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Steve and Brianne Buffett outside of their new home in Mississauga, Ont., with their daughter Kennedy, 3. They saved between $11- and $13,000 by listing their home without an agent a little more than a year ago. (Tim Fraser for The Globe and Mail)
Steve and Brianne Buffett outside of their new home in Mississauga, Ont., with their daughter Kennedy, 3. They saved between $11- and $13,000 by listing their home without an agent a little more than a year ago. (Tim Fraser for The Globe and Mail)

How Canada's housing downturn threatens to shake up real estate commissions Add to ...

“Real estate agents used to have to sell quite a few houses to make a living, and in cities where the prices are really high, they don’t any more,” Mr. Andrew says.

But he and others are quick to point out that the life of a realtor is not a life of leisure. A lot of work goes on behind the scenes, and since the number of homes changing hands in most areas of the country has shrunk significantly since last summer, agents have had to work harder in recent months to keep business up.

Canada lacks data on the exact amount of commissions that are paid to realtors each year.

“There are no set commissions,” says Gary Simonsen, the chief executive officer of the Canadian Real Estate Association, which represents about 100 real estate boards and associations. “They are purely negotiable between buyer and seller and the agent involved, and it’s not something that we track nor do our boards and associations.”

Canada also lacks data on how many consumers buy or sell a house without a realtor.

Mr. Simonsen says the number of transactions that are occurring over the MLS has remained remarkably constant over the past decade. “I think people will certainly try various and sundry things depending upon their own personal circumstances, but at the end of the day we still see that people are relying upon a realtor ultimately to assist them in the transaction, whether it’s on the buying or the selling side.”

Amid the market turmoil, CREA launched a new TV ad campaign this spring. Its amusing commercials are based on the theme of Internet overconfidence. One spot shows scenarios such as a man searching “how to be your own lawyer” online and winding up strip-searched by police; a guy checking relationship advice on his smartphone only to find his date storming out of dinner, smashing the dishes on the restaurant table and popping her middle finger on the way; and a cheat sheet on edible mushrooms followed by footage of a naked man laughing like a lunatic and spinning around the woods. Cue the announcer: “Why do we think if we can look it up we can do it? When it comes to your home, get help, get a realtor.”

Home sales have been in a slump since last summer, creating a situation where a realtor’s help is generally more valuable to sellers. But economists expect the declines to dissipate and give way to a period of more stable, but moderate, sales. “The market has to swing a bit more in favour of the seller, and sales have to pick up, for these alternatives to really have the opportunity to compete,” Mr. Andrew says. The companies that cater to do-it-yourselfers argue that sellers without a realtor have an advantage in this market, because they can afford to reduce their asking price by the amount of commission they stand to save.

The Competition Bureau recently noted that, at least when it comes to Toronto, the top five agencies have cornered the market, taking in more than 70 per cent of commissions in recent years. Re/Max and Royal LePage combined are responsible for more than 40 per cent of commissions.

Walter Melanson, director of partnerships at PropertyGuys.com, is hoping that the market dynamics will loosen the grip that the big brokerages have on the market. “We anticipate that an increasing number of sellers will abandon the high cost of using a traditional agent because they won’t want to give up what little equity they do have,” he says. But he’s been wrong before.

PropertyGuys.com has been up and running since the dot-com era was in its heyday. The company sells advertising services to people who want to sell their home without a realtor, and is rolling out a new product it calls “Pro Approach” where online experts, real estate lawyers, appraisers and others are made available for a cost that Mr. Melanson says still amounts to a small fraction of a realtor.

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