OttawaIt is a polite country. A polite country does not name names. A polite country, when asked who is responsible for the price of a house in any of its major cities, will offer a list of distant villains. Foreign buyers. Money laundering. Interest rates. Demographic pressure. Building-code complexity. NIMBYism. Provincial inaction. Federal overreach. The list is long. The list is, in many of its items, partly true. The list is also, in its quiet completeness, a way of avoiding the one item that does not appear on it.

The item that does not appear on the list is the realtor. The realtor is the agent who, on every residential transaction in this country, takes a percentage of the sale price as a commission. The percentage, by long convention, is between four and six. The percentage is paid by the seller, but the percentage is, in any honest accounting, embedded in the price the buyer pays. The percentage is, in the largest urban markets, the single largest transaction cost in any household's lifetime. The percentage is, on the math the country has not been asked to do, also one of the largest single sources of the price inflation the country complains about every dinner.

How a commission becomes a cartel

The commission is not, on its own, a cartel. The commission becomes a cartel when, across an entire market, every brokerage charges the same percentage, every multiple-listing service requires the percentage to be honoured for inclusion, and every transaction proceeds on the assumption that the percentage will be paid. This is the structure of the Canadian residential real estate market. It has been the structure for at least three decades. It has been, in this country and in the United States, the subject of multiple regulatory inquiries. The most recent of these, in the country to the south, produced a settlement in 2024 that began, very slowly, to unwind the equivalent American structure. No equivalent unwinding has occurred here.

The Canadian structure is also enforced by what economists call a most-favoured-nation clause, written not in any contract but in the practical conduct of every brokerage in every city. A brokerage that offers, in public, a lower rate is a brokerage that, in private, finds its listings de-prioritised, its colleagues uncooperative, and its referrals dried up. This is not paranoia. This is the operating fact every Canadian brokerage knows. It is why no brokerage of any size has, in this country, sustained a public lower rate. It is why the percentage has, despite the rise of online listings and the maturation of consumer search tools and the spectacular gains in productivity that a digital marketplace ought, in any honest economy, to have produced, not moved.

What the percentage actually pays for

The percentage pays for, in the typical transaction, the listing photography, the staging, the open houses, the negotiation, the paperwork, and the walk-through. None of these tasks, taken individually, has, on the international comparison, a cost that grew with the price of the house. A photograph of a million-dollar house costs the same to take as a photograph of a four-hundred-thousand-dollar house. The paperwork is the same length. The negotiation is, in most cases, slightly easier on the more expensive house, because the buyer is more sophisticated. The walk-through takes about an hour. The percentage, however, scales with the price.

What this means, on the simple arithmetic the country has not been asked to do, is that as the price of housing in this country has tripled, the gross commission per transaction has roughly tripled. The work has not. The number of brokerages has not. The skill required has not. The percentage has held, and the dollars have moved with it, into the brokerages that operate, in the major cities, as the most reliably profitable small businesses in the country.

The polite lie is that the realtor is a service. The honest one is that the realtor is the structural beneficiary of an arrangement nobody else in the room can leave.

The polite lie

The polite lie about the cost of living is that it is complicated. The polite lie is what the political class prefers, because the polite lie does not require any actor to be named. The polite lie is also what most of the country's commentariat prefers, because the polite lie is congenial to the kind of essay that lists eight contributing factors and ends, modestly, with a call for further study. There are eight contributing factors. Most of them are real. Most of them are also intractable, by which is meant that no government in this country can, on its own, change them. The percentage, however, can be changed. The percentage is a single number that the political class has, for thirty years, not asked to lower.

What the country could do

The country could do three things, all of which have been tried in comparable jurisdictions and all of which would, on any honest accounting, lower the percentage within five years. The first is to require, by federal regulation, that every multiple-listing service in the country accept listings irrespective of the commission offered. This was the practical effect of the 2024 American settlement, and it is the single most important reform available. The second is to require, by provincial real-estate-council regulation, that every commission be itemised in writing on the closing documents, alongside an estimate of what the same transaction would have cost the consumer at the median rate in any of the other three G7 economies that have unbundled commissions. The third is to permit, by simple amendment to existing real-estate licensing law, an alternative class of fixed-fee listing agent, whose conduct is governed by the same standards as the existing class but whose compensation is not, by structural convention, a percentage.

None of these is a moonshot. None of them confiscates anybody's wealth. None of them prevents any consumer who wishes to use a full-service traditional broker from doing so. All of them, however, would within five years lower the percentage, lower the embedded transaction cost, and, on the math nobody has yet been asked to do, lower the price of every house in the country by an amount that, in aggregate, would dwarf the impact of any single tax or subsidy currently being debated.

The country has not been asked. The country, when it is asked, will, in this magazine's view, ask back why this question took so long to reach the table. The answer to that question is the cartel. The cartel does not want the question on the table.

Put it on the table.