Alternative Business Models and You

A headline earlier this week on the Calgary Herald website read: “Commission-free real estate brokerage opening in Alberta.”

The article garnered some discussion on the Herald website, with some individuals weighing in that it’s about time Alberta had this sort of thing. What some of these readers didn’t take away from the article is that though this new brokerage says it’s commission-free, it is not working for free. There are still fees for the brokerage’s services. Also noteworthy is the fact this isn’t the first time a brokerage with such a business model has opened in Alberta and it likely won’t be the last.

Given the interest this news story generated and the fact the Real Estate Council of Alberta (RECA) received emails from industry members about the licensing of this brokerage, now seems like the perfect opportunity for a reminder that the RECA does not regulate or otherwise govern business models. Its concern is that authorized brokerages and industry members are acting in accordance with the Real Estate Act and Rules. It is not for RECA to decide if a brokerage is to operate in designated agency or under common law, nor does RECA concern itself with the commissions/fees charged by a brokerage (or real estate appraisers/candidates, as the case may be) unless they somehow breach the legislation (i.e. section 18 of the Act states, in part, that no industry member shall receive money in the course of carrying on business as an industry member unless, before receiving the money, the industry member has entered into a service agreement with the person who provides the money).

Do these alternative business models have a place in Alberta’s real estate industry? Based solely on comments on the Herald website, it appears some consumers believe they do. Whether or not they will be successful is an entirely different story altogether—and for that, only time will tell.

How do you feel about brokerages that operate with non-traditional business models?