Inside the Industry
Understanding Buyer’s Commission in Ontario Real Estate
When you’re buying a home in Ontario, one of the terms you’ll often hear is “commission.” It’s an important part of any real estate transaction, but it can also be a source of confusion. Let’s break down how buyer’s commission works, who pays it, and what it means for you as a homebuyer in Ottawa.
How Does Buyer’s Commission Work?
In Ontario, the commission for a Buyer’s Realtor is typically offered by the Seller as part of their agreement with their own Realtor. This commission is then detailed in the MLS® listing and is agreed upon in the Buyer Representation Agreement (OREA Form 371) when you work with a Realtor.
In Ottawa, the commission offered to a Buyer’s agent is commonly between 2% and 2.5% of the final purchase price, though it can range from $0.01 to 4% or more.
Who Pays the Buyer’s Commission?
The commission structure can be viewed from two perspectives:
The Seller Pays
In most transactions, the Seller pays both their agent’s commission and the Buyer’s agent’s commission. This amount is deducted from the proceeds of the sale. From this perspective, Buyers don’t directly pay their Realtor but benefit from the service without additional out-of-pocket costs.The Buyer Pays
Some Realtors operate with a fixed commission model that specifies the commission percentage in the Buyer Representation Agreement. If the Seller offers less than the agreed-upon commission, the Buyer may need to make up the difference. For example, if the agreed commission is 2.5% and the Seller offers 2%, the Buyer would cover the remaining 0.5%.
At our team, we focus on service, not commission. We work with the commission offered by the Seller, ensuring our clients receive full support regardless of the amount offered on the MLS®. Whether the commission is high, low, or even absent, our priority is helping you achieve your real estate goals.
Why Choose Full-Service Representation?
Our team believes in providing exceptional service to all clients, no matter the commission offered. Our approach is built on:
- Reputation: We thrive on referrals and repeat clients who trust us.
- Experience: Full-service representation means comprehensive advice and guidance, from your first showing to the closing date.
- Transparency: We explain every detail of the Buyer Representation Agreement so you understand what to expect.
Can Commission Be Negotiated?
Yes! The amount of commission your Realtor expects can be negotiated when signing a Buyer Representation Agreement, if it would otherwise be a set amount. It’s important to have an open discussion about this with your Realtor, so you know how any differences between the agreed commission and the amount offered on the MLS® listing will be handled.
Common Questions Buyers Have About Commission
Do I have to pay my agent directly?
Usually, no. The Seller’s commission covers the Buyer’s agent, but always confirm the details in your Buyer Representation Agreement.What happens if the Seller offers no commission?
In rare cases where the Seller offers no commission (e.g., $0.01), our team will still represent you and discuss how best to proceed.Is commission included in the price of the home?
Yes, when working with our team the commission comes out of the proceeds of the sale, which is factored into the home’s price.Why do commission rates vary?
Commission rates depend on the Seller’s agreement with their Realtor and can vary based on factors like market conditions, location, and the property’s price.What is the Buyer Representation Agreement?
It’s a contract between you and your Realtor outlining the terms of your relationship, including commission. In Ontario, this is OREA Form 371.Can I negotiate commission with my agent?
Yes, commission is negotiable. It’s important to discuss your expectations with your Realtor before signing any agreements.What happens if I buy a home privately?
If the property isn’t listed on the MLS®, your Realtor will advise how their commission would apply in a private sale.Does higher commission mean better service?
Not necessarily. The level of service depends on the Realtor, not the commission. We prioritize your experience regardless of the commission offered.What’s the advantage of a full-service Realtor?
Full-service Realtors handle every aspect of your purchase, saving you time, reducing stress, and providing expert negotiation and advice.How do I know if I’m getting a good deal?
A great Realtor provides market insights, fair comparisons, and ensures you’re confident in your decisions.
Your Next Step
Looking for a Realtor that puts your goals first? Contact us at nickfundytus.ca to start your home-buying journey. We’ll guide you every step of the way with no pressure, just exceptional service.
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