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(Rebecca Cook)
(Rebecca Cook)

Real estate deal opens up closed shop Add to ...

Real estate agents who find a buyer for houses listed on the MLS by flat-fee agents can expect to be paid something for their effort. But in some cases, that payment will be one, shiny penny.

That is the minimum amount set out in an agreement between the federal Competition Bureau and the Canadian Real Estate Association in an agreement ratified by CREA boards. The deal, which puts an end to a year-long battle between the two, ensures that homeowners can pay a broker a flat fee to have their homes listed on the Multiple Listing Service.

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The agreement, released in full on Monday after it was ratified by CREA on Sunday, ensures that brokers who post MLS listings for a flat fee will be able to operate without interference for at least the next 10 years.

CREA changed its rules earlier this year to allow alternative business models to compete with the traditional commission-based structure. But Competition Commissioner Melanie Aitken was worried the association might arbitrarily change its rules down the road to stifle competition and make it difficult for low-cost operators to exist.

The new agreement also ensures that sellers who opt for a flat-fee listing can have their contact information made available to interested buyers, through a link on the MLS listing. It also dictates that the seller must offer a finder's fee for any agent who brings them a buyer - but stipulates only it must be more than zero.

As before, only licensed brokers will be allowed to post MLS listings.

"[The settlement]reaffirms the commitment to the rule of law and our commitment to competition," said Georges Pahud, president of CREA.

Ms. Aitken said the deal ensures Canadians will be able to choose between various service models. "For Canadian homeowners, it ensures that they will have the freedom to choose which services they want from a real estate agent and to pay for only those services," she said. "For real estate agents, it ensures that they will be able to offer the variety of services and prices that meet the needs of consumers."

A host of services have already started, with some offering to post listings for as little as $100. Joe William, an Ottawa broker, has been offering one-cent commissions for most of this year.

"My customers aren't interested in paying commissions," he said. "So that's why we use that price. And I'm telling you, some agents write to me asking for that penny."

Propertyguys.com, the country's largest for-sale-by-owner company, is using an Ontario broker to post its customers' listings and offers real estate agents a finder fee of $1 - although it encourages its customers to negotiate a commission with anyone who finds them a buyer.

While several of the flat-fee operators have worked quietly on the fringes for more than a year, Richard Rutkowski of Wiktor Realty Corp. said now that the changes are official, he will be able to launch formal complaints about agents who refuse to show his low-commission, flat-fee listings.

Agents are obligated to show any house in which their client may be interested, he said, but many take a pass on his listings because of his business model. "Now we get to step it up and make sure agents are playing by the rules," he said. "We can complain to regulators if agents are bad-mouthing us or avoiding our properties."

Phil Soper, president of Royal LePage, said the deal was a reasonable one. However, he said its contents are almost less important than the fact that a deal was reached after a year of difficult negotiations.

"You have no idea how distracting this has been, at a time when the market itself has been tumultuous - it was expanding rapidly, people were worried about bubbles and then it contracts," he said. "Against this backdrop, you have all this disagreement. It was very distracting."

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