Welcome back to our Real Estate Agent Series! In our last post, we talked about what a real estate agent does. Today, we're diving into a question many people have: How do real estate agents get paid, especially in Sarnia, Ontario? Whether you're looking to buy your first home or sell your family home, this post will provide some clarity into the world of real estate commissions. We'll also take a look at the bigger picture, discussing the Ontario and Canada housing markets to give you the full scoop.

How Real Estate Agents Get Paid: The Basics

Unlike many jobs, most real estate agents don’t get a regular salary.... Instead, they work on commission. This means they get paid a percentage of the sale price of a property, and they only get paid if a deal is closed.

No Sale, No Pay: If a property doesn't sell, the agent doesn’t get paid.

Split Commissions: When a property is sold, the commission is typically split between the agent representing the seller (the listing agent) and the agent representing the buyer (the buyer's agent). It can be a percentage fee or a flat fee, based on what is discussed between the client and the listing agent. 

Real Estate Commissions in Ontario: How it Works

Commission Breakdown:

Split: Usually divided between the seller’s and buyer’s agents.

Paid to Brokerage: The commission goes to the brokerage, who then pays the agents.

HST: Home sellers also pay HST on the real estate commission.

Are Real Estate Commissions Negotiable?

Yes, real estate commissions are always negotiable...! There is no standard rate, and it is actually illegal for real estate agents or brokerages in Ontario to "fix" commission rates. Agents and brokerages set their own rates, so there is room for discussion. Some agents might offer different commission packages with varying services and inclusions.

How Does This Affect You? Tips for Homebuyers and Sellers in Sarnia Lambton

For Homebuyers in Sarnia Lambton

Ask Questions: Don’t hesitate to ask your agent about how they get paid and what services they provide.

Buyer Representation Agreement: Ensure you review this document so that you understand your obligations with respect to agent fees.

Be Informed: Be aware of market conditions to ensure you are getting fair value.

Consider the Value: While lower commissions might seem attractive, make sure your agent offers the services and expertise you need.

Negotiate: You might be able to negotiate a lower rate if you are using the same agent to both buy and sell a property.

For Home Sellers in Sarnia Lambton

Negotiate Commissions: Don't be afraid to discuss commission rates with your listing agent.

Know What You’re Paying For: Understand the services included in the commission, such as staging, photography, and marketing.

Consider the "Cooperating Commission": Think about the commission you're offering to the buyer's agent. A higher commission might attract more buyers.

Don't Focus Solely on Commission: Focus on how much money you'll make overall, not just the commission rate. A skilled agent can help you get the best possible price for your home.

Shop Around: Reach out to multiple real estate agents and compare what they offer.

Understanding how real estate agents get paid is essential for both homebuyers and sellers. While commission is a significant part of the equation, it’s not the only factor to consider. Look for an agent who is knowledgeable, responsive, and dedicated to helping you achieve your goals in the Sarnia Lambton real estate market. Whether you’re buying a home or selling a home, working with a qualified agent can make all the difference. Don't hesitate to ask questions, and make informed decisions based on your unique circumstances.

We hope this post has helped clarify how real estate commissions work. Keep an eye out for the next post in our Real Estate Agent Series, and as always, feel free to contact us at Blue Coast Realty with any questions you have!