Tell Canada's Lawmakers To Restructure Real Estate Fees & Stop Corruption To Consumers
Tell Canada's Lawmakers To Restructure Real Estate Fees & Stop Corruption To Consumers
Why this petition matters
Long overdue, it is high time our government steps in to revise the woefully outdated real estate industry that runs itself similar to a cartel. Antitrust & anti-competitive, this industry has dominated over buyers and sellers for far too long. The current commission fee structure incentivizes illegal practices & all sorts of harm to consumers and now, more than ever, the excessive fees are one factor in driving up housing prices. It appears our own government has not really cared or has been fearful of doing anything about it. We need to follow the U.S. initiative and investigate/re-structure the fee system to stop the harm done to consumers.
The current commission fee system charges extortionary fees as a percentage and is open to manipulation, in an MLS monopoly created decades ago to suit a totally different time period. The fee structure currently in place is a huge incentive for greed & corruption and hurts consumers. So far, our government passes the buck and does nothing. As of 2023, nothing has ever been done about it:
2016: Double-ended Commission Deals; Bidding Wars For Houses Cloaked In Secrecy-Top Agents Industry Wide Cheat Consumers For Bigger Commissions: Hidden camera investigation CBC Marketplace:
2021: Blacklisting, Steering; Real Estate Agents Caught Breaking The Law On Hidden Camera CBC Marketplace:
2022: Real Estate Agent & Mortgage Broker Mortgage Fraud Caught on Camera; Undercover Investigation - Marketplace, Oct 14/22:
Not only is the fee structure confusing with consumers, (buyers are told they don't have to pay realtor fees when they do) the unreasonable percentage charged (avg. of 6%) makes fees progressively excessive as selling prices of homes go up – all off the backs of hard-working people's equity. And this system only subjects consumers to additional detrimental practices.
And why else is this a problem? Besides being a monopoly, this is one of the reasons why homeowners feel they have to increase selling prices by thousands – in order to pay for the overly high commissions they have to fork out. And clients are constantly taken advantage of - many times downright harmed - by agents manipulating them for higher commissions. We need a fixed fee structure - ideally where each buyer and seller party pays their own fees, in order to stop the continual damage done to consumers.
An industry with low education entrance requirements and the lure of high percentage pay outs attracts an influx of people. The business is a magnet for thousands of agents looking for large paydays and creates an agent-saturated market – seemingly largely comprised of unethical realtors who use all sorts of tactics to increase their commissions. There are good agents, but they are hard to find and you can’t trust any google/online reviews, as they are easily falsified. And the ridiculous commission fees still must be paid out, regardless – good or bad.
By restructuring the outdated commission model, it will be one step in helping to soften housing prices, while at the same time finally protecting consumers, as the current laws only serve to incentivize dishonest practices. It is unconscionable that sellers must hand out 20K - 30K - 50K - 75K - 100K in commission fees. We need a much more equitable flat fee rate and open accessibility to all listings. After all, the data is ours, not theirs. Why is our data sold back to us?
It is time to realign the commission fee structure to suit today's market. Additionally, we need to put an end to blind bidding – a practice exploited by many realtors, who within this faulty system, lie to clients to entice higher bid amounts for the sole purpose of receiving a higher payout in commissions. As well, higher bids often lose out to lower bids in order for agents to double end their commission fees. If fees were fixed - not a split percentage, as it is now, the incentive to deceive clients would be removed.
And please don’t suggest that real estate boards will do anything. They never have and they never will. Realtors do not tell on other realtors and shady practices are commonplace. Real estate boards downplay incidents' they get caught for, as if they are isolated, but they are not, as issues occur, year after year.
Even though complaints to real estate boards have skyrocketed, they go nowhere. The boards do virtually nothing to realtors, except issue reminders and suggest educational courses. There is zero enforcement of obligations and little to no punishment of offences committed by realtors. This is what happens when you have an industry that regulates itself.
Real estate's dirty little secret: Inflated fees
Setting lower fixed commissions, rather than a percentage of the selling price of homes would assist in toning down prices as well as the incentive that fuels shady practices. When high % commissions are up for grabs, corruption is abound. There is absolutely no justification for compensation being increased with the selling price of a home. A fixed fee, assigned to and paid for by each buyer and seller party, needs to be be implemented to stop all the corruption.
