When it comes to home buying, the largest fee you have to pay is the real estate commission.
In Canada, most realtors follow a certain price range but still have the flexibility to establish their own commission rates.
This article will cover realtor commissions, who pays for the fees, and how much realtors charge in various provinces in Canada, such as Alberta, BC, and Ontario.
- Realtors in Canada have no standard for commission rates, but the typical charge is 3% to 7% of the final selling price of a house.
- Real estate agents have two types of commissions: a percentage of the selling price and a fixed or flat fee.
- Many Canadian realtors are open to negotiating their commission rates, particularly seller agents willing to lower their fees in favour of buyer agents.
How Realtor Commissions Work
Realtor commissions refer to the fees you pay to real estate agents for services they render, such as listing the property and representing a buyer.
There are two basic types of commissions:
- A percentage of the selling price
- A fixed or flat fee (also called a flat-fee substitute)
The seller of the home will typically pay the realtor fees. When a property is listed, the seller will dictate how much gross commission they are open to paying and how the buyer and seller agents will divide it between them.
Although how the split is made varies between agents, commissions are often divided evenly between the sale agent and the buying agent. The commissions are often deducted from the sales proceeds during closing.
The Pledge of Competition from the Canadian Real Estate Association (CREA) states that each realtor in Canada can set their commission rates based on the services they provide to their clients.
While there is no standard commission rate, an average real estate commission rate is commonplace with realtors in Canada.
Commissions paid to real estate agents in the country range from 3% to 7% of the final sale price of a house.
The commission does not go to just one realtor since the seller, and the buyer agents will split it between them.
For example, if a house sold for $800,000 and the commission rate is 2.5% for the seller agent and 2.5% for the buyer agent, the seller will pay $40,000.
Thus, the buying agent’s commission is $20,000, and the selling agent also gets $20,000.
Some realtors may charge a flat fee for homes with a low value. Flat-fee commissions are often lower than percentage-based commissions.
Related: Home Inspection Cost in Canada
In Canada, realtors do not have a standard for their commissions, but most adhere to the 3% to 7% range.
The rates vary from province to province, and the property type may influence their fees.
Below are the realtor commissions in Canada by province.
The average realtor commission in Alberta is 7% for the first $100,000 of the house price and 3% of the remaining balance above $100,000.
The rate is a combined realtor commission of both the buyer and seller agents. The fees are usually divided 50/50 between the seller and the buyer agents.
Realtor commission rates in BC vary from one region to another.
- In the Greater Vancouver Area:
- Seller agents charge 3.875% on the first $100,000 of the property price.
- Buyer agents charge 3.125% on the first $100,000 of the cost of a home and 1.1625% on the remaining total.
- In the Greater Victoria Region, the commission rates for both buyer and seller agents are 3% on the first $100,000 of the home price and 1.5% on the remaining total.
- In the Abbotsford region, these are the realtor commissions:
- A buyer agent will charge 3.22% on the first $100,000 of the home price and 1.35% on the remaining total.
- A seller agent commission rate is 3.78% on the first $100,000 and 1.65% on the remaining balance.
- In Kelowna, buyer and seller agents charge 3.5% on the first $100,000 of the home price and 1.75% on the remaining total.
- In Nanaimo, the commission rates of both buyer and seller agents are 3.5% on the first $100,000 of the home price and 1.5% of the remaining total.
- In White Rock, the realtor commissions are 3.5% on the first $100,000 of the home price and 1.25% on the remaining total.
It is typical for the home seller to pay the commissions of both the seller and buyer realtors.
The realtor commission rates in Manitoba are between 4% to 5% of the final price of the house. This is the combined commission for the buyer and seller realtors.
About 90% of realtors in the province split the commission 50/50 between the buyer and the seller agents.
The property seller will pay the commissions for both the buying and selling agents.
The realtor commissions in Ontario range from 3.5% to 5% of the property’s final selling price, and the average rate is 5%.
