The seller typically pays 5% commission on the final sale price of a property to the listing and buyer’s agents.
Real estate commissions are not typically paid by the buyer because the seller distributes commissions to the agents.
According to the industry standard in Ontario, the seller typically pays 5% commission on the final sale price of a property to the listing and buyer’s agents. In addition, HST is added on top of the commission and this is a fee that the seller is responsible for. Each agent then has to split this fee with their brokerage offices which varies per agent.
Depending on your point of view, real estate commissions are not typically paid by the buyer because the seller distributes commissions to the agents. Because commissions are included in the purchase price, one could argue that fees for the buyer’s agent are not technically “free”.
It is very rare that a seller pays only 1% commission to sell a home. Most of the time, the 1% commission is for the listing agent and a 2.5% commission is owed to the buyer’s agent. This is a typical structure for discount brokerages.
Lawyers pay out the commission according to the contracts signed by real estate agents and the seller.
Yes they are but they are required to tell you before you sign any contracts with them.
This is a matter of perspective and not every listing agent will accept it. It may appear to save the seller money up front but the property may not get as much exposure to the right buyers. You also need to figure out what services are included with a flat-fee service. You may find yourself having to stage the home, take professional photos, handling appointments and negotiating with buyers because flat-fee services typically only include listing your home.
Sellers may not always pay the buyer’s agent commission. When you sign a buyer’s agreement with your REALTOR® you may notice a section talking about commission and what would happen if a seller does not pay the buyer’s agent commission. This section will state that if a seller does not pay the buyer’s agent commission the buyer will be responsible to pay the commission. This will be either a flat fee or a percentage of the purchase price and can be negotiated with your buyer’s agent.
An example of when a seller may not pay an agent’s commission is when the seller is listing their home by themselves. However, many agents will negotiate with the seller to collect a commission from them and will only resort to the buyer paying the commission as a last resort.
Yes, real estate commissions are negotiable!
Keep in mind that some agents will agree to reduce their fees right up front and some will not lower their fees because of the services they offer. This is an important part in selling your home. Do not worry that it will offend your agent. Agents at Fivewalls are happy to explain why they charge a certain commission and the services that they offer.
Just remember that when you are negotiating the ‘perfect commission rate’, you get what you pay for.