So How Do Real Estate Agents Get Paid?

By: Thomas Cook

So How Do Real Estate Agents Get Paid?

Although most likely you’ll have a listing agent representing you and a buyer agent who brings in the successful offer, the payment of the total commissions falls to the seller.
 
Don’t think that the buyer is getting away with a big win however.  The seller pays minimal closing costs while the buyer will have to pay, among other expenses, both Province of Ontario land transfer tax and, if buying in the City of Toronto, they’ll also have to pay city land transfer taxes.
 
On a $500,000 purchase those taxes alone could range between $6,000 and $12,000 depending on whether they’re first-time buyers or not.
 
Realtor commissions of course are completely negotiable.  Historically total real estate sale commissions have ranged between 4% and 6% with a recent average of about 5%.  Typically, the commission is split 50-50 between the listing agent working for the seller and the buyer agent working for the purchaser.
 
In cases where the total commission is 5%, as an incentive for the buyer agent to show your home, it has been common for the listing agent to offer 2.0% or 2.5% to the cooperating or buyer agent.
 
When an offer comes in, the buyer agent will include a form entitled ‘Confirmation Of Cooperation’ which lays out how the buyer agent will be compensated upon a successful completion of the agreement.
The buyer will offer a deposit with their offer… usually approximately 5% of the purchase price… and that deposit will go into your listing brokerage’s Trust Account for safe keeping until the closing day.
 
No Realtor will get paid until the sale has closed.  Once all the closing documents have been signed and title has been transferred to the buyer AND before your lawyer gives you a bank draft for the proceeds of the sale, he or she will cut a cheque to the listing brokerage for any balance outstanding on the commission (plus HST) due on the sale.
 
The listing brokerage then deposits the lawyer’s funds and pays the buyer agent’s portion out of that money.

Thomas Cook
Thomas@LivingInToronto.com
647-962-1650


Keep Up To Date With Toronto's Real Estate Market
 
Every month we communicate with our readers to give them accurate insights and statistics about what's happening in the Toronto and GTA real estate markets.
 
Subscribe to our free monthly FYI Newsletter HERE.

  

If you are going to sell your suite in the next 1 to 9 months, what you do right now can make a difference of thousands of dollars in your sale price, and there are some simple things you can do forthwith to make sure you get "Top-Dollar" when you do sell.
 

HERE ARE 3 FREE SERVICES YOU MAY WANT TO TAKE ADVANTAGE OF RIGHT NOW 


First, is our FREE "Pin-Point Price" Analysis, where I can take a closer in-person look at your condo and prepare a very specific price for your suite. This price will be much more precise than the general range that you can get automatically from the site - and we guarantee in writing to sell your condo at the "Pin-Point Price" or higher in less than 32-days.

Second, is our FREE "Room-By-Room Review", where I do a 20-minute walk-thru and make specific recommendations about which fix-ups or improvements you should (and should not) do to prepare your suite for sale. I will point out the lowest cost, highest return improvements you can make to help sell your condominium quickly and for more money.

Third, if you would like, I will include your condo in our "Silent Market" of condominiums that are not yet on the market.  Because we generate so much buyer interest from our website, Facebook and Google advertising and other proactive marketing, we may be able to find a buyer for your condo without even putting it on the market… saving you both time and money.

These 3 services are FREE. The Room-By-Room Review takes about an 20 minutes, and we can arrange a time during the day or evening, whenever is most convenient for you.