Buying a home is unlike any other purchase transaction you’ll make. The price is vastly higher, and so are the stakes — home is where your family lives and it’s a vital long-term investment. The buying process is more involved for these reasons.
While you may balk at the cost of a home in your neighbourhood, there are also realtor fees you need to pay. Let’s look at precisely what those fees are in Ontario and who gets paid what.
Ontario Realtor Fees
Realtor fees are based on a percentage of the home’s sale price. In Ontario, realtor fees average 5%, an amount which gets split between the buyer’s and seller’s agents. For example, if a home costs one million dollars, the real estate agents split 5% down the middle, or $25,000 each.
The way this fee gets split isn’t written in stone and may vary. Some sellers want to give the buyer’s agent 3% and theirs 2%, which incentivizes agents to show the home more often. The way it gets divided up is negotiable, but the 5% paid by the selling side is usually the price.
Who Pays, Exactly?
The side selling the home usually pays for the commission fee for both agents. Usually, they bake these costs into the price of the home. To borrow from the above example, if the seller wants to net one million, they can list it for $1,050,000.
The seller’s lawyers are technically responsible for issuing this payment, but it’s only necessary when the deal is officially closed. Agents don’t receive any money if the home doesn’t sell.
Are Real Estate Fees Fixed?
It’s possible to negotiate a real estate fee lower than 5%. Digital disrupter and real estate technology creator Regan McGee built the real estate platform Nobul to connect buyers with sellers whose prices, services, and experiences align.
According to McGee, “real estate transactions have the single largest fees people pay and the average person pays those fees 11 times in their lifetime.” Nobul empowers buyers to get a real estate agent who suits their needs.
For example, a first-time buyer may prefer an agent who waives or lowers their agent fees, offers cash back, and possibly complimentary services. More experienced homebuyers may prefer paying for agents who work overtime to close high-end deals and ensure no corner is cut along the way.
No two homebuyers have the same needs or budgets. Once you understand the fees, where they go, and how they can be altered or negotiated, you can make the right decision.
Anybody who has spent years socking away money to buy a home should understand all the costs. You’ve worked hard to earn and save, and nobody wants their money to get diverted needlessly, especially when making the largest purchase of your life. Keep the above tips in mind, and you’ll feel more comfortable when it’s time to pay secondary fees.