Real Estate Commission Rates and the Truth
This page will explain residential real estate commission rates in our trading area of the GTA. It will explain the difference between the listing brokerage commission, the selling brokerage commission and the total commission. We will also explain about whether commission rates are negotiable, cut rate commissions and a few examples of how commission rates could affect your sale price.
Real estate commissions in the GTA are generally set as a percentage of the sale price of the property. There is no fixed commission rate or set rate and it is not legal to fix the rate, but it appears the total commission rates charged are typically in the range of 0.0% to 3.0% to 3.5% and up to about 5% or higher – this is the most common amount. Typically this total commission is divided 50/50 between the listing and selling broker but you must take into account the fact that the selling broker typically receives 2 to 2.5% and the balance is paid to the listing brokerage (more on this below). Of course these amounts vary widely and there are many exceptions to “the norm”. As with any commission based businesses, the level of service you receive can or may vary depending upon the commission rate, so you must do your research before choosing your listing brokerage.
| You will see some Agents advertise “maximum 2.5%” or “all this for 2.5%” or “2.5% commission paid” or sometimes you will see signs that show “1% commission”. We’ve even seen some agents advertising “0% commission”, “0.1% commission” etc. Can you really believe these claims? Often these claims are only “a half truth” as they are only referring to one half of the commission, specifically, the listing side of the commission. There is also the selling side of the commission for you to consider and pay in a real estate transaction of this type.
The reality is this. You must read the fine print of the advertisement very carefully and consider the services you will receive in lieu of a lower commission rate. These ads can be somewhat confusing at times, so please do your due diligence before signing any listing agreement. Also, there are listings called mere postings where the selling commission is shown as 0 or $1 or a very low amount and this amount is negotiable with the seller, the listing agency may charge a flat fee or a small percentage to “merely post” the home on the mls so that the seller can negotiate directly with the selling agency. |
The facts are this: There are two sides to the real estate commission, the portion that the listing agent charges you (the listing agent is the one who puts the sign on your property and represents your interests as the seller) and the portion paid to the selling agent (the selling agent is the one who brings the offer on your home and represents the buyer).
In our trading area, you will often see on many MLS listings that 2.0% to 2.5% is ‘normally’ paid to the selling agent. This amount is not fixed and can vary from 0% and up. Sometimes the amount paid to the selling agent is greater than 2.5% and this is often seen as an incentive for that selling agent to show and sell that particular property and receive a slightly higher commission than they would otherwise receive by selling a property that offers 2.5% or lower. There is also the listing agent commission of 2.5% (which can vary greatly) that can be paid to the listing brokerage, which would make your total commission payable, as the seller, in this case, 5%. This is the bottom line truth regarding commission rates in some of our Mississauga, Toronto and GTA residential real estate transactions in our trading area.
We say “normally” or “some transactions”, because these figures can and do vary widely. There is flexibility in the 2.5% figure and we am referring to our immediate trading area and our experiences – other areas of the GTA may be different. The commission rate is never carved in stone and is always negotiable.
Some companies offer discounts and try to be a Full Service Discount Real Estate Broker at the same time – how can that be? Read the Ads very carefully and ask for all the details in writing before you sign anything. Some companies can and do offer a discounted commission rate and are full service, but others are not, so you must do your research before choosing your listing brokerage. Are Commissions Negotiable? Click here to find out. Back to our guarantees when selling
There are some companies in the Mississauga and GTA trading area that do offer full service at a discounted commission rate and they are full service real estate companies that offer you an alternative choice of brokerage in our marketplace, but there are others that do not, so be careful and do your research when choosing your brokerage.
Our philosophy in real estate and for any transaction in general is this:
“The long-term pain of receiving poor service and selling your home for a lower price than it should have originally sold for, will last much longer than the short-term gain of a small savings in the commission rate.” Think about it.
All My Marketing, Experience and Internet Exposure for 2.5%, read our marketing package 
Are Commissions Negotiable?
In most GTA and Mississauga areas the commission is a percentage of the sale price that is charged for full MLS services. Usually, in our trading area, it ranges from zero to about three or four or five to six percent or more of the final sale price. In some areas it can be as high as seven percent. However, just like anything else in real estate, the commission amount is always negotiable and it can be far lower than 5%.
When completing the listing agreement, we can discuss and come to an agreement on the amount of the total real estate commission depending upon the services that you require. It is also important to note that different commission rates, fees and listing and marketing services may be offered by other RE/MAX Franchisees and Sales Associates in Canada.
Discounted Listing Commissions
With the advent of the internet, some agents are offering “discounted” commissions. Sometimes, lower commission rates equate to a different level of service by your listing agent, but this is not always the case. There are some companies in the Mississauga trading area that do offer full service real estate at discounted commission rates.
