Brokerage viability is now a regulatory issue

Brokerage viability is not a conversation our industry enjoys having publicly. It is often misunderstood as a discussion about margins, scale or competitiveness. In reality, it is a question of system design. Brokerages are the operational backbone of real estate regulation in Ontario. 

They supervise registrants, maintain trust accounts, fund compliance infrastructure, and respond directly when consumer issues arise. When brokerage viability is not fully reflected in regulatory decision-making, consumer protection can be affected, not because of intent or integrity, but because the system is evolving faster than the information available to those responsible for overseeing it. 

A changing landscape

Over the past fifteen years, Ontario’s brokerage landscape has changed dramatically. Traditional full-service firms now operate alongside virtual brokerages, low fee models, team-based organizations and hybrid arrangements that combine elements of each. 

Technology has reshaped marketing, transaction management, cybersecurity and supervision. Regulatory expectations have expanded appropriately, placing greater emphasis on oversight, documentation, training and financial controls. What has not kept pace is a shared, evidence-based understanding of how these diverse brokerage models function economically and operationally on a day-to-day basis. 

This matters because regulatory reform is often undertaken under real-time pressure. Decisions are made in good faith, with the best information available, but that information is not always complete or current across the full range of brokerage models now operating in Ontario. 

When policy and oversight evolve without access to a comprehensive operational picture, there is a risk that well-intentioned decisions may be miscalibrated. That risk can be reduced when regulators and operators work collaboratively to ensure that assumptions are grounded in contemporary data. 

An outdated evidence base 

The last comprehensive examination of brokerage viability in Ontario was undertaken by the Ontario Real Estate Association in 2008 and 2009. At the time, it provided valuable insight into brokerage economics and sustainability during a period of significant market and financial stress. 

That work helped inform policy discussions with evidence rather than assumptions. Fifteen years later, the regulatory framework, cost structure and business models of brokerages have changed so substantially that relying on that analysis alone no longer reflects the environment in which brokerages operate today. 

Since that study was completed, brokerages have absorbed a growing range of permanent operational obligations. Continuous cybersecurity monitoring, transaction management platforms, enhanced audit requirements, expanded insurance coverage, and dedicated compliance staffing are no longer discretionary investments. 

They are foundational requirements. These costs layer on top of supervision responsibilities that grow more complex as business models diversify and transaction volumes fluctuate. Understanding how these obligations are funded in practice is essential to ensuring that regulatory expectations remain aligned with operational reality. 

Prevention through better understanding 

Understanding brokerage economics is not about rationalizing misconduct. It is about strengthening prevention. When regulators and brokerage operators share a clearer picture of how supervision, compliance, technology and staffing are supported, it becomes easier to identify stress points earlier and intervene before harm occurs. Recent events have shown that when financial pressure goes unseen or unexamined, risks can escalate quickly. Better information supports better oversight and earlier intervention, not weaker enforcement. 

It was with this perspective in mind that I recently wrote the below letter to the Minister of Public and Business Service Delivery and to RECO’s Interim CEO. The purpose was not to question the work underway, but to offer partnership and operational insight from the brokerage community at a moment of meaningful reform. 

Letter to the Minister and RECO

To: The Honourable Stephen Crawford, Minister of Public and Business Service Delivery 

Cc: Jean Lépine, Interim CEO, Real Estate Council of Ontario 

Minister Crawford and Mr. Lépine, 

The work underway to reinforce confidence in Ontario’s real estate regulatory framework is both important and appreciated. The appointment of an administrator at RECO has created a valuable opportunity not only to stabilize the system but also to ensure that its foundations remain aligned with the realities of today’s marketplace. Many within the sector recognize the intent behind this effort and are ready to support it. 

I am writing from the brokerage community to offer partnership and insight at a moment when the operational environment in which brokerages function has changed considerably. Brokerages remain the entities responsible for supervising trades, maintaining trust accounts, supporting registrants, and responding directly to consumer concerns. As such, the long-term effectiveness of regulatory oversight is strengthened when it is informed by a current understanding of how brokerage models operate and how those models have evolved. 

