One of the most common questions that I get from buyers is “do buyers pay realtor fees in Ontario?”. Many buyers and sellers are unsure about realtor fees (commissions) regarding how much they will be, who pays them, when they are paid, and so on. How real estate commissions work in Ontario is actually very straightforward, and knowing this will give you a better idea of what to expect going forward with your purchase or sale.
How Do Real Estate Commissions Work?
Ontario real estate agents are paid for their services in the form of a commission on the sale, which is usually calculated as a percentage of the price that the home sells for. This can also be paid as a flat dollar amount, or a combination of a percentage and a flat rate. This is up to the seller and their realtor when they agree to work together to sell the home. Both the buyer’s and seller’s realtors are paid commissions when the sale of the home closes.
How Are They Calculated?
Like I mentioned, the most common form of commission is an agreed upon percentage of the price that the home sells for. While this can vary depending on the agreement between the seller and their realtor, this percentage is usually 5%. Now, it is important to know that this does not mean both realtors receive 5%. The total 5% that is paid out to the realtors is split between the agent working with the buyer and the one representing the seller. The seller’s side of the deal decides on the total commission amount that will be paid, and the buyer’s realtor makes an agreement with their buyer client as to how much the buyer is entitled to being paid. Again, this can vary, but it is most common for the buyer’s realtor to agree on 2.5% (half of the standard 5% for the deal). You can find a commission calculator here.
So, Do Buyers Pay Realtor Fees In Ontario?
In Ontario, it is usually the seller who pays the commissions. When the sale of the home closes and the seller receives the money for the home, the total commission amount is taken off of the sale price and held by the listing brokerage. The portion of this that is owed to the buyer’s agent is paid out, and then the seller’s agent receives their cut from their brokerage (the listing brokerage). This means that the seller is technically the one who is paying the commissions to both realtors.
When Do I Pay Commissions To My Realtor?
The money for the sale of the home is paid by the buyer to the seller on the closing date. This is the day that ownership and possession of the home transfers from the seller to the buyer in exchange for the agreed upon sale price. Once this money is received by the seller’s lawyer, the amount owed for commission is given to the listing brokerage to be distributed to both of the agents.
Benefits For Buyers
Since commissions are paid by the seller’s side of the transaction, the buyer benefits from the services of a realtor without having to pay them for their help. This means that the services of a professional who will help find you the best properties for your needs, do all of the paperwork and heavy lifting for you, and negotiate the best price on your behalf are provided with no extra cost to you.
Take Advantage Of These Benefits
If you’re looking to buy a home and want to take advantage of the services of a real estate expert who will work tirelessly to get you the best deal on the home of your dreams, don’t hesitate to contact me at any time! If you want to learn more about the buying process, get my free Buyer’s Guide.
My personal cell: 289-675-4882
Email: brad@braddornellas.com