I was recently asked a question on our Facebook page regarding the new agreement struck between CREA and the Competition Bureau. The question was if they could now put their home on MLS without a REALTOR®, and if they could set the commission that a REALTOR® would take. It was a great question that illuminated a common misunderstanding of what these new rules mean for consumers.

Below is the answer to those questions, and some thoughts on how the changes will affect the average consumer:

You can list your home on MLS only through a REALTOR®, but the services you hire that REALTOR® to do may not necessarily include full representation (i.e., you may hire a REALTOR® only to list your home on MLS and you would handle the rest of the listing on your own, or choose from a menu of services that do not have to include full representation).

The commission question can be answered in two parts. A) The commission you pay to the agent who lists your home is a negotiation between you and that agent. B) If you choose to handle the listing on your own, it is the commission you choose to offer to the buyers agent that you would set. There must be a minimum of $0.01 offered.

**It should be noted that no listing agent is obligated to take a listing at a fee that is lower than what they choose to charge, and no REALTOR® is obligated to offer low-service commission plans – there is simply the freedom on the parts of both the consumer as well as the agent to negotiate something they both can agree on, without having services they are obligated to offer (REALTOR®) or obligated to pay for (consumer).

**It should also be noted that although you may offer whatever you choose to the buyer agent, their client may end up being on the hook for the remainder of the commission if they are in a contract with their agent. As most can imagine, agents are not expected to spend their evenings and weekends away from their families on a volunteer basis because the rules changed – the buyer agents will need to be paid still, it will just be more of a negotiation as to who will cover that part. If a buyer who is under contract has to cover REALTOR® fees (in whole or in part) themselves, this may make your home less attractive than a home where the buyer does not need to kick in for commissions.

If you would like to get your home on MLS without paying for your agent to market it, handle showing requests, open houses, paperwork, negotiations, negotiation of commission with the buyer agent, condition removals, etc., there will now be agents who offer commission structures that allow for that. It really has been the case all along that agents can charge whatever they choose and consumers can hire whichever REALTOR® they would like. There have always been agents who charge flat fees, reduced commissions, higher end commissions, etc. The difference now, is that REALTORs® are no longer obligated to represent a sale. They can simply take a fee, post it on MLS and walk away to leave their client with the rest, should they and their client agree on that. There are some real dangers to that system.

A few things to consider:

1. In an MLS system where all listings are represented by REALTORS®, those REALTORS® owe fiduciary duties to their clients, as well as honesty and due care to all others involved. If ever you had a concern for example that you wrote an offer on a house and were told you were in competition when really you weren’t – You could call your local real estate board or Manitoba Securities Commission and register a complaint, you could request through your agent that they be provided with proof of the competing offers through the listing agents broker. In Manitoba, we have specific protocol to follow in competing offer situations to help ensure things are handled fairly. Manitoba agents are very diligent to make sure we do not mislead one another’s clients where multiple offers are concerned. This allows for some peace of mind when you as a buyer offering thousands of dollars over list price, that there are in fact competing offers.

When you are dealing with an MLS listed property not represented by an agent, what is to stop those sellers from telling buyers they are in competition when they are not? Or revealing the details of your offer to another buyer to try to get them to offer more? Who governs the new system?

2. Legal recourse. Your agent and their brokerage are insured with errors and omissions insurance, obligated to participate in mandatory continuing education to remain current with legal issues and are trained to help you avoid certain liabilities as a seller. When legal issues do arise, and it is determined that an agent has failed to meet their fiduciary duties to you, REALTORS® are often held accountable for the way in which they had represented the sale (for both buyers and sellers). Consumers who choose to opt out of full representation by their agent, may not be able to have their REALTOR® shoulder any legal liabilities involving their sale should they arise.

3. Buyers. The intention of this new agreement is that the way in which agents charge for their services, and the options consumers have, becomes more diverse. Unfortunately, this will not always be a benefit to the consumer. Instead of the commission being paid for by the seller, who typically has the equity to cover it, where a seller chooses a low service option and does not choose to offer a commission to the buyer agent, the buyer will now more often be required to pay their agent for their services out of pocket. This is unfortunate because for first time home buyers, saving for a down payment, plus closing costs (which add up to often over 3k), coming up with the cash to pay their agent as well will be overwhelming for many.

So, while you can likely find an agent out there to put your home on MLS for a low fee and handle the rest of the details on your own, be an informed consumer and be aware of what you give up when you give up representation by your agent and their brokerage. Make sure you know how to deal with multiple offers, what types of issues in your home you are obligated to disclose, how to increase the amount of offers that are generated, or in the case of no offers, how to network with REALTORS® to increase awareness of your listing and get them to bring their clients through, how to maximize the potential of each showing and then how to properly negotiate an offer. Be prepared for the cost of advertising your own home, as well as the work involved. Be prepared for the possibility of hearing people criticize your home openly at your open house, be prepared to obtain agent showing feedback on your own, etc.

There is a lot that goes into selling a home – more than most people realize. Now that there are to be more options available, make sure you know what that means for you as a consumer. As in all industries, you get what you pay for. If you choose a low service option, makes sure you are informed on the industry, disclosure, legalities, etc., and are prepared to undertake things on your own properly.