What Percentage Do Most Realtors Charge in Ontario? 5 Facts

Understanding Realtor Commission Fees

If you’re diving into the Toronto real estate market, whether as a first-time homebuyer or seller, you’re likely asking, what percentage do most realtors charge in Ontario? I can tell you that one of the critical costs to consider in Toronto real estate are realtor commission fees. These fees can be a significant part of any real estate transaction, and understanding them can help you budget effectively and avoid surprises down the line.

So let’s take a look to get a better understanding of what realtor commission fees are, who pays them and whether they are at all negotiable.

What Are Realtor Commission Fees?

In Ontario, realtor commission fees typically amount to around 5 percent of the home’s final sale price. These fees are also typically split evenly between the buyer’s and seller’s agents. For instance, if a home in Toronto sells for $1,000,000, the total realtor commission fees payable would be $50,000, with each agent, buyer and seller agent, receiving $25,000. It’s important to note that this is an industry standard rate and can be negotiated to suit both parties involved in the transaction.

Who Foots the Bill for Commission Fees?

Many clients often ask, what percentage do most realtors charge in Ontario? Generally, the seller of a real estate property is responsible for covering the realtor commission fees of both the buyer’s and seller’s realtors. This amount is deducted from the seller’s proceeds of the sale. However, this only comes into play if, and when the home is sold. The fees are paid at closing, which means if the sale doesn’t go through, no commissions are owed to either side. In most cases, that means realtors are essentially working for free until a property is sold and closed.

Why Toronto Realtor Fees Matter: What Percentage Do Most Realtors Charge in Ontario?

For sellers, the commission fees can make up a substantial part of the transaction costs and can influence the listing price and the decision to accept an offer. Not all agents offer the same services for these fees; it’s essential to ensure that you know what services your agent will provide. This could range from full services that include items like professional photos, video tours, home staging, and marketing efforts to lesser services that only involve listing your property or conducting showings. In many cases, paying a full service commission rate can mean receiving better value and services.

Negotiating Real Estate Fees in Toronto

When considering what percentage do most realtors charge in Ontario, the standard commission is around 5 percent, but nothing is set in stone. Many agents are willing to negotiate their fees to secure a listing, with some even accepting a flat fee. However, keep in mind that agents who agree to lower fees might provide only minimal services. Depending on your needs and the complexity of your transaction, investing in a full-service agent might be more beneficial. 

The Role of Brokers in Realtor Fees

When asking yourself, what percentage do most realtors charge in Ontario, it’s crucial to understand that brokers also take a share of the commission. While the broker’s fee might not be apparent, it is included in the buyer and seller agent’s commission. Brokers have additional qualifications and may operate their own firms. They usually take a percentage of the agent’s commission, which can be up to 30 percent.

For instance, in the example used earlier, if a home in Toronto sells for $1,000,000, the total realtor commission fees payable would be $50,000, with each agent, buyer and seller agent, receiving $25,000. The agents’ brokerage would then take a percentage of that commission directly from the agent (e.g. up to 30 percent of their $25,000 commission equaling $7,500.

While most Toronto realtors charge a commission fee of about 5% list a property, there is always room for negotiation based on the value and services provided. Sellers should weigh the cost against the service quality they expect to ensure they make the most out of their real estate experience.

Learn more about realtor commission fees before deciding which realtor is right for your needs.