When it comes to selling your home, you have to spend money to make money. Land transfer taxes. Lawyer fees. Mortgage discharge costs. But your biggest cost? Likely your real estate agent’s commission.
It’s been said that Canadian sellers typically pay between three and seven per cent of their home’s selling price to their real estate agent, which is then split with the buyer’s agent – sometimes evenly, sometimes not. And commission adds up, especially in the nation’s hottest markets. Though there’s been speculation of cooling in notoriously hot markets like Toronto and Vancouver due to government intervention, the average selling price of a home in the GTA came in at $890,284 in the beginning of May. That can add up to a lot in commission.
Commission rates in Canada
There is no set rate of commission for real estate agents in Canada or in the individual provinces and territories.
In fact, according to Canada’s Competition Act, to promote free and open competition, commission rates are based on whatever that specific agent wants to charge, and realtors cannot claim that there is a standard rate across the board.
The average rate in the market also isn’t information that is collected and readily available.
In order to calculate that average, we need to know how much every listing agent and buying agent received for every home sold in Canada.
And while MLS listings usually tell us how much the buying agent will get, they don’t tell us how much the selling agent charged in the first place.
The power of negotiation
What many Canadian home sellers don’t know is that commission rates aren’t set in stone – they can negotiate the rate of commission. Even a one per cent reduction could save you thousands of dollars.
Have the discussion with each agent you meet. Many agents, of course, aren’t interested in haggling, but you never know until you try.
Some agents will charge a percentage, while others will charge a flat rate. Be sure to ask about the services you’ll receive in return; some agents may provide less marketing services for a lower commission. You have the power to shop around for different commission rates to find the one that best suits your budget.
The “for-sale-by-owner” route
You can, of course, always sell your house yourself and avoid agent commission rates altogether. Experts recommend engaging the services of an appraiser to help set the best price for your home, and then hiring a broker to post your listing in the MLS systems and on Realtor.ca for a flat fee. Even after paying for those services, plus a lawyer to close your transaction, you’ll still save thousands of dollars by avoiding commission.
This post has been updated.