The buyer and seller agents split the commission, with the buyer realtor getting 2.5%.
In Toronto, the commission rates are similar to the rates across Ontario. But due to high competition and higher property prices, realtors in the area are offering attractive deals.
Sellers can negotiate a 1% commission rate, so the combined commission is reduced to 3.5% (2.5% for the buyer agent and 1% for the seller agent).
Buyers can find cashback agents or realtors who offer up to 50% cashback on their 2.5% commission as a rebate when you use their services to buy a home.
Use a realtor commission calculator for Ontario to get a general idea of the realtor commissions in the province.
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In Saskatchewan, the average combined realtor commission is 2% to 8% of the total selling price. The buyer and the seller then divide it between them.
Saskatchewan has two methods to calculate realtor commission:
- The commission rate is equal to the total of 6% of the first $100,000 of the selling price, 4% of the second $100,000, and 2% for the remaining balance.
- The commission rate is equal to the total of 7% of the first $100,000 of the selling price and 3% for the remaining balance.
The seller of the home will pay the commissions of both the buying and selling agents.
The average commission rate of realtors in New Brunswick is 5%, but it can also range from 5% to 7%.
Home buyers in the province are not required to pay any commission since the home seller will shoulder the commissions of both the buyer and seller agents.
In Quebec, the realtor commission rates range from 3% to 6% of the final price of the house. The average commission is 5%.
Many agents in Quebec will accept a rate between 4% to 5% if you negotiate with them.
The decrease in realtor fees was due to the increased number of homeowners who opted to list their homes without using the services of a selling agent.
As with most other provinces, the property seller will pay the commissions of both the buying and selling agents.
Realtors in Nova Scotia earn commission rates ranging from 4% to 6% of the final house price, with the average rate at 5%. For properties under $25,000, realtors charge a $1,500 flat fee.
The home seller will pay the realtor fees of the seller and buyer agents, who will split the commission equally between them.
Some seller agents in Nova Scotia are open to negotiating their commission rates. They are willing to reduce their fees to provide a larger share of their commission to the buyer agent.
In Newfoundland and Labrador, commission rates range from 3% to 5%, with the average rate at 5%.
The seller of the home would pay the realtor commissions, which will then be split equally between the buyer and seller agents.
The realtor commission rate in Prince Edward Island is 5% of the final selling price, but it may range from 5% to 6%.
The house seller will also pay the realtor commissions.
Realtor fees in Canada are negotiable. There is no standard regulation that keeps you from getting lower realtor commissions.
Some real estate agents may agree to lower their fees upfront, while others will not due to the services they offer.
When you approach a potential realtor for negotiation, it is vital to understand what the agent offers before negotiating.
Inquire about what services the agents offer, how long they have been real estate agents, and their success rate.
If you can negotiate a discounted rate, you will find that the seller agent will agree to a lower commission. The commission of the buyer agent will remain the same.
This is to motivate buyer agents to show a property to potential buyers.
Home prices across Canada have been soaring, and with it comes the matter of realtor commission, the highest fee in home sale transactions.
Whether you are a home buyer or a seller, know how much you will pay your realtor and how much Canadian provinces charge for realtor commissions.
With this information, you will know what to expect and when necessary, you can work better at negotiating for lower realtor fees.
The typical commission rate of realtors in Canada ranges from 3% to 7% of the final purchase price, with the average at 5%. The seller and their agent agree on the price when the home is listed. Upon the sale of the property, the buyer and seller agents will divide the realtor fees.
The seller typically pays the realtor fees as commissions for both the buying and selling agents. Buyers do not directly pay realtors but will give compensation through a commission on the final house price.
The fees associated with buying a house in Canada are property appraisal fees, home inspection fee, a property survey, property transfer tax, GST on new homes, mortgage or title insurance, welcome tax or land transfer tax, legal fees, and moving expenses.