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Real estate commission is one of the most controversial topics out there – everyone has an opinion (and it’s usually that Realtors get paid too much). What better to blog about then the truth about commission?

Home sellers in Toronto have an increasing variety of service and commission options to choose from. Each option comes with different service, skill, strategy and inclusive services.

Full disclosure: Our brokerage is a full-service brokerage, meaning we don’t offer our clients piecemeal versions of the real estate experience; we strive to be trusted real estate consultants who provide FULL service throughout the entire home buying or selling process.

Even more full disclosure: the BREL team (that’s us) goes one step further with the full service business model – we provide an all-inclusive package of benefits and services to our clients; in addition to providing experience, expertise and strategy, we pay for professional photography and advertising, pre-home inspections, staging consultations and a whole slew of other potential services depending on the needs of the listing.

So…as a Seller, what are you REALLY paying for and where does the money go?

While I can’t say much about the discount brokerages (well I could say a lot, but I won’t), here’s how it would work if a Seller listed a$600,000 home with us at 5% commission:

Commission: $30,000 + HST

Brokerage representing the Buyer:   $15,000

Fees to Listing Realtor’s Brokerage*:   $4,500

Hard Costs to Sell the Home:   $1,000-2,500    (professional photography, advertising, home inspections, cleaning, etc.)

Operating Expenses:   $1,500    (realtor licenses/fees, car/gas/parking, training, technology, etc.)

Taxes:   $3,000

Net Income :   $3,500-$5,000

 

* Every Realtor has a separate arrangement with their brokerage re: how they split commissions-anywhere from 10-50%. For this example we assumed the Realtor pays 30% of gross commissions to their brokerage, our current split.

This blog isn’t about trying to defend how much money Realtors make, so I won’t go on and on about the risks we take (we only get paid IF our clients buy or sell) or the number of hours we work that aren’t directly related to a specific client and I certainly won’t lament about the fact that we work every evening and weekend and miss Thanksgiving dinner every year. Sorry, I couldn’t resist.

The point is...buying or selling can be expensive, and our clients deserve to know how we spend that money. Like in most everything else in this world, you get what you pay for. More on that our blog – Why Toronto Realtors Aren’t Created Equal. 

Comments

  1. James House says:

    It’s good that you broke it down, the graph really helps the picture learners like myself. I know that agents get a hard time generally speaking about their commissions. I say, if you are willing to give up your weekends and holidays and put the kind of time required into doing your job, then you deserve to make more than what’s shown here. Frankly I’m a little shocked at just how much the brokerage takes but then again, if you want a quality firm…

    Good stuff guys, thanks.

    James House

    • Thanks for your message James! If it’s any consolation, our brokerage does provide a lot – a killer office next door to Poutini’s, tons of training and coaching, an awesome Manager, admin and graphic design support staff…and they do lots of advertising and behind-the-scenes stuff for their agents.

  2. I live in BC and Iam curious how Toronto’s commission rates and rules are different. If the buyer bought a house without using a realtor to help, does that mean the listing realtor gets all the commission money, meaning both listing and buying? Please let me know, thanks.

    • Yes,you are correct. Many realtors will work out a deal with their sellers where they reduce the commission paid by the seller in those cases (since they are getting both sides). Of course that also means they would be doing the work of both realtors.
      Note also that such an arrangement always needs to be disclosed! There will also be extra paperwork and special rules in a multiple representation situation, to make sure that the interests of both parties are protected.

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