This guide is for real estate commissions charged by Realtors in Ontario
Updated January 21, 2016:
Typically real estate commission payable to your agent is is a percentage of the final sale amount for your home. The figures range from 1% to 5% in the Greater Toronto Area and surrounding market.
The rates charged by each real estate agent varies based on housing market condition, property type, property value and your agent’s business model.
As mentioned above if you see an offer from your agent ranging from as low as 1% commission up to 5% (total commission) it is pretty much within the limits of what your neighbours might have paid when they sold their property.
Let’s look closer at the 1% offer that you might receive from a Realtor.
This One Percent Commission offer, if indeed offered, by your agent covers the fee for the listing agent who will be representing you in the sale of your home.
In addition to this 1% there may be another commission paid to buyer agent or what we call the co-operating agent who brings the buyer. So now we are looking at a 3.5% total. One percent for your agent and two and half percent for buyer agent.
So what happens if that buyer is represented by your agent or as we call it the listing agent? This question should be answered in the agreement you sign when listing your property for sale.
Some agent might go as far as offering you an additional discount in the event when he / she brings the buyer. This could be a extra one percent discount or sometime your agent might simply settle for 1% commission in total. And that will be all you will have to pay, a one percent of the total final sale price of your home but don’t bit on it that easily as it is a difficult bargain to get.
Now the 5% commission is a much more simple math. You offer a 5% commission to your agent and if both sides of the deal meaning the buyer and the seller are represented by two different agents then that 5% gets split into two where each agent takes a 2.5% commission.
Keep in mind that the commissions regardless of the amount is payable when the sale is final and when your lawyer receives the fund. In other words the commission is paid after the deal closes.
Lest we forget about the FSBO or For Sale By Owner companies that offer some signage and website listing for a fee. When dealing with DIY companies, you pay them an upfront fee and they put a sign on your lawn and give you access to list your property on their website.
You get to do the rest of the work which includes arranging showings, answering calls, talking to potential buyers, speaking to so many agents who will be calling you to get your home listed and finally negotiating the deal and doing some legal paperwork or drafting agreement of purchase and sale.
If I were you, I would leave the job to a professional and try to negotiate a lower and fair commission rate and get my house sold without ending up in court…
Above guide is a general information and should not be taken as real estate or legal advise. Fahim Safi Real Estate Broker at CITYGATE Realty Inc. Tel. 905-232-8006
Real estate agents will be soon able to book appointments using showing app from their mobile device.