Ontario’s brokerage landscape now includes traditional full-service firms, virtual models, low-fee structures, team-based organizations and hybrid arrangements. Each serves different consumer needs and faces distinct operational pressures. What they share is a responsibility for consumer outcomes and regulatory compliance. A modern regulatory system functions best when it is informed by contemporary insight from across this full range of models. 

Ontario’s real estate boards and associations continue to provide valuable services and professional support, and their efforts are appreciated. At the same time, it is important to recognize the distinct roles played by advocacy bodies and operational entities. Associations contribute meaningfully to policy dialogue and professional development. Brokerages, however, are responsible for supervision, trust account management, and day-to-day regulatory execution. Ensuring that both perspectives are reflected in ongoing reform will strengthen the quality and durability of the resulting framework. 

Recent challenges also highlighted that consumers, registrants, and brokerages experienced different impacts. Consumers received protections and remedies, and registrants were offered a path to compensation. Brokerages simultaneously managed operational continuity under significant pressure. A comprehensive understanding of these dynamics can help ensure that Ontario’s oversight system remains resilient over time. 

Given the scale and pace of industry change, there would be value in commissioning an updated study of brokerage economics and operational capacity. The last comprehensive examination of brokerage viability was conducted by the Ontario Real Estate Association more than fifteen years ago, under conditions that no longer reflect today’s economic, technological, or regulatory environment. A renewed study would complement existing regulatory expertise by providing a shared factual foundation for policymakers, the regulator, consumers, registrants, associations, and brokerage operators alike. 

To complement this work, there would also be benefit in establishing a forum for direct and ongoing dialogue between the ministry, the regulator, and brokerage leadership across all business models. Many of us are already engaged in constructive conversations with colleagues and competitors throughout the sector and would welcome the opportunity to bring those perspectives together in a structured and collaborative manner. 

Ontario has the opportunity to build one of the most modern and effective real estate oversight systems in the country. Achieving that outcome will require continued collaboration between government, the regulator, consumers, registrants, associations, and the operational entities responsible for carrying out regulatory obligations. Brokerages across the province are prepared to contribute anonymized data, operational experience, and practical insight, and I would encourage the ministry and RECO to engage with colleagues and competitors across all brokerage models to ensure a full and balanced understanding of the marketplace. 

Respectfully, 

Brandon Reay
On behalf of the leadership team
RE/MAX Hallmark Realty Group 

Distinct roles within the regulatory system

This letter reflects a view shared by many brokerage operators, even if it is not always voiced publicly. Associations play an important role in professional support. Brokerages, meanwhile, carry responsibility for regulatory execution in practice. When these perspectives are brought together constructively, regulatory outcomes are stronger.

It is encouraging to hear Mr. Lépine’s recent comments regarding plans to convene sector leaders for a summit focused on trust account oversight, financial reporting, and insurance protections. This is a constructive step, and one that aligns well with the need for shared understanding across the system. 

I would propose the inclusion of brokerage leadership representing the full range of business models operating in Ontario today, as brokerages are directly responsible for safeguarding trust funds and implementing regulatory requirements in practice. Their operational experience and day-to-day perspective can meaningfully support these discussions and the outcomes they aim to achieve. 

Two steps toward long-term resilience

If Ontario is serious about strengthening consumer protection and long-term regulatory resilience, two steps would meaningfully support that goal. First, commissioning a modern, independent study of brokerage economics and operational capacity would provide regulators and policymakers with a stronger evidentiary foundation as reform continues. Second, creating structured and ongoing dialogue with brokerage leadership across business models would ensure that oversight evolves alongside the marketplace it governs. 

Many brokerage leaders across Ontario, representing a wide range of approaches and philosophies, are willing to participate in this work and to share insight openly, alongside their peers and competitors. Brokerage viability is not a private concern. It is a shared responsibility. Approached collaboratively, it can strengthen both consumer protection and confidence in the regulatory system that supports it.