19 December 2013 ~ 0 Comments

BIG changes approved on how Realtors charge fees or commissions

New changes to how Realtors charge fees or commissions may have a big impact in the real estate market.

Last spring, Minister Tracy MacCharles introduced Bill 55, Stronger Protection for Ontario Consumers Act, 2013 in the legislature. Bill 55 sought to strengthen consumer protection in the areas of door-to-door sales, debt settlement services and real estate transactions.

Under the old act, Realtors could either charge a flat fee or a percentage (commission) based on the sale price. But not both. This also determined to a large extent, which brokerage an agent would go to work for.

But now all of that has changed! And personally, I think this change is good for both consumers and brokers alike.

Once again, personally speaking, I have been using a sliding rate scale on commission fees charged to my clients for over the past 7 years. Depending on variables such as loyalty of client (past sales and referrals), would they be buying as well as selling, difficulty of sale (list price, condition, timing of sale etc), I would set a rate that is fair for both sides.

What are some of the changes you might see? Well for one, I think retainer style charges would be considered. What this would entail is that an upfront flat fee of for example, $5,000 plus a commission of 4% when the property is sold might be beneficial to both parties?

In the past (and still currently) the selling agent assumed all of the risk financially when a home was listed. If for some reason the seller changed their mind, or the house didn’t sell then the selling agent would be out pocket for expenses that could run into the thousands of dollars.

Another example might be that only a flat fee for the buyers agent would be offered, while a commission to the selling broker would be payable. Or vice versa? Or maybe even a combination of these two scenarios?

It will be exciting to see how these changes play out in 2014 and beyond.


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