Policy to be unethical regardless of how many times I reassess it, I have a major issue with the investigation into the mandatory buyers’ agent commission policy.

This is a complex issue involving both legality and ethics, and as realtors, we often say that we are not lawyers. However, I would like to provide my perspective on both the legality and ethics of the situation.

Our MLS from a high-level view

Before delving into my thoughts, it’s important to step back and discuss our MLS from a broad perspective. The MLS in North America is a unique system that facilitates cooperation between listing agents and buyers’ agents, which is not commonly seen in many other countries or even in commercial transactions within North America.

In other countries, buyers are often left to navigate multiple websites, interact with various agents who may not have their best interests at heart, and ultimately work with an agent whose primary goal is to secure the highest possible price. This differs from the cooperative nature of the MLS system.

Benefitting buyers, sellers, and agents

The MLS system is a valuable resource that provides homebuyers with access to a wide range of potential homes while also offering the support of a trusted representative during what might be the most significant purchase of their lives. This benefits both buyers and sellers, as well as the agents involved in the transaction.

The buyers’ agents play a crucial role in guiding homebuyers through the purchasing process, ensuring they find the best home under favorable terms. This system creates a win-win situation for all parties involved.

The conflict between legality, ethics, cooperation, and competition

Considering these factors, a fundamental question arises: how should we fairly compensate these professionals for their services? This dilemma highlights the tension between what is legally permissible and what is ethically sound.

While it may be legal for buyers to engage with the system without any upfront commitment to payment, it raises ethical concerns about fair compensation for the services rendered.

The MLS system represents a unique blend of cooperation and competition among realtors, which can be challenging for the legal system to navigate. The question of whether consumers utilizing the system should contribute financially is central to this discussion.