by 
Updated: Dec 18/2025
Home sellers paying for buyer agents: Is it injustice or simply misunderstood business logic?
Introduction: A Lawsuit Shaking Foundations or Just a Misunderstanding?
Canadian home sellers have long accepted that paying both sides of the commission is standard practice. Recently, a class-action lawsuit launched by Kalloghlian Myers LLP has alleged that this practice is anti-competitive and contributes to Canada’s housing affordability crisis.
On the issue of cost, the lawsuit is correct: transaction costs in Canada are significantly high. On a $1 million home, traditional commissions can consume $40,000 to $50,000 of a family’s equity. In a market where prices have hovered above the $1 million mark since 2021, these fees are a legitimate burden on sellers.
However, while the cost is a real issue, the lawsuit’s attack on the structure of the MLS system is misplaced. The system of cooperation between brokerages is what allows a home to be seen by millions of unique visitors. The solution isn’t to dismantle the cooperative network that sells homes; it is to introduce competitive, lower-fee models within that network to preserve seller equity.
What Exactly Does the Lawsuit Claim?
According to Garth Myers of Kalloghlian Myers LLP, quoted prominently in a January 2024 Business Wire release:
“This practice needs to end. The cost of housing is a major problem in Canada. Unfortunately, the real estate industry is contributing significantly to this crisis.”
Specifically, the lawsuit targets what’s described as the entrenched “buyer brokerage commission rule,” allegedly enforced through MLS boards like TRREB and CREA. Court filings state explicitly:
“These rules apparently oblige a seller of residential real estate listed on the Toronto MLS to make an offer of commission to any Cooperating Brokerage acting for a prospective buyer, thereby making the seller responsible to pay for the Cooperating Brokerage services used by the buyer.”
But is this truly accurate?
The Nuance: It’s Not a Law, It’s Leverage
The lawsuit paints sellers as victims forced to pay a “tax” to buyer agents. This is a fundamental misreading of how the market works. We need to stop confusing a legal mandate with a smart business strategy.
There is no provincial law forcing you to pay a buyer’s agent. Even the MLS rules are secondary to the cold, hard truth of the market: you pay a commission to get noticed. Listing on the MLS puts your home on the main stage—Realtor.ca—where nearly every serious buyer in Canada starts their search.
Sellers don’t offer a commission because a rulebook forces them to; they do it to put a “bounty” on the sale. They are paying to motivate the army of agents who control the buyers. This isn’t about regulatory compliance. It is a calculated commercial decision to unlock the massive network of buyers that only the MLS can provide. You aren’t being forced to pay; you are choosing not to be invisible.
In simple terms, while no government law forces a seller to pay, the commercial reality of the MLS® System makes it a necessary condition for full market exposure. Sellers are not adhering to a statute; they are paying a ‘market access fee’ to unlock the 90% of buyers shopping on REALTOR.ca.
The Operational Flaw: Friction vs. Service
The lawsuit rests on the premise that sellers are paying for a service they do not receive. It argues that because the buyer agent represents the buyer, the buyer alone should pay. While logically appealing, this ignores the operational reality of how real estate transactions are funded.
In the current system, the seller does not pay the buyer agent for representation; the seller pays to ensure liquidity.
Most first-time buyers in Canada are cash-poor but credit-approved. If the lawsuit’s ‘buyer-pays’ model were enforced, buyers would need to pay 2.5% commission plus HST out of pocket, on top of their down payment and closing costs. This would effectively disqualify a massive segment of the buyer pool.
Sellers currently offer a cooperating commission not because they are ‘forced’ to subsidize the buyer, but because it removes a financial barrier that would otherwise prevent qualified buyers from making an offer.
The lawsuit is flawed because it treats the commission as a ‘fee for service’—which implies the user of the service must pay—rather than a ‘cost of market access.’ Sellers voluntarily incur this cost to ensure the maximum number of buyers can afford to close the deal. Removing this mechanism doesn’t ‘liberate’ the seller; it restricts their potential market.
