As of 2024, the real estate market in Ontario, Canada continues to thrive and evolve, despite all the obvious challenges that came with the recent global pandemic. This remarkably resilient and adaptable real estate market continues to punch above its weight, and with it, real estate commission rates hold steady as ever.
Real estate agents who are just entering the field can benefit greatly from an understanding of the current commission rates in the province, which are crucial when factoring in budgeting and planning for this most significant financial transaction.
COMMISSION TYPES
Real estate commissions are typically paid out as follows:
A particular percentage of the property’s agreed-upon sell price (i.e. – 3.5% to 5%)
A “flat-fee substitute,” otherwise known as a fixed fee, which remains the same, regardless of the price of the property in question.
COMPARISON OF REAL ESTATE COMMISSION IN PROVINCES ACROSS CANADA
| Province | Typical Real Estate Commission Rate | Average Sold Prices of Homes in April 2024 | Average Total commission Paid to Both Agents |
| Ontario | 5% of total price | $900,161 | $45,008 |
| British Columbia | 7% for 1st $100K and 2.5% for the remaining balance | $1,006,248 | $29,656 |
| Alberta | 7% for 1st $100K and 3% for the remaining balance | $499,505 | $18,985 |
| Quebec | 5% of the total price | $498,124 | $24,906 |
| Saskatchewan | 6% for 1st $100K, 4% for the 2nd $100K, and 2% for the remaining balance | $324,474 | $12,490 |
| Manitoba | 5% of the total price | $382,658 | $19,133 |
| Nova Scotia | $1,500 flat fee for properties under $25,000, and 5% of the total price for other properties | $468,543 | $23,427 |
| New Brunswick | 5% of the total price | $334,561 | $16,728 |
| Prince Edward Island | 5% of the total price | $379,366 | $18,968 |
| Newfoundland and Labrador | 5% of the total price | $304,570 | $15,229 |
WHAT TO KNOW
In Ontario, real estate commission rates aren’t actually regulated, meaning that they are negotiable between the seller and the real estate agent, or brokerage. However, that doesn’t mean sellers can simply lowball their agents in order to maximize their profits.
Commission rates are tied directly to the performance of the agent in question. To start off, it’s important to remember that the total commission rate is typically split between the listing agent, and the buyer’s agent, which signifies the complex relationship between the two.
As of 2024, the average real estate commission rate in Ontario is around 3.5-5% of the final sale price of a home, plus HST, and this rate is often divided equally between the listing agent and the buyer’s agent, with buyers receiving 2.5% of the total commission, while the seller’s portion is paid out via a pre-negotiated rate.
These commission rates can fluctuate slightly, depending on several factors, such as the location and type of property, as well as the level of service provided by the agent, or brokerage. To put things into perspective, a luxury property, or one located in a highly competitive market may command a higher commission rate due to the increased level of expertise and resources required to sell the property.
KEY TIPS TO UNDERSTAND COMMISSION RATES
To maximize your understanding of real estate commission rates as they pertain to the province of Ontario, we’ve prepared the following list of key tips and points to provide further information.
1) Commission Structure
The total commission rate of a real estate sale equates to roughly 5% of the sale price, but it’s important to note that this figure can, and sometimes does vary. In fact, it’s quite common for the listing agent and buyer’s agent to split the commission, with each receiving a percentage. Regardless, 5% is a baseline figure through which many brokerages in Ontario operate under, and a good starting point for possible negotiations with the seller.
2) Listing Agreement
Sellers will have to sign a listing agreement with their chosen real estate agent, which in turn outlines the terms of the arrangement, including the agreed-upon commission percentage. This is to establish all the criteria of a real estate sale beforehand, so that both parties understand and avoid any confusion or miscommunication.
3) Cooperating Brokerage Commission
The listing agent will offer a certain percentage of the total commission to the buyer’s agent, which is also referred to as the cooperating brokerage. This percentage helps serve as an incentive for other agents to bring potential buyers to the property, further speeding up the sale.
4) Buyer’s Agreement
Buyers may sign an agreement with their agent which outlines the terms of their respective relationship, including any commission fees the former may be responsible for. However, it’s sometimes common for the buyer’s agent to be compensated directly from the seller’s proceeds, depending on the type of deal.
5) Payment at Closing
Commission fees are typically paid at the closing date of the sale, and funds are usually deducted from the seller’s proceeds before they receive their final payment. However, this is not etched in stone, and the commission payment due dates may vary, depending on the deal. Many real estate agents and brokerages help offset this uncertainty by opting for commission advances, which guarantee their money before the seller has made a payment.
6) HST Charges
Always note that commission fees are subject to HST (Harmonized Sales Tax), which means it’s important to clarify whether the quoted commission includes HST, or if it will be added on top. Agents and brokerages should be especially mindful of this, to avoid any possible confusion or issues down the road.
NEGOTIATIONS
Negotiating commission rates is largely a matter of balancing out the value of services provided by the agent or brokerage, along with the property in question. A lower commission rate may seem appealing to a seller looking for the highest payout, but it often comes at the expense of a qualified and seasoned agent or brokerage with the necessary experience, resources, and networking capabilities to effectively market and sell the property.
There is some flexibility, however. Certain agents and brokerages may offer alternative commission structures, including flat-fee or performance-based commission models which are more attractive to sellers looking for some reassurance and predictability when it comes to the final selling price.
Since commission fees are paid out by the seller of a property, this only stands to reason. Similarly, there are instances where the buyer’s fee may not be paid by the seller, such as when a home is put up for sale independent of an agent.
CONCLUSION
Real estate commission rates in Ontario remain negotiable, but make sure to take into account all the information listed above in order to gain an accurate understanding. When buying or selling a property, it’s essential to understand the current commission rates, so that you can better negotiate with your clients, and provide the best level of service so that both sides close the deal happily. It will also allow you as a real estate agent or brokerage to effectively budget and plan your strategy, so you can sell a home faster, and receive your commission.
As always, Rocket Advance is on standby to assist with that last part. We realize that sometimes it takes a while for commission payments to arrive, and if you’re just starting out as an agent, we know how tough this can be. Even experienced agents may want to receive their commission payouts quicker than usual, and our process makes this easy.
Contact us today, so you can worry less about your incoming commissions, and more on closing the next deal!
