Proposed Class-Action Lawsuit Alleges Price-Fixing in Real Estate Industry

Proposed Class-Action Lawsuit Alleges Price-Fixing by CREA and Real Estate Groups

Two North American court cases are challenging the real estate industry over commissions paid out to Realtors, with significant implications for the market.

In Canada, a proposed class-action lawsuit filed in January alleges that the Canadian Real Estate Association (CREA) and other real estate groups conspired to fix prices for buyer brokerage services. Meanwhile, south of the border, the National Association of Realtors (NAR) recently settled a lawsuit that accused the industry of artificially inflating agent commissions.

Lawyer Garth Myers, who filed the Canadian lawsuit, believes that changes in the NAR case weaken the defense of the Canadian defendants, highlighting the need for fair play in the industry.

Despite the attention these cases are garnering, Trevor Koot, CEO of the British Columbia Real Estate Association, emphasized that Canada has a different legal framework than the US. The CREA has dismissed the Canadian case as being without merit.

If successful, the lawsuit could result in lower costs for sellers, but the impact on home prices remains uncertain. Some experts believe that increased market activity could lead to higher prices, rather than affordability for buyers.

This is not the first challenge to real estate commissions, with past legal actions attempting to address price-fixing in the industry. The Competition Bureau has expressed awareness of the proposed lawsuit and remains focused on promoting competition in real estate services.

While some real estate professionals remain unconcerned about the case, others foresee potential changes in business models, leading to lower fee structures in the industry.

Overall, the outcome of these lawsuits could have far-reaching implications for the real estate market, but the full extent of their impact remains to be seen.