Real estate commissions are the fees you pay to your real estate agent for their services. It is usually calculated as a percentage of the selling price of the property. In Ontario, the standard real estate agent commission is 5% of the property price plus HST, but in practice, the commission can range anywhere from 3.5% to 5%. The total commission will be divided between the buyer and seller agents, where the buyer's portion is typically fixed at 2.5%.
The average combined real estate agent commission is 3.5% to 5% of the total selling price, which is then split between the buyer’s and seller’s agents. Higher commissions are possible, but the typical rate is 5%. The buyer's portion is usually fixed at 2.5% (+HST) and the seller's portion is variable depending on the rate negotiated. For example, if the total combined rate is set at 4%, then the buyer agent gets 2.5% and the seller will get 1.5%.
Yes! Like most other service fees, you can negotiate the commission with your agent. The commission makes up the largest portion of your selling costs, so it always makes sense to check and negotiate the commission of different real estate agents when selling a property. On WOWA.ca, you can check real estate agent commissions.
Typically no, since you are not paying your agent directly and they are paid by the seller. However, some agents are willing to give a portion of their commission back to buyers as a cashback rebate after closing. For example, some agents will pay you up to 50% of their commission. If you purchased a house for $1,000,000 and your agents commission is 2.5%, they will earn $25,000. After closing, they will give you $12,500, which is 50% of their $25,000 commission, as a cashback rebate. Find out more about cashback rebate agents
The commission rates in Toronto are similar to the rates all accross Ontario, typically 3.5% to 5% of selling price. However, the real estate market in Toronto is highly competitive which could provide you with some incentives as a customer. Due to the high competition and the higher property prices, many Toronto real estate agents are providing incentives to their clients for both buyers and sellers.
For sellers, you may be able to negotiate a 1% commission rate bringing the combined real estate commission down to 3.5% (2.5% for the buyer agent and 1% for your seller agent). On WOWA, you can find experienced agents who are willing to list your property at lower than normal commission rates. Find a low commission agent here.
For buyers, you can now find cashback agents. What is a cashback real estate agent? Some agents offer up to 50% cashback on their 2.5% commission as a rebate when you use them to purchase a home. For example, if you purchase a $800,000 home your agent will earn 2.5% as commission, which is equal to $20,000. If the agent offers 30% cashback on their $20,000 commission, they will then give you $6,000 as a rebate after closing.
Sometimes seller (listing) agents offer a discount to their client by reducing their commission fee. A one percent real estate agent or one percent REALTOR® is someone who charges only 1% commission to sell your home. The seller agent will get 1% (+HST), as promised, and the buyer agent will typically receive their standard 2.5% (+HST) commission rate, equalling a combined real estate commission rate of 3.5% (+HST).
Depending on your real estate agent, the commission can be paid as one of the below two different forms:
The seller of the home will usually pay the real estate agent commission. When a home is listed, the seller will decide on the gross commission they are willing to pay and how it will be split between the buyer and seller agents. This commission will then be paid out by lawyers after the transaction has been completed.
Typically, the seller will cover both the commission for both agents. In rare cases, if the seller lists the property by themselves or chooses not to give a buyer agent commission, the buyer may have to pay their agent the difference. However, such cases are rare and real estate agents will generally let you know beforehand if it is the case.
Yes, the seller has the pay HST in Ontario on the real estate agent commission.
Real estate agent commissions are high because the commission is split between many different parties and the real estate agent has to cover any marketing expenses even if the home doesn’t sell. The agent may have to pay upfront for professional photography, mail marketing materials, supplies, and much more. Your agent works very hard behind the scenes to ensure that you are getting the best price for your property and in some cases, a higher commission can mean better marketing for your home. Although, like any service, you can negotiate. Many real estate agents are willing to lower their commission or even offer a cashback rebate.
Some simple tips:
There is no formal rule or regulation that sets the commission rate. Each agent can choose their own commission type and rate or fee. Although the commission will vary from agent to agent, it will be close to the average commission for the area. Real estate commissions are negotiable. Details about your agent’s commission will be outlined in the contract you sign when hiring an agent.
Flat-fee commissions can seem like a great way to save money, especially since they are usually cheaper than equivalent percentage-based commissions. However, the quality and quantity of services offered with flat-fee packages are often much lower. You may have to stage and market the home yourself.
Yes. Real estate agent commission is paid only when the property is sold, even if the property has been listed for a long time. In addition, some sellers may choose to self-list their properties and not offer a commission to buyer agents. Although, if you decided to list your property by yourself, we strongly recommend to pay the normal 2.5% commission to a buyer agent. This will help ensure that your property is being shown to potential buyers by their agents. As well, we only recommend listing a property yourself if you have experience in real estate (i.e. you have a done few real estate transactions yourself).
