Photo: James Bombales

As house prices increase, so do the commissions paid to the people who work on both sides of the deal – real estate agents.

Eyebrows have been raised for years as their fees increased on the back of higher prices – they typically get paid a percentage of the final sale price. Some people complain the fees aren’t transparent and leave no room for negotiation on a rate that add tens of thousands of dollars to a transaction.

The Wall Street Journal says a new Justice Department investigation could change all that and “put downward pressure on the fees paid by home buyers and sellers.”

It’s an investigation that’s sure to be watched closely in Canada as well, where real estate agents have pre-emptively issued press releases asserting they have nothing to do with the rapid increases to the country’s red hot market.

“Because the work of real estate brokers has sometimes been wrongly blamed for the rapid increase in property prices the Quebec Real Estate Association analyzed the underlying context that has truly led the market to such a great imbalance,” it wrote. “It identifies a series of factors arising from the pandemic that exacerbated the situation and created what might be called a perfect storm, where supply was clearly insufficient to meet the unanticipated demand.”

In other words, don’t blame us. The US National Association of Realtors takes a similar approach to fees, which are typically five per cent of a sale but have slipped to 4.9 per cent after peaking at 5.4 per cent in 2012.

“The NAR says that the current commission structure also encourages more competition by giving all participants in local multiple-listing services equal access to information on available properties,” the WSJ reported. “It also helps make homes more affordable to first-time and lower-income buyers, the trade group says, because they don’t have to pay their own agents up front.”

The Justice Department will investigate whether the commission rules stifle competition. If it finds against the industry, it could impose new rules around structures or transparency.

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