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Commission Formula:
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Real estate commission is the fee paid to real estate agents for their services in facilitating the sale or purchase of a property. In Ontario, this is typically a percentage of the final sale price and is usually split between the buyer's and seller's agents.
The standard commission calculation is:
Where:
Standard Rates: In Ontario, total commission rates typically range from 3.5% to 5% of the sale price, though these are negotiable. This is usually split between the listing brokerage and the buyer's brokerage.
Breakdown Example: On a $500,000 sale with 5% commission, the total would be $25,000, typically split as $12,500 to each brokerage, which then splits with their respective agents.
Instructions: Enter the property sale price in Canadian dollars and the commission rate percentage. The calculator will instantly compute the total commission amount.
Tip: Remember that commission rates are negotiable between the seller and their agent before signing a listing agreement.
Q1: Who pays the real estate commission in Ontario?
A: Typically the seller pays the commission, which is deducted from the sale proceeds at closing. This is then split between both agents' brokerages.
Q2: Are commission rates fixed in Ontario?
A: No, commission rates are not fixed by law and are negotiable between the seller and their agent.
Q3: What's included in the commission?
A: The commission covers the agents' services including marketing, showings, negotiations, paperwork, and facilitating the transaction.
Q4: Can I sell without paying commission?
A: Yes, through "For Sale By Owner" (FSBO), but you'll need to handle all aspects of the sale yourself.
Q5: How is commission taxed?
A: Commission is subject to HST in Ontario (13%). The HST is added to the commission amount and paid by the brokerage.