Realtor Fee Calculator
Wondering how much it will cost to pay a realtor?
When you’re listing your house for sale, realtor fees are an important consideration.
In Ontario, realtors commonly charge anywhere from four to six percent of the sale price of your home.
Try the calculator below to get a sense of the commission fees you can expect to pay, and read on for a breakdown on what the fees cover.
Try the calculator
Who pays realtor fees - the buyer or seller in Canada?
In most instances, all fees are paid by the home seller. When a seller enters into a listing agreement with a realtor, they agree to pay a percentage of the sale, which is then split between their realtor, as well as the buying agent’s realtor.
For example, if a seller signs a listing agreement that includes a total 5 percent commission to be paid out, this will be split with:
2.5% paid to the listing (selling) agent and
2.5% paid out to the buyer’s agent.
That being said, there are circumstances in which a buyer may pay a realtor commission. For instance, if a buyer signs onto a buying agreement with a realtor, and then decides to purchase a home privately during the time they’re still under contract, they could then owe the realtor a percentage of commission on the home they bought.
What realtor fees cover
There’s a pop culture image of what it’s like to be a realtor. Someone who dresses in tailored suits and drives foreign cars. Who immediately started earning north of six figures just after licensing.
But the truth is that that image is far from reality for the average agent. Real estate is a relatively expensive profession that has a high (90 percent) drop out rate. Realtors are essentially small business owners, responsible for paying their own taxes, marketing expenses, union dues and insurance (from health to liability).
Out-of-pocket expenses realtors incur when listing your home
Unless you’re familiar with the real estate profession, you may not realise that realtors - and not their brokerages - are responsible for paying several out-of-pocket expenses for listing your home.
This can include:
Sourcing, arranging and paying for photography, videography and floor plans to showcase your listing.
Hosting open houses, including any catering and marketing of the event (digital/physical/mailers).
Hosting agent open houses where they invite other agents to an exclusive open house tour. This helps to widen the buyer pool by tapping into other agent networks, however, agent open houses often demand catering and sometimes even door prizes to drum up interest.
Physical and digital marketing expenses for marketing the property.
And more.
The value of a professional realtor
So it’s important to understand the value that the seller and buyers receive via those fees. That is to say, the fees are paying for the services of a professional who:
is bound by a code of ethics
covered by liability insurance
is trained in the nuances of the market, including pricing and buyer behaviour/preferences
has devoted themselves to building a business network, including a qualified buyer pool
can advise on pricing strategies for your home (yup, there’s quite a few!)
will negotiate for you with your best interest as top priority
will explain the ins and outs of any contract in plain language
can connect you to a network of other service providers - including lawyers, home stagers, landscapers, painters, etc.
is available nearly 24/7
will likely show potential buyers dozens of properties and (in a hot market) represent buyers in multiple offers (and not earn a dime unless the deal goes firm)
and a lot more.
Buying and selling is an emotional transaction, and realtors are often part of their clients’ support team throughout, helping them to keep their feet firmly grounded and their focus on their goals.
Where realtor commissions go
With the commission earned from sales, realtors pay for:
Brokerage fees (which is often be between 10 to 30 percent of the realtor’s commission).
Personal/business income taxes (often 25 to 35 percent of the commission).
Listing assets - professional photography, videography, floor plans, etc.
Advertising - digital, and physical advertising expenses related to the listing as well as marketing their business in general.
Union fees - in Ontario, realtors pay fees to the Canadian Realtors Association (CREA), the Ontario Real Estate Association (OREA), and union fees in their region (e.g. for London and area that’s London & St Thomas Association of Realtors (LSTAR)).
Insurance.
The same bills that the rest of us pay to sustain their lifestyle, including food, lodging, transportation and the rest… and hopefully (hopefully) there’s a bit left over to leave as a cushion between one sale and the next.
How much do realtors make in Canada?
So with all of the above in mind, you may be wondering how much realtors actually make in Canada.
The statistics are hard to track down, but the information that’s out there can paint a stark picture (goodbye Hollywood image!).
According to available info, the average Canadian realtor makes:
$46,212 (median salary)
an average of zero to one sale per year
And for comparison sake, the top 10 percent of agents have approximately 10 transactions a year.
What do you think?
With all of the above in mind, I hope that the amount of work and expense that realtors incur is clear, and that the value is clear.
People who dive into real estate thinking that its easy money are often surprised by just how difficult and expensive the profession can be, however, it’s also highly rewarding. The ability to help individuals and families to transition to the next phase of life, and either reap the rewards of their investment, or make a dream home purchase is a high that can’t be beat.
When you’re looking for a realtor, be sure to find someone whose expertise matches your expectations and whose personality jives with yours. Chances are you’re going to spend a lot of time together and have some tough conversations too. So, making sure you have a partner on board who you can trust is imperative.
Looking for a realtor?
Contact me at any time to have a no obligation chat. I’d love to help.
