How to Calculate Realtor Fees in Ontario
Understanding how realtor fees work in Ontario is essential for both buyers and sellers. This guide explains standard commission rates, how they are split between agents, the impact of HST, and what services are included in your agent's commission. Whether you are buying or selling a home in Mississauga or anywhere in Ontario, knowing these details will help you make informed decisions.
Standard Commission Rates in Ontario
In Ontario, real estate commission is not regulated or fixed by law. However, the industry standard has historically been approximately 5% of the final sale price. This total commission is typically divided between the listing agent's brokerage and the buyer's agent's brokerage, with each side receiving around 2.5%. It is important to note that individual agents do not receive the full 2.5% — they share their portion with their brokerage based on their internal split agreement.
5%
Typical Total Commission
On a $800,000 home = $40,000 + HST
2.5%
Listing Brokerage Side
Shared between agent and brokerage
2.5%
Buyer's Brokerage Side
Shared between agent and brokerage
Example: Commission on a $700,000 Home
HST on Real Estate Commission
Real estate commission in Ontario is subject to the Harmonized Sales Tax (HST) at 13%. This tax is applied on top of the agreed-upon commission rate. Many sellers are surprised by this additional cost, so it is important to factor HST into your budget when calculating the total cost of selling your home.
The HST applies to the entire commission amount, not just one side. For example, on a total commission of $40,000, the HST would add $5,200, bringing the total to $45,200. This amount is deducted from the seller's proceeds at closing and remitted by the brokerages to the Canada Revenue Agency.
What Sellers Should Know
- HST is charged on the full commission amount
- HST is deducted at closing from your proceeds
- Budget for commission + 13% HST when planning
- Your lawyer handles the disbursement at closing
What Buyers Should Know
- Buyers traditionally do not pay commission directly
- Commission is paid from the seller's proceeds
- Always confirm the arrangement in your Buyer Representation Agreement
- Review TRESA requirements with your agent
What Is Included in a Realtor's Commission
When you hire a full-service real estate agent like Joe Battaglia and the Battaglia Team, your commission covers a comprehensive suite of services designed to maximize your sale price and streamline the transaction. Here is what you can expect:
Marketing and Exposure
- Professional photography and virtual tours
- MLS listing on TRREB and Realtor.ca
- Social media and digital advertising
- Open houses and private showings
- Print marketing and feature sheets
Expertise and Transaction Management
- Comparative market analysis and strategic pricing
- Skilled negotiation on your behalf
- Contract preparation and review
- Coordination with lawyers, inspectors, and mortgage brokers
- Staging consultation and preparation advice
Learn more about the Battaglia Team's full-service approach on our Seller Marketing Plan page, or use our Calculators to estimate your costs.
Negotiating Realtor Fees
Commission rates in Ontario are not set by any governing body and are fully negotiable. However, it is important to consider what you receive in return. Reducing commission may mean reduced marketing, fewer showings, or less dedicated service. Here are some points to consider when discussing fees with your agent:
Understand the Full Service Package
Before negotiating, ask your agent to outline every service included in their commission. A full-service agent invests significantly in marketing, staging consultation, professional photography, and their time. A lower fee often means fewer services, which can ultimately result in a lower sale price.
Consider the Buyer's Agent Commission
Reducing the buyer's agent's commission too aggressively may discourage buyer agents from showing your property, potentially reducing the pool of interested buyers and extending your time on market.
Focus on Net Proceeds, Not Just Commission
The most important number is what you walk away with after the sale. An experienced agent who charges a standard commission but achieves a higher sale price through expert marketing and negotiation will often net you more than a discount agent who sells for less.
Explore our Seller Costs Calculator to estimate your total costs when selling.
Frequently Asked Questions
What is the standard realtor commission rate in Ontario?
The standard realtor commission in Ontario is typically around 5% of the sale price, though rates are negotiable and not fixed by law. This total commission is usually split between the listing agent's brokerage and the buyer's agent's brokerage, with each side commonly receiving 2.5%. The brokerage then pays the individual agent according to their internal split agreement.
Is HST charged on realtor commission in Ontario?
Yes, HST (Harmonized Sales Tax) at 13% is charged on top of the realtor commission in Ontario. For example, if the total commission is $25,000 on a $500,000 sale, the HST adds an additional $3,250, bringing the total commission cost to $28,250. This HST applies to the full commission amount.
Who pays the realtor fees when selling a home in Ontario?
In a traditional Ontario real estate transaction, the seller pays the total commission, which covers both the listing agent and the buyer's agent. The commission is deducted from the sale proceeds at closing and distributed through the respective brokerages. Buyers typically do not pay their agent directly, although this structure can vary based on individual agreements.
Can I negotiate realtor commission in Ontario?
Yes, realtor commission rates are fully negotiable in Ontario. There is no fixed or mandated rate set by any regulatory body. You can discuss commission rates with your agent and agree on a structure that works for both parties. Keep in mind that lower commission may affect the level of marketing and services provided, so it is important to understand exactly what is included.
What services are included in the realtor commission?
A realtor's commission typically covers professional photography, MLS listing, virtual tours, staging consultation, open houses, marketing materials, negotiation expertise, contract preparation, coordination with lawyers and inspectors, and ongoing guidance throughout the transaction. Full-service agents like the Battaglia Team also provide digital marketing, neighbourhood analysis, and strategic pricing advice.
How is commission calculated on a $700,000 home in Ontario?
On a $700,000 home with a 5% commission rate, the total commission would be $35,000. Add 13% HST ($4,550) and the total becomes $39,550. This is typically split equally: $17,500 to the listing brokerage and $17,500 to the buyer's brokerage (before HST). Each brokerage then pays their respective agent based on their internal split agreement.