How To Calculate Real Estate Commissions in Toronto

Fivewalls: How Do You Calculate Real Estate Commission In Toronto?

Sellers, Buyers, Commission, Tips & Advice
Last Updated: Apr 07, 2021

When you want to professionally buy or sell property, use a REALTOR®. Despite having to pay their commission, they know how to market your home and connect you with other industry experts, as well as negotiate prices on your behalf to make sure you get the home of your dreams.

How exactly does commission work? Fivewalls has created a breakdown for you.

What Is Commission In Real Estate?>>

Commission is what you’re paying your REALTOR® for their services and the amount can vary per agent. But, typically, in Toronto 5% of the sale price of your home is split evenly between the listing agent and the buying agent, so they will each receive 2.5%. A portion of that 2.5% (depending on their agreement with their brokerage), will be split again between their brokerage and themselves.

How To Calculate What You Owe Your Real Estate Agent In Commission

Once you’ve received an offer that is set in stone on your home, it is very easy to calculate the amount your agent will make.

For example:

If your home sells for $875,000 and your agent was charging you the typical 2.5%, it would be calculated as such:

$875,000 * 2.5%



Therefore, of the $875,000, your agent will be receiving $21,875. This means the buyer's agent will also be receiving the same amount (if their commission wasn't negotiated otherwise).

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What Does Real Estate Commission Cover?

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When you're selling>>that commission is covering the marketing of your home. From advertising on social media platforms to the newspaper and magazines, or even on the side of buses. They're also in charge of organizing open houses and getting your home to look it's absolute best with the help of stagers and photographers.

Who Is Paying Their Commission?

Technically, the seller is paying the commission since it will be included in the sale price of the home. When sellers do not use an agent, the asking price will be lower.

Can You Negotiate Real Estate Commission?

Of course, you can negotiate the commission, and if you're working with a trusted, professional agent, they'll explain why they may or may not lower their commission. The saying "you get what you pay for" may ring true in this case. Full-service agents>> are able to utilize all their tools to market your home or search for homes that suit your criteria, including homes that haven't hit the market yet. 1% commission agents, though they still work very hard, may not be able to deliver on promises like having a stager come in, or being able to advertise on various platforms. Remember that the more money you spend, the more exposure your home will have, which may lead to very promising results.

Once you’ve hired a REATOR® and they’ve been able to successfully either sell your home or help you purchase a new one, the final sale price can be multiplied by the typical commission of 2.5% to determine what you will owe them once the deal has closed. An honest agent who has your best interests at heart will explain why they will or will not negotiate their commission, the main reason being they want to provide you with as many of their high-quality services as they can.

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Current Toronto Market Stats

Toronto housing market stats march 2021

Disclaimer: rates subject to change.



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