How Do Real Estate Agents Get Paid?

A realtor gets paid on a commission basis, which can vary depending on the level of services offered by the real estate firm. According to Canada’s Competition Act, commission rates or fees and the division of the fees are solely the choice of the company providing the service.

Typically, the higher the commission rate, the higher the level of service.  Real estate commissions in BC can range from 5% or lower to 7% or higher on the first $100,000 and 2.5% – 5% on the balance. It must be noted that it is the seller from the listing side who pays the commission and not the buyer, and clients can and do negotiate on the advertised rates, depending on the situation.

When the seller of the property pays the full commission to sell the property, half of that commission is offered to the buyer’s agent who brings in an offer that gets accepted and completes at the Land Titles office. This is known as the “cooperating commission”.

Selling a property is a very big decision involving a large amount of money, so most sellers enlist the help of a full service professional real estate company that knows the market, has considerable marketing resources on hand to showcase a property in the best way to get top dollar for the property.

As mentioned, there is no set percentage or amount of what the seller should pay the real estate company. Each real estate company has its own competitive rates. This becomes part of the conversation when a seller approaches the real estate firm. A full-service firm will charge more as the commission will involve professional photography, professional videos, professional staging, a lot of online and print exposure and many other services built into the commission.

While this may seem higher than what a “budget” firm or a single realtor would charge, this typically translates into getting a higher dollar amount for the home.

Here’s an example of a realtor fee for a $2,000,000 home:

Assumptions: 7% fee charged on the first $100,000, 2.5% charged on the balance and GST charged at 5%.

• The buyer’s agent receives: $25,213

• The seller’s agent receives: $29,288

• GST $2,725

The commission rate and fees are worked out between the seller and their listing agent when the house is listed on the market.

Want to discuss a property sale or buy? Why not contact us or call us on 604.913.1000? We are a full service team of real estate advisors. Our experienced team of professionals will give you the benefit of their knowledge and expertise.