How will the NAR lawsuit impact Canadian real estate?

Erin Best is REW's Director of Real Estate and Industry Engagement.

Date03.04.2024
Words byErin Best
How will the NAR lawsuit impact Canadian real estate? hero image
INTRODUCTION
It’s never been more important for buyers to understand the value of buyer representation in a real estate purchase.

There’s no question that we all have eyes on the National Association of Realtors settlement that was announced in the US last month. It likely has some of you wondering how this will impact your business moving forward if we see the same thing shake down in Canada.

We asked Erin Best, REW’s Director of Real Estate & Industry Engagement, for her take on the news.

What impact is the NAR settlement in the US having here in Canada?

There’s a lot of worry right now because there’s no real concrete answers to how the industry is going to look beyond July of this year. There’s a tremendous fear of the unknown and it’s super easy for agents to be thinking the worst right now. I think it’s always good to be proactive and be mindful about the changes you may need to make in your business, but as my father says, “never panic”. I get it though, it’s part of an agent’s livelihood. A lot of industry members have positioned themselves as ‘buyer’s specialists’ and many of them may even possess an ABR® designation.

What I do know is that there is a ton of speculation and sensationalization from the media. For Canada, it’s simply too soon to tell how this lawsuit will truly impact our real estate industry. Change is inevitable in real estate and the industry members I know are resilient. Right now, there are simply not enough hard facts for anyone to make any real tangible decisions.

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60% of all enquiries to tour properties on REW come from homeseekers who do not yet have an agent.

Erin Best

REW's Director of Real Estate & Industry Engagement

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Should buyer’s agents here in BC be worried?

The agents who are part time or don’t fully know how to demonstrate value to buyers may be worried the most. There has been this idea from consumers that all real estate agents do is open doors and write offers for people. During the pandemic, that may have happened more than anyone would like to admit. The real estate market in Vancouver exploded and now a few years later, the industry is dealing with the perception that the consumer doesn’t actually see the value of buyer’s representative.

Amidst any challenging market, the best agents in the industry - like the ones we partner with in our flagship agent program, Connect - will be able to see opportunities with this industry change. To put it in perspective, 60% of all enquiries to tour properties on REW come from homeseekers who do not yet have an agent. That is crazy to me. More than half of people searching on our platform need some sort of assistance or help buying a home. That’s a huge opportunity to capitalize on if you know your value as an agent. How an agent gets paid in the future may change, but if an agent is good at what they do in this industry, a buyer knows the value they bring to their experience and will pay that fee.

What can we learn here from the situation in the US?

If we are seeing a move to even more transparency in the industry (which I think is a good thing), I can’t comment on what agreements are in place for representation in the US. However, the research I’ve seen tells me only 18 out of 50 states require written buyer agency agreements. If there’s something I do think we do better here in Canada, it’s the paperwork and the disclosures we offer our clients as they are taken through the journey of homeownership. That said, there’s still room for improvement here in BC.

Legislation and governance in the US and Canadian real estate bodies are different. Not only that, competitive brokerage models in Canada have been around for a long time, giving consumers a myriad of options to choose from. I myself discounted my service fees when it was paramount to getting the deal done.

What more can be done to show homeseekers the value of a buyer’s agent?

I think education and action is always important when it comes to creating the right experience for homeseekers. My dad is the ‘acts of service’ guy and that’s how I knew he cared for us. He was always the one that followed through on the things he said he was going to do for us. It made him dependable and we could count on him. If you’re an agent and you’re not willing to follow through on the things you say you’re going to do for a homeseeker, then that’s the place to start.

When you are as good as your word, you get to think about elevating the homeseeker experience because you’re not stressing about all the things you should have done. I think if you’re going to make it in this industry after this lawsuit settles, you’re going to have to re-evaluate if your actions for clients are creating memorable experiences that are worth talking about.

What are people expecting to happen from this that may not actually transpire?

There is speculation that real estate prices will go down if sellers don’t have to pay out a buyer’s agent fee. Will that actually happen? A big part of an agent’s job is to get a seller the most amount of money in the shortest amount of time. I recognize that there are other motivators for sellers, but for the most part, that’s one of the biggest drivers for sellers to sell. It’s usually the sticking point when a deal can’t come together - it’s about price. Is a seller actually going to take less because they’re not offering a cooperating commission? I wouldn’t be so sure of that.

The ripple effect of this lawsuit in Canada has yet to be seen. What I know for sure, is that industries evolve. Real estate is not immune to change. How you adapt to it and see the opportunities within this change will be what sets you apart from those who are already planning their exit strategies.

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