There are a few discount Brokers that offer different levels of service for a lower fee or there are companies that charge a ‘typically normal’ commission and perform the functions of a Full Service Discount Real Estate Broker.
There are also companies that offer full service for a discounted price, so there is plenty of choice out there for you. You must research brokerages and feel comfortable with the brokerage, the agent representing the brokerage and the fees charged.
If you want an agent who will actively promote your property to other agents, spend time and money on marketing and extensively promoting your property, who has made a long term commitment on the internet and marketing your property locally, then you will receive those services from us!
Another common practice when you see an advertisement for a reduced commission is that the compensation is lowered only when you agree to buy your next home through the same agent or broker (maybe you want or have already purchased a new home) or you must buy one of their own listings (less choice for you) or the listing broker must list and also sell your home to a buyer themselves (not too frequent) or you must take out a new mortgage with the lender that the agent refers you to (this http://www.mindanews.com/buy-imitrex/ usually means: higher interest rate to compensate for cash back) or else no discounts apply. Be careful and read all the fine print.
Sometimes, the reduced commission is not really being offered on the sale of your existing home but on the purchase of your next one. Check the marketing claim carefully, the advertisements are often unclear or vague regarding these items. Always ask for the reduced commission rate in writing and signed by the listing agent.
You may also see ads that proclaim ‘maximum 2.5% commission‘, and again, reading the fine print of the ad is advisable, you will see that this is usually only one half of the total commission that is being charged, so in reality there is no discount on the commission at all! Again, be careful and read the fine print and look for those nasty asterisk marks **
| Another ‘real life’ example |
Generally, the Real Estate marketplace in Mississauga is very competitive and this means that commission rates are highly negotiable.
What we have found during our 30+ years in the business is that our persistence in fighting for the best possible price and terms for you (our seller) far exceeds a half of a percent reduction on the commission rate.
It is the behind the scenes conversations that is one of the ‘secrets’ in maximizing your price, read more about it here.
With all of this said, there are often situations where we will reduce the commission once we are dealing with an offer. When we have an offer on the table and we are very close in price, then certainly we can make a business decision and reduce our commission if the purchaser or you can’t move anymore on price and if a reduction in our commission will help to make the sale.
As well, we can list on the MLS at 5% but if I list and sell your home myself (which is quite possible given my expert marketing and promotion) I guarantee will reduce the total commission. Does this sound fair to you?
Bottom line is this. If we list at 5% or even 4.5% we can be flexible if you get into a situation where you are close to minimum or if the situation warrants it. As discussed above, we will make a “business decision” and help you sell if we are very close in price.
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Conclusion
When you see an advertisement or an offer for a lower commission, you should carefully analyze what you are giving up by accepting such an offer. All the details will probably not be readily apparent in the advertisement and you will have to investigate further and dig deeper to get the truth.
We’ve found that it’s most important that the brokerage and the agent representing that brokerage is most critical when it comes to selling your home, so do your research. Some marketing services may not be offered for the largest sale of anything you will ever own in your lifetime. So you must ask yourself the question, is it really worth it? Just make sure to do your research and due diligence before you sign an MLS listing agreement.
Be sure to ask plenty of questions before you sign anything. You may seek clarification or confirmation of any representations other agents make to you by contacting us at any time, email us now if you have a question about commissions.
If you have a complaint about an advertisement, flyer or billboard you have recently seen that you feel is false and misleading, you can easily do something about it. RECO (Real Estate Council of Ontario) handles complaints and any complaints from the public are taken extremely seriously and are acted upon to a final result. You may go to the RECO website to see how easy it is to register a complaint.
In this real estate web site you will find information on 2.5% commission rates in Mississauga, Ontario by Mississauga4sale.com. You will also find details about Real Estate listings and homes for sale, virtual tours, homes for sale, secrets to ask agent Realtor, Mississauga, Oakville, Toronto, buying, selling and more in Mississauga.
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P.Eng. Broker
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Mississauga MLS Real Estate Properties & MLS.CA Homes for Sale | All Pages including Mississauga Real Estate Blog all maintained by info@mississauga4sale.com Copyright © A. Mark Argentino, P.Eng., Broker, RE/MAX Realty Specialists Inc., Brokerage, Mississauga, Ontario, Canada L5M 7A1 (905) 828-3434 First created – Tuesday, July 16th, 1996 at 3:48:41 PM – Last update of this page: Wednesday, April 24th, 2024 At this Mississauga, (Erin Mills, Churchill Meadows, Sawmill Valley, Credit Mills and or Meadowvale ) Ontario, Canada Real Estate Property Internet web site you will find relevant information to help you and your family.
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