Ideally, instead of listing a home yourself to avoid commission fees, we would recommend hiring an experienced agent and negotiating. Offer to do most of the work like marketing, staging, etc. and the agent may be willing to lower the commission to 1%.
The typical pre-construction commission rate is about 3% to 4% in the GTA but in some cases the rate could be lower than 3% or higher 4%. Many agents are offering cashback incentives on their earned commissions when selling pre-constructions. See above for information on cashback agents.
A double-ended deal is when one real estate agent represents both the seller and the buyer. In this case, the agent will get the full amount of the commission. This can happen if the buyer directly contacts and works with the seller’s agent after finding the listing without consulting an agent of their own. However, this is not recommended due to potential conflicts of interest. The conflict being that the buyer and seller have different interests within the real estate transaction. For example, the seller of the home will want to sell a home for the maximum possible value. On the other side, the people buying a home will want to get the cheapest price possible. How can one agent protect both these conflicting interest? Agents are required to tell you in advance if they are double-ending a commission. In many parts of North America, this practice of dual agency real estate is illegal.
The Real Estate Council of Ontario (RECO) does not allow a commission type to vary based on the final selling price of a home. For example, you are not allowed to be charged a rate for a base amount and then an additional rate for the remainder. The rate has to remain the same for the full sale price.
It is also not permitted to have a different rate for the listing price and the final sale price.
Agents are allowed to base their commissions on how much they think the home will sell for. For example, a $400K home will have less commission than a $1M home if charged at the same rate. Agents can choose to charge a lower commission rate for the $1M home or a higher commission rate for a $400K home.
There are many additional closing costs involved in selling a home including lawyer fees, penalties from closing out a mortgage too early, as well as legal fees.
The most common titles for real estate agents are Sales Representative, Broker, and Broker of Record.
Not necessarily. Many experienced real estate agents who specialize in buying and selling homes and dealing with clients do not apply to become brokers. While brokers usually have a minimum level of experience and take additional courses and exams to obtain a broker’s license, the broker’s license is only required for those who want to own or manage a real estate brokerage.
Practically speaking, there is very little difference between a real estate agent and a realtor. The term REALTOR® is a trademark that is often used to refer to a real estate agent and almost all practicing real estate agents are also realtors. Legally, realtors are real estate agents that are either direct members of their provincial real estate association or have registered with the Canadian Real Estate Association (CREA). Realtors have to comply with the REALTOR® Code. All active real estate agents are licensed and have to comply with the rules and regulations of their provincial governing body.
Ontario has the most real estate agents in Canada with more than 79,000 real estate salespersons and brokers and 38 local real estate boards in Ontario. Of those 79,000 agents, over 56,000 are part of the Toronto Regional Real Estate Board (TREB). In Canada, there are over 130,000 real estate agents represented by the Canadian Real Estate Association (CREA).
The largest real estate brokerages and franchises in Ontario are:
Franchised real estate brokerages are brokerages that license and work under real estate brands like Century 21, Royal LePage, and RE/MAX. Many of the largest brokerages in Canada are franchised brokerages. Even though they may share the same brand name, franchised brokerages operate independently and may compete with other brokerages with the same brand.
The brokerage alone will not tell you how much value a particular agent can bring you. Brokerages can provide a brand name, but ultimately it’s your real estate agent that will do the work to help you buy or sell a property. You can find poorly-rated agents in brokerages of some of the largest real estate franchises and you can find highly experienced agents in less well-known brokerages.
Most brokerages in Ontario charge the standard commission of 2.5% for seller agents and 2.5% for buyer agents. However, many agents advertise lower commission packages for sellers and some give cashback rebates for buyers as an incentive to work with them. Some brokerages also offer similar lower commission packages for sellers. For example, One Percent Realty charges only 1% of the sale price plus a $950 fixed fee for sellers. You are more likely to find these agents in the GTA, where property prices are high enough so that a lower commission can still be in the tens of thousands, than other regions in Ontario.
Some brokerages also offer alternative commission types. PurpleBricks is a UK-based real estate company that charges a fixed fee of $2,999 in Ontario for listing homes. Due to their low cost, these brokerages may not offer the same services as a full-commission agent.Compare agents with low commission on WOWA.ca
PropertyGuys.com is a real estate marketing services company that sells listing and marketing packages for home sellers. They are not a real estate brokerage and do not provide real estate agent services but instead offer an alternative model where sellers are responsible for many of the tasks that real estate agents provide. They allow home sellers to self-list their homes on their website but do not provide any home preparation, staging, showing, or open house services. Sellers will also still be responsible for any buyer’s agent commissions, which are usually 2.5% of the home price in Ontario.