Real Estate agent commission fees

The commission that you will pay to sell your home here in Ottawa can vary greatly.

Nowadays there are many options for you, such as choosing a discount brokerage or a zero commission model where you do all of the work yourself. Or you can go the traditional route and hire a REALTOR to Market and sell your home.

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Here are 5 of the most common commission structures:

  1. 5% is the regular commission charged by most Brokerages where they provide full services
  2. As high as 6% or even 7% can be charged when the property is going to be a long or difficult sale
  3. Some Agents will charge you 4% or less if they manage to sell your house themselves.
  4. Higher-End Properties often see  4% where the seller offers just 2% to the other Brokerage
  5. Discount Companies list for a flat fee and let the seller decide how much to offer the buyer agent

Let's look at each of these scenarios:

1. Using a REALTOR

Most Brokerages in the Ottawa area will charge 5% to sell your home, where they will keep 2.5% and they will offer every other agent the other 2.5% if they can bring a buyer and secure a sale. On a sale price of $380,000 this equals $19,000 to be split between the 2 agents and Brokers.

This means that the buyer agent and the listing agent each receive $9,500 each.

This amount might seem like a lot, but remember, the average agent here might only sell about 6 homes per year. That would make their yearly earnings $114,000.

In this 5% commission scenario, the listing agent has costs to pay, like advertising and marketing for the property, as well as feature sheets and photography. Some agents now will even produce a video of your home. They also have to split their commission with their Broker, between 10-30%.

On top of their Broker Fees they will also have fees and dues to pay to their local real estate board as well as their company for office space and services.

If there is a buyer agent involved, they will have costs for their gas to drive the buyer around as well as all the broker and real estate board fees as well.

With this type of structure you are getting full service, where your agent will arrange all of the showings, profile buyers to make sure they are serious and get feedback from all showings so you know what to do to get your home sold.

2. Difficult Seller or Difficult Property

2. For a 6 or 7% commission, your property might be far out in the country, it might need a lot of work to be done, or it might be stigmatized in some way. Offering a higher commission will encourage buyer agents to show your property. There are also those sellers' we call difficult and the listing agent might charge extra to deal with them.

3. Lower Commission for a Double-End Sale

As well as the regular commission at 5%, some agents I know are offering the seller a cut in the commission if they double-end the sale. They might drop it to 4%, saving you around $3800 on the average priced home. This means that there are no other agents or brokers involved in the sale and your listing agent gets the full 4%.

Not every agent will offer this, and it should be discussed up-front before signing the contract.

4. Higher-End or More Expensive Properties

Higher-end properties in the Million Dollar range are often listed for 4% and 2% is offered to buyer agents. This is also true in the Income Property Market when the price of the property is a few million dollars.

Think about it. If a house is listed for $2,500,000, the commission on this sale would be $125,000 at the 5% rate. One sale under this scenario would be more than the average agent makes for the entire year !

Discount and Flat Fee Realty Companies

Discount Companies can charge the seller a flat dollar amount, and list their home on the MLS System, and that's where the services pretty much end!

The seller will have to deal with all appointment requests to see their home and will have to follow-up with everyone who saw their home. It is then up to the seller to decide how much they want to pay a buyer agent who brings them a buyer.

The commission offered here can range from 0% up to the regular 2.5%. From personal experience and talking with other agents, this is becoming more difficult to navigate.

The seller can offer 2.5%, then they can change their mind and after the offer, only pay 0.5% or any other amount. This type of structure can cause a problem with agents feeling apprehensive to show these homes, not knowing if they will get paid anything.

I better stop here with this type of listing as it grinds my gears.

So, expect to pay between 0% and 7% in real estate commission when you sell your home in Ottawa.

As a side note, we never charge any commissions to our Buyer Clients, whereas some agents will charge them 2.5% of the sale price of their new home. Ask your Agent up-front if there is any chance that they will have to pay any fees to their Buyer Agent.