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 a few years back. Independent real estate brokerages now set their own REALTOR commission which they charge 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, who represent buyers, a competitive real estate commission. In Ontario, a popular rate for the buyer brokerage is 2.5% plus applicable HST. This is determined by the seller and their REALTOR®, in compliance with the sales rep's brokerage 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, so a home owner certainly has various options from which to choose.

A Word to the Wise

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 REALTOR®, 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.

Bottom line?

Realtor commission is negotiable. But remember that your REALTOR® may decline to accept the listing of your property if they feel the compensation is insufficient relative to the risk involved. REALTORS® 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 compensated for their out of pocket expenses.

I also ask you to consider that in many areas, the vast majority of REALTORS® sell fewer than five or six properties annually. Fewer and fewer agents are generating an increasing number of the real estate sales. So, unless your REALTOR® is a top producer, they may not be able to 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 click here to learn more about REALTOR fees from the Real Estate Council of Ontario (RECO). There are similar organizations where you live.

If you have questions, or wish to arrange a no-obligation consultation, CONTACT ME using the tab on the top left of your screen.



The commission, and 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 ready to explain to the consumer 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.



Return to Seller Questions

Return to Home Page