Who pays the realtor commission?
Now, when you hire a realtor, who pays the real estate agent?
Is it the buyer or the seller?
Well, today I'm going to go through the differences if you're going to be searching for a home
to buy or selling a home, and I'm going to have a big tip for you at the very end that
you don't want to miss, so let's get started.
The seller typically pays for the real estate commissions.
I'm from Calgary, Alberta, and the fees are can be different from province to province,
so BC is going to be different than Alberta.
Alberta is can be different than Ontario.
If you are looking for a realtor outside of Alberta, let me know because I have connections
to realtors throughout the different provinces.
Typical commissions in Alberta is 7% on the first hundred thousand dollars and 3% on the
remaining balance.
Now this is split 50 - 50 between the buyer agents and the listing agent, so it's three
and a half percent on the first a hundred thousand and one and a half percent on remaining
balance per realtor.
It's important for buyers to know this and to understand how this is structured because
it could affect you.
Now, if you want to rewatch this video in the future, hit the like and the save button
so you can always refer back to this video for the future.
Now typically the buyer's realtor commissions is going to be three and a half percent on
the first hundred thousand and one and a half percent on the balance.
Now sometimes the seller may not pay in full, so the buying realtors may be okay with that
or they might ask you to make up for the difference.
Now oftentimes, realtors may not bring up the commissions in your first or second meeting,
or sometimes even at all.
If that happens to you, then I have a big tip for you at the end so you don't want to
miss it.
For sellers:
Now when you're hiring a realtor, you're actually hiring their real estate brokerage and that
brokerage is appointing the realtor to represent you.
What a lot of people may not know is the realtor is responsible for the expenses of selling
the home.
So things like photos, professional measurements, some videos, that usually is the expense of the seller,
unless of course, they decide to do a pro production video for your home.
How the real estate commission is structured is the selling brokerage charges the full
commissions for both the buyer and the seller and of that they pay the buying brokerage
their fair share of typically the three and a half, one and a half.
So let's calculate some commissions.
So you have an example.
Remember, typical commissions is 7% on the first hundred thousand dollars and 3% on the
remaining balance.
And that is split 50 50 between the buying agent and the selling agents.
So let's use an example.
Let's just say your home is worth $500,000 then 7% of the first hundred thousand dollars
is $7,000 and 3% on the remaining balance of 400,000 is $12,000 so your total commissions
is $19,000.
So per realtor it's $9,500. GST is payable.
But in Alberta there is no PST.
So here is my tip and it's really for buyers.
Finances and money is usually a contentious issue but it's important to get the elephant
out of the room and talk about it your very first meeting if your realtor does not bring
it up, I believe an experienced realtor will bring it up the first time because that shows
honesty, transparency and them being a professional and that's who you want to work with.
So talk to your realtor and ensure what they're charging for their commissions.
Most sellers will pay the buying agent the three and a half and one and a half, but sometimes
they may not.
So it's important to instruct your realtor on how to proceed if he comes across a property
that doesn't pay then you have a few options.
Number one, you can ask him to show you only properties that pay the three and a half, one and a half.
Two, You can get him or her to inform you if it's not.
And then you can make the decision if you have the budget to make up the difference
between what the seller is offering and what your realtor is charging.
Or lastly, get your realtor to show you all the properties and you promise that you'll
make up the difference no matter what.
Honestly, in my opinion, if a realtor thinks that a home is the perfect fit for you, they
shouldn't hold that back no matter what they get paid.
Because if they are the ones bringing a property for you that is going to be the best fit,
then you too should be able to work that out.
So it's always important to have that conversation beforehand so that later on in the transaction,
your realtor is not coming back to you and saying, Oh, by the way, they didn't pay full
commissions.
I need $3,000 from you.
So was that helpful guys?
If it was throw a big yes in the comments below, as well as any of the other questions
that you might have surrounding the commissions and I'd be happy to answer them for you.
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we come up with videos every single week.
My name is Felix Chan with the LiveInnerCity real estate team helping you keep real
estate simple and we'll see you in the next video.