25 Jul Real Estate Brokerage Fees Explained
If you are selling your home, you should know how real estate brokerage fees work. In the province of Ontario, there are no hard and fast real estate fee rules.
With one exception. Price fixing is not allowed which means there is no manual explaining how real estate fees work. Here it is in simple terms.
How Are Real Estate Fees Determined?
Real estate fees are most often a percentage of the sale price of a home. Which is kind of cool because the more money a Realtor can sell your home for, the better for everyone involved. In other words, the percentage model incentivizes a real estate agent to get higher prices for the seller.
Are There Other Ways Realtors Charge?
In other models, there is a flat fee for service. Though not as prevalent, flat fee models usually are just that. Sometimes based on the real estate brokerage business model, a single price or tiered pricing based on what the seller wants from the brokerage they have selected to help them sell a house. In Ontario, this is less common than in other western provinces.
How Does My Realtor Get Paid?
What’s important to know is there are usually two sides to the transaction. The listing brokerage side (represents the home seller) and cooperating broker aka the buyer’s broker (represents the home buyer). Both parties get paid and it’s usually handled on the listing brokerage side.
When the seller signs a listing agreement with a brokerage to sell their home, the listing brokerage discusses with the seller how much their fee is and a discussion of how much to offer the buyer’s broker as an incentive to bring buyers. These are not fixed costs so you are best to discuss this with your listing brokerage as soon as you meet with them to discuss the selling process.
How Do I Determine What Commission To Offer The Buyer’s Agent?
I had a client once who described through her lens how she viewed the buyer’s brokerage incentive fee. She said it was like buying insurance.
Though agents are not allowed to discriminate against a lower fee and not show a particular home, agents are human. And Humans are driven by incentives. Consult with your local agent beforehand and ask what the going rate being offered is in your marketplace.
Do All Realtors Charge The Same Fee?
Real estate fees are all over the map. There are no two real estate brokers that are the same and all of them provide different services such as how they market and advertise your home. Home staging, decluttering services, home improvement contacts are but a few of the services a full service broker can offer. Needless to say, these services cost money.
How Do I Choose The Best Broker For My Needs?
A seller is advised to choose a broker that best meets their needs. Oftentimes a real estate agent has trusted contacts that have worked with other clients in the past. This can bring assurances and trust to the decision of whether to apply these services to your needs.
If selling your home for the most amount of money is important, then remember, you often get what you pay for. A low service fee agent will provide just that, oftentimes low service. On the other hand, A real estate brokerage that charges a high fee better be able to back up why they do so. Often these answers and a clear decision is made when interviewing and understanding what the Realtor provides.
How Long Does It Take To Sell My House?
There are many factors that determine how long a house might take to sell. A low-fee agent may put your home on the MLS (multiple listing services) website and wait. Also referred to as a passive agent.
Sticking to the theme of you get what you pay for, a higher service fee agent will expose your home on more websites to more potential buyers. Generally speaking, the more people that know your home is for sale, the more likely you are to sell it quicker and for more money.
Advice In A Nutshell
- Do your homework
- Meet with an agent that you feel can best deliver on your needs
- Be wary of discount brokers
- You get what you pay for
- What may feel like savings on fees could cost you more in the long run if the sale price is not maximized