Residential Market Commentary - CREA and competition

Canada’s competition watchdog is looking into some of the policies and practices of the Canadian Real Estate Association.  It wants to determine whether CREA’s rules discourage buyers’ realtors from competing to offer lower commission rates.

Under the current rules, property listings on the Multiple Listing Service (MLS) must include a commission offer to the buyers' agent.  When a listing is sold, often the buyer-agent is paid by the seller's agent.  There are concerns this system could be reducing incentives for buyer-agents to offer lower commissions because if buyers are not directly paying their agent, they may be less likely to select an agent based on their commission rate.  The Competition Bureau alleges the rules could act as an incentive for buyer-agents to steer their clients away from listings with lower commissions.

There are further concerns that CREA’s co-operation policy is anti-competitive; favouring larger brokerages because of their ability to advertise to bigger networks of agents.  The Bureau also alleges the co-operation policy disadvantages alternative listing services, making it harder for them to compete on things like privacy or inventory.

In a statement CREA says it is cooperating in the investigation.

“CREA believes its rules and policies are both pro-competitive and pro-consumer,” says CREA Chair James Mabey.

The Competition Bureau is looking for public input.  There is more information on their website.