Real Estate Commission Breakdown

How Commission Works in Ontario

In Ontario, real estate commissions are paid by the seller from the sale proceeds. There is no fixed or regulated commission rate. Commission is always negotiable between the seller and their listing brokerage, as outlined by the Real Estate Council of Ontario (RECO). However, the most common total commission ranges from 4% to 5% of the sale price, plus HST at 13%.

The total commission is typically split between the listing brokerage (representing the seller) and the cooperating brokerage (representing the buyer). For example, on a 5% total commission, the split might be 2.5% to each side.

Who Gets Paid and How Much

It is important to understand that the commission does not go directly to the individual agents. The flow of money typically follows this path:

• The seller pays the total commission to the listing brokerage
• The listing brokerage pays the cooperating commission to the buyer's brokerage
• Each brokerage takes their split (often 10% to 30% of the agent's portion)
• The individual agents receive their share after the brokerage split
• Agents then pay their own business expenses, insurance, licensing fees, and taxes from their share

On a $900,000 sale with a 5% total commission, the gross commission is $45,000 plus $5,850 HST. If each side receives 2.5%, that is $22,500 per brokerage before HST. After the brokerage takes their share and the agent covers their expenses, the individual agent may net significantly less than the headline figure suggests.

What Commission Pays For

A listing agent's commission covers a wide range of services and expenses that the agent provides to sell your home:

• Professional photography, videography, and virtual tours ($500 to $2,000)
• Home staging consultation and coordination
• MLS listing through the Toronto Regional Real Estate Board (TRREB) and syndication to major real estate websites
• Digital marketing, social media advertising, and print materials
• Open houses, private showings, and buyer follow-up
• Market analysis, pricing strategy, and ongoing consultations
• Negotiation on your behalf for offers and conditions
• Transaction coordination from accepted offer to closing
• Errors and omissions insurance coverage

Negotiating Commission

You have every right to negotiate commission with your listing agent. However, it is important to understand what you might be trading off. A lower listing commission may mean reduced marketing spend or fewer services. A lower cooperating commission may discourage some buyer's agents from showing your property, although the impact of this is debated.

Some agents offer tiered commission structures where they charge a lower rate if the property sells within a certain timeframe or above a certain price. Others offer flat-fee listing services where you pay a fixed amount regardless of the sale price, but these typically provide fewer services.

Discount and Flat-Fee Alternatives

In the GTA, you will find several alternatives to the traditional commission model. Discount brokerages may charge 1% to 3% total commission, while flat-fee services charge anywhere from $500 to $5,000 for a basic MLS listing. These can work well for experienced sellers or properties that are likely to sell quickly in a hot market.

However, reduced-fee services typically mean you take on more of the work yourself, from coordinating showings to negotiating offers. In complex transactions, competitive markets, or challenging situations, a full-service agent often provides value that exceeds their commission through better pricing strategy, stronger negotiation, and a smoother process.

Buyer Commission Changes

The real estate industry is evolving. The Canadian Real Estate Association (CREA) and industry stakeholders across North America are engaged in increasing discussion about how buyer agent commissions are offered and negotiated. In some markets, buyers are now entering into formal buyer representation agreements that specify how their agent will be compensated. This trend may continue to develop in Ontario.

Regardless of how the industry evolves, understanding the commission structure helps you make informed decisions. Ask your agent to explain exactly how commission works in your transaction, what services are included, and how the total cost compares to the value they deliver.