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How To Save on Realtor Commissions ?

How To Save on Realtor Commissions ?


David Doe

Published in

Real Estate

09 Dec 2021

When buying a home, the majority of Canadians use a real estate agent and pay real estate commissions. A real estate agent can assist buyers in finding the right home at the right price and guiding them through the entire home buying process !

Buyers, for the most part, do not pay realtors directly. Instead, they are paid a percentage of the property's final sale price as a commission. The commissions for both the buyer's and seller's agents are deducted from the sale proceeds. While it may appear that the seller pays for the services, making realtors "free" to buyers, this is not the case !

So, how does a buyer figure out how much a realtor costs, and ways for saving on realtor commissions? Here's what you need to know about real estate commissions and how to save money on them when buying a home in Canada !


What are the commissions and who is responsible for paying them ?

A commission is a fee paid to a real estate agent to list the property and the buyer's agent. The commission may be split evenly between the two agents. However, you are not always required to pay the entire commission. Before making an offer, buyers should confirm the arrangement with their agent, according to the Real Estate Council of Ontario. Neither agent is paid if the house isn't sold. They won't get a cut from the real estate brokerages they work for, either, because agents typically have to share a percentage of their commission with their brokerage !

Canadian Commission Rates

Real estate commissions range between 3% and 7% of the sale price, but there is no standard rate. "Commission rates or fees members charge for services offered to the public, and the division of those fees among cooperating members, are solely the choice of those providing the services," according to CREA !

There are several ways of calculating commissions:

  • A fixed percentage of the sale price — The most common type of commission is a fixed percentage of the sale price.
  • Split percentage of the sale price — As the sale price rises, the rate decreases. For example, your agent's commission could be 2.5 percent on the first $500,000 and 2% on anything above that. In Ontario, for example, the percentage rate cannot rise unless the sale price increases as well. Only two options are available: stay fixed or decline.
  • Flat fee — The fee is the same for all sellers, regardless of whether one home sells for $300,000 or $3 million.
  • Service fee — You may agree to pay a flat or hourly fee for listing and marketing the property, holding open houses, and printing brochures.
  • Fees in combination — You may be charged a flat fee plus additional fees for additional services.

Sell it yourself to avoid paying a commission to a realtor

Going it alone is a radical option. You can save a lot of money by skipping the agent — and the commission fees — and opting for the grassroots For-Sale-By-Owner (FSBO) method. However, it is not completely free.

Posting a listing on websites like and, for example, can cost anywhere from free to just over $2,000. Like the MLS, these dedicated Internet portals allow homeowners to add descriptions, photos, prices, and contact information to their listings.

Then there's the cost of neighbourhood signs, online ads, flyers, and flyer distribution. So as you take on the roles of open house host, neighbourhood canvasser, and real estate marketer, you'll have to consider how much your time is worth.

However, be aware that only about 7% of buyers prefer the FSBO option, which means a much smaller pool of potential buyers for your home.

Work out a lower fee

On a $400,000 home, shaving just 1% off the average 6% real estate agent commission could save you $4,000 on the sale. Regrettably, not all realtors are open to the idea of lowering their fees. Consumer Reports published a study in 2008 that found that only 46% of sellers in the United States attempted to negotiate a lower commission. Only 71 percent of those who tried succeeded.

Requesting a slightly lower rate or promising a double-ended commission is a good strategy. For example, according to a Boston study, lowering commissions from 2.5 percent to 2% did not affect the sale price or time on the market — but this fee reduction could save the seller $10,000 or more in commission fees.

When you make a double-ended request, you ask for a lower overall commission in exchange for agreeing to work with the same realtor for both selling and buying your new home. Because the agent now receives both ends of a commission, they may be more willing to reduce their overall fee.

Pay a flat fee

When you choose the flat fee option, you will receive an MLS listing but will be responsible for almost all of the other tasks. According to some seasoned Realtors, this service is best for people who have sold a home before and are familiar with the process. The flat rate options are a variation of the flat fee, in which you pay a higher fee but a lower commission to get some advice. These fees can range from $1,995 to $5,000, which is still a bargain compared to paying a full commission to a listing agent.

Remember that you will almost certainly have to pay a commission to the buy-side Realtor whether you choose a flat fee, a flat rate, a negotiated discount rate, or an FSBO listing. Why? Because if there is no money to be made, these agents will not bring business to your listing.

Many agents will take a percentage of the sale price as a commission. You will usually pay a fixed percentage if you choose an agent from a traditional real estate brokerage. You can, however, request that certain services, such as marketing or home staging be reduced to help you save money overall. Discount real estate brokerages that charge a flat fee are also available. You can compare prices to find the best deal that fits your budget.

Final Thoughts

Buyers who use a real estate agent are indirectly paying for the professional's expertise. Saving on realtor commissions can be done by negotiating a lower commission with the agent, using a discount real estate brokerage, or going it alone if they feel comfortable doing so. Furthermore, if you are looking for the services of a real estate agent, you may contact Guglu Homes !

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