Antitrust & anti-competitive, consumers have complained for years about this monopoly, but to no avail. Brokers and agents have retained a stronghold on their MLS cash cow and the consumer continues to lose, often being exploited. Consumer protection is nowhere to be found. The U.S. is currently investigating this very matter as one of the issues that anger & hurt consumers.
A video by Jerry Norton explaining the confusing commission structure and price-fixing of this industry (re: U.S. realtors, but applies to Canada's structure as well): Realtors Are Screwed! Say Goodbye To 6% Commissions....
It seems every year, there are shady practices exposed, but it falls to the wayside and not one government body has effectively challenged the current structure. A few years back it was shadow flipping. Now we still have money laundering, steering buyers to more expensive homes, blacklisting other homes, double-ended commissions, manipulating biddings; the list goes on year after year. The entire industry needs revision and it starts with the convoluted, excessive fee structure.
Every time there is an 'incident' of an agent's offence, it is always a situation of manipulation for more commission fees. This would not continue year after year if there was no incentive to do so in the form of high % commissions. No other sector of business is so plagued with dishonesty and harm to consumers as the traditional real estate model (article from 2010):
Moving the entire industry towards a discount brokerage model and revising the currently outdated commission structure would vet out the honest, helpful professionals who are truly in the business because they want to be and are not afraid of getting paid a normal wage proportionate to their value and service.
The current high commission percentage evolved from the U.S. in the early 1900's when housing prices were much lower and local real estate boards openly engaged in price fixing. In the early 1950's, the Supreme Court ruled that an established 6% commission was illegal, but with some fancy footwork, the real estate boards managed to swindle their way into keeping the high payouts during a time when the country was fixated on other important external issues.
The commission was suggested at a time when housing prices were much lower and there was no anticipation of the inflated housing prices of today. If banks decided to charge criminal rates on credit cards or loans, they would be regulated immediately, as would any other industry. Yet the real estate industry continues on, in an era where every other industry has removed the middleman and given consumers a choice. https://www.forbes.com/sites/forbesrealestatecouncil/2018/07/05/will-startups-remove-real-estate-agents-from-the-transaction-process/?sh=49977ec319cf
Fast forward to 2023 and now the high % commissions for realtors have exploded way over and above anything considered reasonable. Says Robert Peden, ex-realtor: “what exactly do real estate agents do now that they didn’t 30 years ago to warrant such a staggering increase in pay? The problem with realtors today is they’re more order takers than salesmen. Honest to God, I think a used car salesman works harder at selling a car and earns a fifth of what these people make.”
30 years ago, everything was done manually – professional photos, listings, etc. Now everything is online. Uploading photos to the internet is an easy process. Realtors now sit in the comfort of their home on Skype or Zoom taking orders for their clients, while performing quick searches online. They easily upload listings and advertise them all over the internet on social media sites such as FB, Instagram, Twitter, YouTube. Can you name any other career in which people receive pay raises of 500% + more for doing less work? One only needs to read realtors’ LinkedIn pages ‘Millionaire Club Awards’ to see this. But that's not the point. The point is that these overly high commissions are robbing and hurting consumers who are forced to use this system with few alternatives - from losing homes to lower bid offers, to being steered towards higher priced homes and more .... all for the sake of a higher payout to an agent. Consumers deserve to be protected from these deceitful practices, and they definitely deserve to have lower fees.
There is absolutely no reason on earth for realtors to be paid these percentage commissions; the fees just do not commensurate with education or service value and are extremely disproportionate to all other equal careers. The only 'value' they currently hold is a monopoly on listings, which is no value at all to consumers, who are subject to all kinds of tactics in a system where greed knows no bounds and instigating bidding wars or 'steering' practices for more profit is common practice. When such high commissions are at stake, anything goes.
