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New rules allow mix of fee and percentage

Joe Richer

Toronto Star
December 21, 2013

Last week, the Government of Ontario passed Stronger Protection for Ontario Consumers Act, 2013 (also known as Bill 55), which immediately changes the rules around real estate fees to give brokerages and their clients more options for how they structure fees and commissions. It’s an important development that will be of particular interest for sellers, because they typically pay the commission for both the buyer’s and seller’s representatives.

Here’s what you need to know: Previously, real estate brokerages could charge consumers a flat fee, or a percentage of the sale price, but not a combination of the two. The changes remove the restriction, allowing brokerages the flexibility to make fee arrangements that include a blend of a flat fee and a percentage of the sale price.

With more flexibility on how to charge for their services, real estate brokerages now have another way to differentiate their business from competitors. It’s too early to tell how this will play out in the marketplace; the bottom line is that competition and market forces can now play a greater role in how real estate services are priced.

More choice and flexibility is a good thing for consumers. However, more than ever, it is important for homebuyers and sellers to educate themselves and understand what services their brokerage will provide and how the cost of those services will be calculated.

There are more than 60,000 registered real estate brokers and agents across the province, each with their own strengths and experience. It’s a good idea to carefully consider your options by meeting with several representatives to ensure the person you choose to work with will provide the services you need with a fee structure you think is reasonable.

As with all things real estate, remember that fees and service levels are negotiable. When you come to an agreement, get everything in writing to avoid potential misunderstandings down the road.

Signing a representation agreement with a real estate professional creates a legally binding contract with their brokerage.

I say this a lot, but it can’t be stressed enough: Ask questions of your representative, and even a lawyer if you feel it’s necessary, until you fully understand the agreement. Don’t sign on the dotted line until you do.

Posted on Saturday, December 21, 2013 at 10:55AM by Registered CommenterElaine in | CommentsPost a Comment | References1 Reference

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