REALTOR Commission Rates


There was a time long ago when REALTOR commission rates were determined by the local real estate board or association. However, that changed quite a few years back. Independent real estate brokerages now set their own REALTOR commission charged to their clients.

Having said this, many brokerages permit their sales people to choose their own real estate agent fees. They often insist, however, that their agents offer the cooperating brokerages representing buyers a competitive real estate commission. It's sometimes but not always half of the total contractually agreed commission rate as determined by the seller and their agent in compliance with the brokerage's policy on an individual basis during client consultation.

Currently, in Ontario at least, with the change in market conditions from a strong seller's market to a more balanced market, we're beginning to see higher REALTOR commission being offered occasionally to buyer agents in order to attract attention.

Different brokerages may have different real estate commission policies, thus, a homeowner certainly has various options from which to choose.

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A Word to the Wise about Realtor Commission

The old adage 'you get what you pay for' often holds true in this situation. A full service REALTOR® will usually provide full service in return. And a discount or flat fee brokerage usually provides a discounted minimal service. When deciding about realtor fees, think about ...

Incentive

The greater incentive you offer your listing agent, the greater chance your property will sell, not only because of the potential higher financial reward, but because they'll likely invest more of their own resources into the marketing of your property.

Realtor commission is negotiable. But remember that your agent may decline your offer to list your property if they feel the compensation is insufficient relative to the risk involved. Agents work on spec, that is if (and it's often a big if) the property sells, they'll be rewarded for their efforts and risk and be compensated for their out of pocket expenses.

I also ask you to consider that in many areas, the vast majority of agents sell fewer than five or six properties annually. Fewer and fewer agents are generating an increasing number of the real estate sales. Therefore, unless your realtor is a top producer, they may ill afford to discount their fee.

Think about it

Click REALTOR commission to learn a little more on the subject of real estate agent fees. Click here to learn about finding a REALTOR®. And visit the Real Estate Council of Ontario (RECO) to learn more about REALTOR fees. There are similar organizations where you live.

If you have questions or wish to arrange a no-obligation consultation, contact me at your leisure.


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The commission, including the portion paid to the cooperating brokerage, is decided by the seller in consultation with the REALTOR® representing the listing brokerage as part of the listing process. Similarly, the buyer and the REALTOR® representing the buyer brokerage would discuss and set the commission to be paid to that brokerage.

Commission discussions should take place prior to entering into a representation or customer service agreement. A REALTOR® is always prepared to explain their pricing from the perspective of the value of the services to be provided. Commission rates may be set by an individual brokerage or agreed to by the brokerage and salesperson. There is no standard or set rate of commission charged to sellers or buyers or payable to cooperating brokerages. The amounts and percentages are not fixed and are negotiable. Other arrangements might contravene the Competition Act.

The commission or fees charged by REALTORS® are not set by the Ontario Real Estate Association (OREA) or any real estate board or association or by RECO or any government authority. This is forbidden by competition law. Furthermore, REALTORS® are not permitted to indicate that fees are fixed or approved by any such body.


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No part of the information provided on this site may be reproduced or utilized in any form or by any means, electronic or mechanical, including copying, recording or by any information storage and retrieval system, without specific written permission from the author. While every attempt has been made to provide accurate and current information, due to the constantly changing nature of our industry, I cannot guarantee the accuracy, completeness or timeliness of any information provided. All information offered is not to be construed as legal or financial advice. Seek skilled guidance from an appropriate professional since all editorial comments herein are merely my personal opinion. I mean no offence to any particular person, group or association and apologize if they happen to find any of my comments offensive.

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