How do realtor fees usually work?
Realtor fees are based around real estate commissions, with the average commission rate being anywhere between 3% and 7% in Canada.
This means that sellers pay between 3% and 7% of the final sale price of their home. The justification for charging a realtor fee is that you are paying for the services of your real estate broker, and the work they put into selling your home.
Below is a list of the services that your realtor is charging you for in their fees:
- Property valuation
- Drawing up floor plans
- Photographing your house
- Listing your property
- Property description
- A “for-sale” sign
- Enticing buyers
- Marketing the property
- Organizing viewings
- Negotiating a sale price
Although your realtor will come to you with their commission costs already set, you shouldn’t take their number at face value. You should always negotiate realtor fees before agreeing to work with a real estate company.
Why does the seller pay the buyer’s realtor fees?
The seller pays the buyer’s, as well as their own, realtor fees, because they are paying the associated costs of selling their home. A prospective buyer shouldn’t have to pay for things that don’t concern them such as pictures of the house, or a “for-sale” sign. It’s therefore the seller’s responsibility to cover these costs.
Do realtor commissions vary?
Yes, realtor commissions vary. Different realtors calculate their commission in different ways, which affects the final price you pay. Below are the different approaches to commission calculation that a traditional realtor is likely to use:
- Fixed percentage of the sale price
- Split percentage of the sales price
- Flat fee
- Fee for service
- Combination of fees
Although paying a fixed percentage of the sale price is the most common practice, some realtors try to get as much commission as possible by using a different payment scheme. If you aren’t happy with the price that your estate agent is charging you and can’t negotiate a price you both agree on, you should look for an alternative selling option.
Who pays realtor commission fees?
Realtor fees are paid by the seller. It is their responsibility to organize all aspects related to the selling of a house. If they don’t do that themselves and instead go through a real estate agent, they will have to pay the agent for their services.
If you are unwilling to pay realtor fees, there are alternative options that you can pursue to avoid paying estate agents’ commissions. There are plenty of options for potential savings that will make your life easier. However, if you decide to go through a realtor, you will have to pay the commission fees.
How much does a realtor cost?
How much a realtor costs will largely depend on how much you are selling your home for. The average commission for realtor fees is between 3% and 7%, and the national average house price in Canada is $644,643. Going by the median Canadian realtor fee of 5%, you can expect to pay at least $32,232.
4 ways to avoid paying realtor fees
Since realtor fees can end up taking a big chunk out of your final sale price, you should consider looking for an alternative to traditional agents, which will allow you to sell your home without having to pay thousands of dollars to your realtor. Below are tips to avoid paying realtor fees.
Sell your house as-is for cash
There are companies who are willing to buy your house for cash, regardless of the condition it may be in. Selling to these companies directly can save you realtor and maintenance fees, spare you the stress of having to wait for offers from buyers and leave you with a wad of ready cash.
Sale by owner
Another way to avoid paying a listing agent commission is to list your house yourself. Although this method will save you a lot of money, it can also be a lot more stressful than using an agent. However, if you have the time to commit, you should do it.
You will need to begin by organizing a valuation of your house, so that you know how much to sell it for. You will also need to take great pictures of your house and advertise it. Finding a competitive buyer is one of the more difficult aspects of adopting a sale-by-owner approach because you don’t have the real estate market expertise or contacts.
That being said, it’s not impossible as there are plenty of websites that allow you to list your own house. You also need to be aware of the hidden costs of selling your house yourself. Although you will save on realtor fees, you will need to pay a solicitor to deal with all the legal proceedings surrounding the sale. You therefore need to weigh the cost of commission compared to sale-by-owner costs.
Negotiate your fees
Although negotiation will not get your realtor fees down to $0, it can end up saving you a lot of money. You should never agree to a realtor’s first commission cost as it is unlikely to be fair. Always talk to your realtor to see if you can get them to reduce their fees.
If you want to ensure that you have good negotiation leverage, we recommend agreeing to both buy and sell through a single real estate professional. If they are getting business from you from both the buying and selling end of your transactions, they will be more likely to give you a better deal on realtor fees.
Utilize discount services
Discount brokers almost sound too good to be true but they are great if you are looking for a typical home sale at a discounted rate. There are brokers who are willing to offer their services at a discounted rate. Their typical realtor fee lies between 1% and 2%, compared to the 3% to 7% for traditional realtors.
Discount agents can afford to charge you less because their models for buying, selling, and managing properties are different from estate agents. They use a team-based approach so you will have dual agents working on the sale of your home, and won’t be working with the same agent twice. This enables them to provide you with full-service brokerage at a lower cost.
Sell your house for cash
Selling your house as-is to a cash buyer will save you both time and money, and ensure a smooth closing experience. Acheteur De Maison Quebec wants to make it as easy as possible for you to sell your house. Our team can buy your property as-is, regardless of whether it needs major repairs or is inhabitable.
By contacting us, you stand to save on realtor and repair costs. What’s more, after our experts have assessed your property, you can be assured of a fair price. This also means that you will get cash in hand quickly as you won’t have to wait for offers from potential buyers.
