Written by Ozzy De La Paz Maldonado   |   Posted on   |   242 views

So how does my REALTOR® get paid?

Real estate agents are paid by commission.  This is typically a percentage of the sale price of the home, and it isn’t paid until the sale officially closes and money has been transferred from the buyer to the seller of the house.

This is to the benefit of their clients.  Agents that work hard for their buyers and sellers make more than those that just put in minimal effort.  

More often than not, it’s the Seller that pays the real estate commission, which is split between their own REALTOR®, as well as the Buyer’s REALTOR®.  

Again, if the house doesn’t sell, no commission is paid to anyone.

Who do I pay the commission to?

Real estate commissions are NEVER paid directly to the REALTOR®.  Be wary of any agent that suggests otherwise.  

Instead, commissions are paid to the real estate brokerage that listed the home.  The funds are taken out of the proceeds from the sale of the home and your lawyer handles transferring this money on your behalf.  Once received, the listing brokerage will pay both real estate agents that worked on the sale (buying and listing sides).

Does HST apply to my agent’s commission?

Yes.  Just like any other professional services, you must pay HST on your real estate agent’s commission.

If the seller pays the Buying Agent’s commission, how much is it?

We call this the “Cooperating Commission”.  This is what is paid out to the buyer’s agent that “cooperated” in getting your home sold!  You can decide how much to offer any agent that represents a buyer, but keep this in mind:

You want to entice agents to show your home to their buyers, right?  So it makes sense to set the commission you’re offering them in line with what other sellers are offering.  Offering less might mean they’re less motivated to show your home to their buyers.

For example, if the total commission is 4% on a house, that means the Listing Agent usually receives 2% of that, and the other 2% is given to the Buyer’s (Cooperating) Agent.  Of course, this is just an example and may differ from one listing to another.

In conclusion…

While it may seem like an awkward conversation to have with your real estate agent, it’s an important one.  You wouldn’t hire a contractor to renovate your home without knowing what their fees will be when the job is complete.  Likewise, you should get your agent’s commission fee sorted and in writing before listing your home so that everyone is in agreement with what will be paid upon closing.

Commissions are truly a “pay for results” way of compensating your agent.  If your home never sells, you aren’t out any cash.  The incentive for your REALTOR® to do an incredible job is a great motivator!  As always, we are happy to discuss our commission structure and all that it includes.  Don’t be shy!  Just ask!

*All information provided by the Brantford Regional Real Estate Association (BRREA) and ITSO for the highest sales volume and highest number of completed transactions since January 1, 2015. All Brantford MLS® House Listings come from the various systems operated by Real Estate Boards and Associations across Canada. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used underlicense. The trademarks MLS®, Multiple Listing Service®, and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.



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