Real estate commissions explained
Very quick and to the point introduction to real estate commissions
- There are no “standard” commissions.
- Sellers agree to pay commission when they hire a real estate company to sell their house.
- Commissions are divided up into 2 parts. One part goes to the Listing Brokerage (LB) the other to the Brokerage (BB) who brings in the buyer.
- It’s not always divided up into equal parts between the Listing Brokerage and Buyer Brokerage.
- Even though there are no standard commissions, buyer agents seem to getting 2.5% in the Brampton market.
- LB commission in Brampton is anywhere from $999 to 2.5% (that’s what I’ve noticed. Others might be charging more or less).
- There’s HST onreal estate commission. It’s 13% on the commission portion.
- Generally no commission is paid if the house does not sell. Unless it’s a FSBO company that might charge upfront.
- Usually it’s not a good idea to pick an agent just based on commission. Check for track record, services, experience, and your comfort level.
- Some believe the more commission you pay the better the agent. Not always the case.
- Commission is paid the the LB, then a cheque is cut out to the BB for their portion. Your contract is always with the LB.
- Upon closing, your lawyer will cut out the cheque to the LB. You don’t need to worry about anything. Lawyer handles everything.
- Some companies (as mentioned above) will charge an upfront fee whether the house sells or not. You have to do all the work (and still pay the BB whatever you negotiate with them on your own).
- Be careful of agents who might charge $500. Usually there are catches. Be sure to ask lots of questions and read the fine print.
Have you been calling Brampton real estate agents to find out how much commission they charge? Have you been shocked at some of the responses? Even though commissions are not fixed and each real estate agent is free to charge whatever they like the range is from 4% to 5% (2.5% of that going to the buyer Broker).
Average price of house in Brampton is over $400,000. $20,000 is what you can expect to pay in real estate commissions when it’s time to sell. That’s a lot of money especially if the house is priced right and sells in a few days (mostly because of the MLS).
I can’t do anything about the buyer Broker commission but I CAN help you with the listing side. I provide full MLS service for only 1% commission. On a $500,000 house that means a saving of $7,500! I do everything that a 5% agent might do. I worked at one of the top companies for over 6 years so I know exactly what is being offered. I’m not a discount agent. This is for full service. Everything from MLS, Feature Sheets, online marketing, offline marketing, and much more.. You can get details of my marketing plan here.
I would not recommend offering less than 2.5% to the buyer Broker. Why? Because with so much inventory on the market and everyone offering 2.5% commission chances are your house will not get shown. I’ve seen listings on the MLS where the buyer Broker is being offered ONE PERCENT and what happens with those listings is they just end up staying on the market forever and not sell. So I’d advise to pay the full 2.5% commission to the buyer Broker.