REALTOR® REACTS to CBC Marketplace Report | “Steering” Buyers Away From Low Commission Homes

About this video

In this October 2021 video, Tom Storey responds to a CBC Marketplace report on real estate agents steering buyers away from homes offering low commissions. He agrees the dishonest behaviour shown is wrong and breaks the code of ethics, but argues the report left out important context.

Key points

• The report followed a Vaughan homeowner who sold through a flat fee listing service and found that two of three agents contacted gave misleading reasons not to show the home. Tom says that behaviour is wrong and agents who do it should be held accountable.
• There is no standard commission. A cooperating commission of about 2.5% was common at the time, but sellers can offer whatever they choose, and choosing to sell without a full service agent is a valid option.
• Context Tom says was missing: based on the listing he found, the commission offered appeared to be nominal rather than the 1% described.
• Whether the buyers had signed buyer representation agreements matters. With an agreement, the agent owes a fiduciary duty regardless of commission. Without one, there is no formal duty.
• Good practice: discuss in the buyer agreement whether to show homes offering less than the stated commission, and whether the buyer would cover any difference.
• Tom notes marketing matters: the listing had a pricing typo that triggered a price change flag, no staging and vertical phone photos. Staging can add about 3% to 6% to a sale price.
• The home did sell close to its asking price, but in about 90 days versus the area average of 15 to 20 days for detached homes.
• His takeaway: the industry needs more transparency, and a few bad actors should not define all agents.

Rules that have changed since

Since December 2023, under Ontario’s Trust in Real Estate Services Act, agents must have a written agreement with buyers before making an offer, including how the agent will be paid. Ask your agent to explain the agreement before you sign.

Questions answered in this video

What is steering in real estate?

Steering is when an agent discourages a buyer from viewing or buying a home for the agent’s own benefit, such as because the home offers a lower commission. Tom says it is unethical and agents should be transparent with clients.

Is there a standard real estate commission in Ontario?

No. Commission is negotiable. Around 2021, a 2.5% cooperating commission was common, but sellers can offer any amount, and buyers and agents can agree how any difference is handled.

Do I need a buyer agreement with a real estate agent in Ontario?

Since December 2023, agents in Ontario must have a written agreement with a buyer before submitting an offer, including how the agent will be paid.

Related: selling with The Storey Team, buying with The Storey Team and Toronto real estate FAQ.