Commission Explained

Team Oulahen

Commission is a crucial but often misunderstood aspect of selling a home. Sellers and buyers should understand the terms and rates outlined in the listing agreement, the deduction from the final sale price, and the level of service provided by different brokerages.

Commission is a commonly misunderstood part of the home selling process. While most people understand that it involves a percentage paid to a realtor, many key aspects of this part of a transaction remain unclear to many. As this payment can add up to tens of thousands of dollars, you need to understand it in order to be a truly informed buyer or seller.

The Seller

During a sale transaction, the Seller hires a Listing Agent to sell their property. The Seller and Listing Agent sign a listing agreement that will outline the terms and will show the commission rate, typically 5% (which is HST applicable). In this listing agreement, it will also show that there will be a separate commission paid to the Buyer’s Agent, when the Buyer accepts an agreement on a property. If two agents from the same brokerage work together on a purchase and sale, the commission will just total to 5%.

Closing Sale

On closing day, an invoice for the commission amount will be sent to the Seller’s lawyer from the listing brokerage, which is deducted from the final sale price, with the remainder going to the seller. If there is a second brokerage involved (Buyer’s side), an invoice for half of the commission amount will be settled between the two brokerages.

Breaking it All Down

If you’re the Seller, you are aware of your agent’s cost because you signed a listing agreement and have interviewed multiple agents, shopped around, and found the best Realtor who offers a commission amount that you’re comfortable with. A Buyer often doesn’t see a commission expense directly. However, they are indirectly coming up with the amount through their purchase price, and should make sure that their agent is providing a level of service in line with the commission they will receive.

The Full-Service Approach vs. A Discount Brokerage

The Oulahen Team is happy to discuss commission, as we do not stay fixed to a specific commission rate. We adjust this amount based on the level of service the client wants us to provide, which is something all Sellers should keep in mind. We care a lot about our clients, which means it is essential to provide the highest level of service possible. The cost of items such as hiring a photographer and promoting a client’s property through various marketing methods including print, direct mail, online and social media, eclipses the amount that would be made up.

We are not a discount brokerage, so those looking for extremely low commission rates would likely be looking to work with a different brokerage. That being said, it’s important to keep in mind that discount brokerages will not offer additional support or advice beyond the purchase and sale agreement.

Decide What Level of Service You Need

The bottom line is that if marketing tools aren’t used, it is highly unlikely that the property will sell for the highest value possible. It simply wouldn’t be seen by enough interested Buyers who would provide multiple competing offers. This, combined with the fact that our team is available to clients whenever they need us, makes us a full-service brokerage that aims to get our clients the best results. All of this leads to this key takeaway: as a Seller, you need to decide what level of service you are looking for, and understand the sharp differences between a full-service brokerage, and a discount brokerage. Like everything else, do your homework, and choose what’s best for you, your family, and your home!

Want more information about commission? Email us at or text us your questions to 905-222-1212.


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