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Have You Ever Wondered How Real Estate Agents Get Paid?

Understanding Real Estate Commissions

Buying or selling a home is one of the biggest financial transactions you will make in your lifetime, so you should take time to interview real estate agents before you begin the process.  One aspect that you should have a firm grasp on is the agent’s fees, otherwise known as commission. While you may be working within a budget, it’s important to not make a choice based solely on an agent’s commission percentage. Of course, it’s a key aspect, but it should not be the only decision making factor for you.
 
Real estate commissions may seem a bit confusing, but there is one thing that you should keep in mind: your agent gets paid only upon a successful result. In other words – if your property doesn’t close or sell, you don’t pay.
 
To give you a better understanding, here’s a quick breakdown:
 

  • When interviewing an agent, they will discuss their services, a listing agreement and a fee for their services. This includes what they will do for you, as well as the amount that you will be offering to the buyers’ agent.
 
  • In most cases, the sellers’ agent fee for their package of real estate services may include: MLS exposure, home inspection, professional photography, staging, home cleaning, legal fees and more. However, not every agent is the same, so this should be discussed during the interview process.
 
  • Most often, buyer’s agents are paid by the seller through their listing agent after a sale. So, if you are a buyer, you’re not paying anything out of pocket.
 
  • Although housing prices continue to increase, commission fees have hovered around 5% in Ontario.
 
  • It’s true that you get what your pay for, so a good real estate agent who provides exceptional and thorough service deserves to earn a fair pay, which may not necessarily be the lowest out there.
 
While real estate commissions are negotiable, not every agent will negotiate. Take time to consider the services that your real estate agent is offering before dismissing them because of their fee. Buying or selling – it’s a big financial transaction, so it’s best to use an experienced professional during the process who will do the best job that they can.
 
If you would like more information on this topic, are looking to sell, or are interested in a free and confidential market evaluation for your home, don’t hesitate to get in touch with me today!
 
- Jacob