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The Real Estate Market Real estate fees not headed for basement despite new rules

The average real estate commission is 5 per cent in Canada, which meant the average national sale price of $324,928 in August would have landed agents a $16,246 commision.

Chris Bolin/Copyright 2010 Chris Bolin Photography Inc.

Canadians shouldn't expect a sharp drop in real estate fees, with the country's largest brokerages vowing to hold the line on the commissions despite rules that make it easier for discounters to muscle in on their businesses.

While a deal between the Competition Bureau and the Canadian Real Estate Association means agents will be able to break real estate services into small, individually priced chunks rather than charge a set commission for a complete sale, companies such as Royal LePage don't plan to offer à la carte services.

That leaves the door open for a small group of discounters who have already set up shop across the country, offering those who want to sell their own homes to buy a listing on the real-estate funded Multiple Listing Service for as little as $109.

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"That type of service may appeal to a certain segment of the market but I don't think it appeals to those who would traditionally use a professional agent," said Royal LePage president Phil Soper.

The national real estate association, which represents about 100,000 agents, was locked in a battle with the Competition Bureau over Commissioner Melanie Aitken's charges that CREA made it impossible for individual agents to offer innovative services to consumers.

Instead, anyone who wanted an agent's help to sell their home had to sign up for a full slate of services - including the posting of a Multiple Listing Service listing, the handling of negotiations and anything else involved with the sale. The average commission is 5 per cent in Canada, which meant the average national sale price of $324,928 in August would have landed agents a $16,246 commission.

CREA made changes earlier this year that were meant to appease the Competition Bureau, but they didn't go far enough because there was some wiggle room that allowed it to keep members from offering low-cost services at any time. Thursday's deal, which must still be ratified by CREA's members, should end that battle.

"This battle has been about making sure a consumer isn't forced to buy more service than they may need," said Mr. Soper. "These changes may well have a profound effect on the lower end of the market, but I'm not sure this is the best time to be offering fewer services considering the market is cooling."

But even without a settlement, this year has seen a slew of low-cost realty companies set up shop to help those who want to sell their houses on their own.

Joe William of Best Value Real Estate in Ottawa has been putting houses on the MLS for $109. In British Columbia, Mayur Arora of OneFlatFee.ca will place a listing for $649. Other services can be purchased as needed - for example, he will negotiate a deal for an extra $500.

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"We're having our best year, business is up over 40 per cent," said Mr. William. "It's been a very popular service, we're looking at going national."







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