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October 30, 2024 | Buying


HOW DOES REAL ESTATE AGENT COMMISSION WORK? 

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When it comes to selling your home in Ontario, the real estate commission might
seem like one of those unavoidable expenses, and you may find yourself
wondering, “Is it really worth it?” The truth is, commission is more than just a
fee, it’s an investment in expertise and marketing that will ultimately help you
sell your home for more money. Like many things in life, when it comes to real
estate services, you get what you pay for. Choosing between a full-service agent
and a discount brokerage can make a significant difference in your selling (or
buying) experience. Let’s break down the basics of real estate commission and
why full-service agents often offer value that discount brokerages can’t match
and how commission works in Ontario. 

> Have you subscribed to the West End Scoop yet? Sign up for our newsletter
> right here and get new listings, exclusive insights, home and design inspo and
> more delivered right to your inbox!


HOW ARE THE COMMISSION FEES CHARGED & SPLIT? 

In Ontario, real estate commission generally hovers around 5% of the home’s sale
price, though this can vary based on the agent and the agreement with the
seller. This commission is usually divided between the listing agent
(representing the seller) and the buying agent (representing the buyer), with
each typically receiving 2.5%. The seller covers the full commission, paying for
both agents’ roles in the transaction. 

A portion of each agent’s commission is then shared with their brokerage,
typically between 15% and 30%, depending on the brokerage model, the agent’s
experience, and specific arrangements. This split supports brokerage resources
like marketing, office space, administrative services, and brand leverage, all
of which enable agents to deliver a higher level of service. 

For buyers, there’s no direct commission cost, as their agent’s fee is built
into the seller’s commission. For sellers, understanding where this 5% goes
helps clarify the value of the investment. Full-service agents utilize their
time, marketing resources, and negotiation expertise to maximize results. In
contrast, discount brokerages may offer lower fees but often with fewer
services, which can impact the overall selling experience. 

--------------------------------------------------------------------------------

Do you have more questions about buying a home in Toronto? Here are some more
articles to help you out:

 * How to Win a Bidding War in Toronto
 * Can You Buy a House in 30 Days?
 * In Real Estate, What Does ‘Days on Market’ Really Mean?

--------------------------------------------------------------------------------


WHAT MAKES FULL-SERVICE BROKERAGES WORTH THE INVESTMENT? 

A full-service real estate agent does much more than just put up a “For Sale”
sign and wait for offers. They bring a range of skills, resources, and
strategies to maximize your sale price and make the process smooth and
efficient. Working with a local realtor, especially one who knows your
neighborhood, adds an extra layer of expertise and insight that can really make
a difference.  

Like anything else, you get what you pay for, and a top-notch realtor is no
exception. Full-service agents are deeply connected to the real estate world and
often grow their business through strong client relationships and referrals.
Their focus goes beyond just closing a sale. They’re invested in long-term
relationships, making them a valuable partner in your real estate journey.  

> Finding the right agent to buy or sell your home is essential. Read our post
> about how to find the best real estate agent in Toronto’s west end right here.


WHAT SHOULD YOU EXPECT FROM A FULL-SERVICE REAL ESTATE AGENT?  

Current marketing strategies:  Full-service agents focus on showcasing your home
at its very best, utilizing professional photography, video tours, 3D virtual
walkthroughs, and expert staging. They tap into exclusive marketing platforms,
digital ads, and targeted outreach, ensuring your property reaches a broad
audience of qualified buyers. This results in more in person showings and often
leads to more quality offers for the home seller.

Expert advice on home improvements: With years of experience, full-service
agents know what updates and features attract buyers and why. They should
provide practical advice on valuable improvements and have a network of reliable
contacts to get the job done right. 

Access to quality home staging: Staging is a step every seller should consider,
as staged homes sell 73% faster than non-staged ones. Staging not only elevates
your home’s online appeal but also leaves a memorable impression on buyers
during showings. Full-service realtors should include staging costs in their
selling fees, which is an added bonus.  

Pricing expertise & negotiation: Pricing strategy is crucial for both buyers and
sellers. Experienced agents understand local pricing trends and can guide buyers
in multiple-offer scenarios and sellers in setting a list price that drives
competitive interest. This level of experience leads to stronger negotiation
skills and guidance that benefit both buyers and sellers.  

Support from start to finish:  Full-service agents manage every detail—from
setting the right price to coordinating showings and finalizing
paperwork—ensuring a smooth and lower stress process from start to finish. For
many sellers, these elements add real value to the process. Full-service agents
earn their commission by investing time, resources, and expertise to deliver the
best outcome for their clients. 

--------------------------------------------------------------------------------

Thinking about selling your home? Here are some blogs you can check out next:

 * What’s the Fastest Way to Sell Your Home?
 * Can I Sell My House without a Realtor in Ontario?
 * Why Your Agent’s Communication Style Matters to Your Home Sale

--------------------------------------------------------------------------------


WHAT DO DISCOUNT BROKERAGES OFFER? 

Discount brokerages operate on a different model by offering lower commission
rates, typically between 1% and 3%, in exchange for a pared-down list of
services. While the promise of savings can be attractive, it often comes with
trade-offs, as discount brokerages generally provide only basic listing support
with minimal marketing and limited guidance throughout the process. 

With fewer services, discount agents may not offer the same level of expertise
in crucial areas like pricing strategies, staging and home improvement
recommendations, or targeted marketing—areas where an experienced,
neighbourhood-focused agent can make a substantial difference. This lack of
insight and strategic planning can lead to longer days on the market, reduced
buyer interest, and, ultimately, a lower sale price. The initial savings on
commission might not hold up once you consider the possible missed earnings and
extended timeline, which can add stress to the process. 

While discount brokerages may be a fit for certain clients—particularly those
looking to take on more of a DIY role—the limited nature of their services often
means missing out on personalized advice, premium marketing, and valuable market
insights. These elements can be critical in maximizing your sale price and
ensuring a smooth, efficient selling experience. 

> Find out what it’s like to work with us. Read our post about the 5 ways we
> speed up the home selling process and blow sellers away right here.


CAN YOU SAVE BY BUYING & SELLING WITH ONE AGENT? 

If you’re planning to both buy and sell a home, many full-service agents offer a
reduced commission to clients who use their services for both transactions. For
example, if you sell your current home and buy a new one with the same agent,
they might reduce their selling commission rate to make the transition more
affordable. This arrangement not only saves you money but also simplifies the
process, as your agent can coordinate both transactions, ensuring everything
moves smoothly. 

> Planning a home purchase? Find out how we speed up the buying process and blow
> buyers away here.


WHY IS COMMISSION AN INVESTMENT IN RESULTS?   

For many sellers, paying commission makes sense when they consider the value it
brings to the table. Working with a full-service agent means investing in a
suite of services that aim to maximize your sale price while making the process
smoother and less stressful. As a seller (or a buyer), it’s essential to do your
homework to find the full-service agent who’s the best fit for you. Spend time
on their website, look at the types of properties they sell, their listing
services, and how they work with buyers.  

If you feel a disconnect when reviewing their online presence, they might not be
the right match for you. But if their site resonates with you, and they offer
the right experience and services to meet your needs, you may have found a great
partner for your real estate journey. Taking the time to find an agent you
genuinely connect with will help make your commission dollars a worthwhile
investment. 

When it’s time to buy or sell, remember: you get what you pay for. Working with
a full-service agent means you’re not only investing in expertise but also peace
of mind, knowing they’re by your side from listing to closing. 

> Give us a call directly at 416-909-1602 or email us at hello@getnested.ca to
> get started!

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