Landmark U.S. settlement could impact Canadian housing market

The NAR, which denied any wrongdoing in the case, has also agreed to eliminate the standard six per cent sales commission and do away with other commission rules.

A substantial settlement recently announced by a U.S. group representing more than one million Realtors has real estate experts hopeful Canadian home sellers could soon get a better deal.

Last week, the U.S.-based National Association of Realtors (NAR) agreed to pay $418 million US to end legal claims from home sellers that argued the group artificially inflated real estate commissions.

The NAR, which denied any wrongdoing in the case, has also agreed to eliminate the standard six per cent sales commission and do away with other commission rules.

The landmark settlement in the U.S. is playing out at the same time as a proposed national class action lawsuit makes its way through Canadian courts, with the lawyer behind the claim saying a win would reduce the cost of Canadian homes.

A University of British Columbia real estate professor says the settlement bolsters the argument for similar changes to happen in Canada, which could make it cheaper for people to buy and sell homes.

"It's going to revolutionize the practice of real estate," said Tom Davidoff, an associate professor at UBC's Sauder School of Business and the director of UBC's Centre for Urban Economics and Real Estate.

"It may become more competitive, but more importantly, cheaper for people to sell their homes."

While they would not be a solution to the affordable housing crisis, Davidoff said, changes to commission rules would be a win for those looking to buy a home because prices would fall if sellers have lower costs.

Tamara Stone, a real estate agent and co-founder of ReMax Kelowna Stone Sisters, says that if Canadian commission rules are changed similarly to the U.S., it could lead to more competition among agents. ReMax is named as a defendant in the Canadian lawsuit.

"If [a Realtor] isn't really showing value ... negotiating and marketing for a seller and negotiating and working hard for a buyer, I think that will bring fees down," Stone said.