Most people know that Vancouver realtors work on a commission basis. However, it may not be clear that the majority of Realtors work on 100% commission.
The person who is selling their home usually pays the commission and it is then divided between the two Realtors (Realtor representing the Seller and the Realtor representing the Buyer). The Realtors will then use their portion of the commission to pay their Brokerage fees, MLS fees, office fees, business expenses (advertising, cell phone, website, postage, car, gas, insurance, benefits, etc.) and last but not least taxes.
Real estate commissions in the Lower Mainland are generally set as a percentage of the sales price. My Brokerage (Sutton Group - Seafair Realty) which is a full service company recommends a rate of 7% on the first $100,000 and 2.5% on the remaining balance.
It should be pointed out that there is no standard commission rate and as a result there are other Brokerages in the Lower Mainland that recommend a higher rate and there are others who recommend a lower rate.
As an example, if a home sold for $500,000 and the commission was based on the recommended rate by my Brokerage (Sutton Group - Seafair Realty), the commission would be as follows:
7% on the first $100,000 = $7,000
2.5% on $400,000 = $10,000
Total Commission = $17,000 (GST would then be applied)
The total commission ($17,000) would then be basically divided in half between the Realtor working with the Seller and the Realtor working with the Buyer.
Not only do commission rates vary throughout the Lower Mainland, but they also vary between Provinces and States. For example:
Alberta 7% on first $100,000, 3% on remaining amount
N.B 5-8% of the sales price
Ontario 5-6% of the sales price
Washington 6% of the sales price
California 6% of the sales price
If you sold a home in Ontario for $500,000 and the recommended commission by the Brokerage was 5% you would pay the following:
5% of $500,000 = $25,000
As you can see by the above examples, commission rates vary throughout the country as there are no standard commission rates. It also should be mentioned that even though a particular Brokerage recommends a rate...... the Realtor and Client can discuss and agree to a different arrangement.
Thus, commission rates can be negotiated depending upon the services that you require just like the price of a home will be negotiated between a Buyer and a Seller.
Please do not hestitate to call or email me if you have any questions or would like further information on the flexible commission rates that I offer.