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Commission and calculation



When buying or selling a home in British Columbia Canada, you will most likely be using real estate services and

therefore may need to pay a commission. Hence, it is valuable to understand the principles surrounding real estate

commissions.


What are commissions for?


Real estate commissions are known as the fees paid towards real estate agents for their services.

Commission rates vary depending on the area and the specific seller/listing agents you choose to work with.


Who needs to pay?


Typically, the seller has to pay for all commission fees which includes both the seller/listing agent of the property

and the buyer’s agent. The buyer does not have to pay the realtor commission in most cases.


What does this mean for you?


Although there is no standard commission rate across British Columbia, our commission rate comes in at 7% on the

initial $100,000 of a property’s price plus 2.5% on the remaining balance. The commission will then be split between

the listing agent at approximately 55% and the buyer’s agent at approximately 45%.


How to calculate a commission total?


In order to understand how to calculate a commission total, let’s look at a real-life example. Assume the commission rate

used is 7% on the initial $100,000 of a property’s sales price plus 2.5% on the remaining balance. If the price of a property

is set at $900,000, then 7% on the initial $100,000 will amount to $7,000. The remaining balance from the property’s sales

price is $800,000 ($900,000-$100,000). Therefore, 2.5% of $800,000 amounts to $20,000. The total realtor commission fee

for this example is $27,000.


Are the commission rates negotiable?


Yes! Since there is no standard commission rate across British Columbia Canada, rates can be negotiated individually.

Is GST applicable to commissions?

Yes! GST is applicable to commissions as real estate services apply to Goods and Service tax. Hence, it’s imperative to

remember to add on the (5%) GST fee to the total commission amount.


When will realtors receive their commission payments?


In most cases, the seller/listing agent and the buyer’s agent obtain payment following the sale completion.

What you need to remember when looking at commission rates

Higher commission rates do not always equal more experience or expertise! Look for strong local market knowledge, flexibility, extensive marketing skills, positive reviews and of course the right overall fit.


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