The Market Solution: Competition, Not Litigation
The lawsuit aims to lower costs by banning seller-paid buyer commissions. But this ignores the market reality known as ‘steering.’ As noted on our own site, while steering is ethically prohibited, it is a practical reality: agents are less likely to show homes where their compensation is uncertain or non-existent.
If the lawsuit succeeds and buyer commissions become entirely optional or buyer-paid, we will likely see a chaotic market where properties offering no commission see significantly less foot traffic.
The flaw in the lawsuit’s approach is the belief that court intervention is required to lower fees. The solution already exists in the market: competitive listing models.
Sellers can already reduce their total cost significantly by choosing low-commission or flat-fee listing services. By paying a flat rate on the listing side but maintaining a competitive offer for the buyer agent , sellers can save tens of thousands of dollars without breaking the cooperative engine that drives the MLS® System. We don’t need a judge to redesign the market; we just need sellers to exercise the choices already available to them.
The First Domino: Analyzing the RE/MAX Settlement
While the broader legal battle against Canada’s real estate boards continues, a significant fissure appeared in late 2025. RE/MAX Ontario-Atlantic Canada Inc. reached a settlement in the Sunderland and McFall class actions, agreeing to pay $7.8 million and implement specific practice changes.
To the casual observer, this might look like an admission of guilt—a smoking gun proving the system is rigged. However, a closer look reveals a strategic “business decision” rather than a legal concession.
1. The Cost of Certainty In the high-stakes world of class-action litigation, legal fees can quickly eclipse settlement amounts. RE/MAX’s decision to settle for $7.8 million — a relatively modest sum for a national franchisor — allows them to exit the courtroom and return to business. The settlement explicitly states there is no admission of liability. By settling, RE/MAX effectively purchased an insurance policy against the unpredictable outcome of a years-long trial, insulating their franchisees from future liability while the remaining defendants (TRREB, CREA, and other brokerages) are left to fight the expensive battle.
2. The “Trojan Horse” Clause The most critical aspect of the settlement isn’t the money; it is the practice change. RE/MAX agreed that it will no longer require its franchisees to be members of CREA or TRREB.
This sounds revolutionary, but practically, it changes very little in the immediate term. The MLS® System is owned by the boards. If a brokerage wants to access the MLS®—where 90% of Canadian real estate is sold — they must be a member. RE/MAX knows that while they are legally “freeing” their agents from the requirement, the commercial necessity of the MLS® remains the ultimate handcuff.
This reinforces my central thesis: it is the market value of the MLS, not a regulatory conspiracy, that binds the industry together. Even when legally untethered, brokerages will likely stay voluntarily because that is where the buyers are. The lawsuit may be chipping away at the rules, but it cannot legislate away the network effect that makes the MLS essential.
Is Litigation the Right Tool for Reform?
While the lawsuit correctly identifies that transaction costs are too high, asking a court to ban seller-paid commissions is a blunt instrument that may harm the very consumers it aims to protect.
If the court forces a “buyer-pays” model, we risk shrinking the buyer pool and stalling the market. The question Canadians should ask is not merely whether real estate commissions need reform (they clearly do), but whether the approach chosen by this lawsuit serves the public good—or simply adds unnecessary confusion, complexity, and cost to an already challenging market.
Conclusion: Reform Is Necessary, but the Lawsuit’s Approach Misses the Mark
The current lawsuit rightfully highlights valid concerns—commission transparency, competitive pricing, and housing affordability; but fundamentally misunderstands critical contractual and operational realities. The claim that sellers are forced by regulation to pay buyer-agent commissions is demonstrably contradicted by existing industry-standard agreements.
Rather than replacing one flawed system with another potentially problematic model, the industry would better serve Canadian consumers by embracing transparency, competition, and consumer education. This balanced path offers a viable solution that maintains market efficiency, protects consumer interests, and strengthens housing affordability, benefiting everyone involved in the process of buying or selling a home.