The blind bidding process is another way for realtors to exploit clients to gain extra commission fees and by doing so, it is a factor in jacking up housing prices unrealistically, but nothing ever happens - in fact they are protected:
Ethically bankrupt agents are far too common in this industry:
When people try to sell their home themselves without going through the traditional agent, it is met with the "blacklist" process. It is better and cheaper to just go through an educated real estate lawyer, since they do all the work anyway, but homes that are FSBO (for sale by owner) are ‘steered’ away by agents who are only looking for a big payout. If prices were fixed and not % commission based, this would not happen. Conversely, clients are routinely steered towards homes that pay out higher commissions, when it is not what the client wanted:
Canadian lawmakers, take note: it is not just Canadians who've been crying for changes. U.S. citizens and consumer advocates have long criticized established real estate commissions as confusing and outrageously high. Now, in the U.S., those commissions are coming under fire with mounting legal pressure:
Showdown Over Real Estate Fees:
Realtor Commissions Under Investigation By US Justice Department & FTC:
Additional lawsuits by consumer groups and discount brokers resulted in President Biden to include real estate in his Executive Order on Promoting Competition in the American Economy. The order includes a laundry list of issues that have irritated consumers, real estate being one of them. Joe Biden's words: "Let me be very clear, capitalism without competition isn't capitalism, it's exploitation"
The FTC (Federal Trade Commission) is investigating areas on unfair trying practices and exclusionary practices in real estate listings: "Brokerage firms and multiple listing services (MLSs) have denied or limited access to property listing data, or used the threat of doing so, to prevent competitors from offering consumers lower-cost alternatives that threaten to disrupt the traditional brokerage commissions."
*** We urge our Canadian lawmakers to follow the U.S. initiative - protect consumers by changing these criminal % commission rates and put an end to blind bidding.
People are increasingly disillusioned with the realtor racket. The long protected real estate monopoly only gives us two choices: 1) over-paying thousands in commissions to real estate agents or 2) get black listed if we choose to sell FSBO.
#1) As sellers of homes, we need to have much lower, separate, fixed rate commissions paid strictly to our own realtor and not have to pay out exorbitant split fees as a percentage of the sales price. This will simultaneously remove the shady tactics & agents from the industry.
#2) As buyers, we need complete transparency in the bidding process. We deserve to be aware of amounts of all other bids - if there even are any, since we are often lied to by agents looking for more money in their pockets.
We urge you to act now, as this is so very long overdue. It is time to change this long outdated, notorious business model.
Price Fixing Has Sent Realtor Commissions Soaring in an Already Hot Market, Lawsuit Alleges
Canada May Have a Problem With Real Estate Agents Acting as a Cartel That Serves Themselves Rather Than Clients:
Meet The Cartel – Zero Value Realty:
(And one of the very few helpful options for buyers)
Real Estate Agents Routinely ‘Steer’ Clients To Higher Commission Homes:
C: 2010 - Forced Transfer of Wealth From Consumers To The Monopoly Middlemen: The Current System of Selling Homes Makes No Sense – But Nothing Has Changed:
Greed In Real Estate Industry Behind Skyrocketing Prices:
More Anti-Competitive Behavior - Canadian Legal Software Company Dye and Durham Cornering The Market On Conveyance Software; Fees Increase by 600%
‘How Is This Legal?’: Real Estate Sales Tactics Under Fire As Canadian Home Prices Spiral Out Of Control:
**If you don't have a Globe&Mail account, you can read the article here: https://www.nancyksmith.ca/blog-article.html?Is-Current-Real-Estate-Marketing-and-Pricing-Practices-Deceptive-153
Buyers Fed Up With Blind Bidding & Other Shenanigans In Red-Hot Real Estate Market; Agents Listing Property Below It's Market Value To Drum Up Bidding Wars For Higher Commissions:
Bad Things Happening In Real Estate Market As Homebuyer Complaints Surge:
C: 2010 - The Outdated And Expensive System For Buying And Selling Homes; The Realtor Racket – Real Estate Board Changes Regulations To Put Discount Brokerage Out of Business. Ex Realtor: “I’m not prepared to pay full-service real estate commissions because they’re totally out of whack,” he says. “No realtor is worth that kind of money.”
Obstacles To Price Competition In The Residential Real Estate Brokerage Market:
ALL FOR THE MONEY:
Real Estate Agents Caught On Hidden Camera Breaking The Law: Steering Buyers From Low-Commission Homes; Discount Brokerages Run Out of Town:
Double Ending, Bidding in Secrecy; Government Does Nothing: