How Realtor Commissions Work in Canada
In Canada, the realtor commission is a fee paid for the professional services of a licensed real estate agent. This commission is typically calculated as a percentage of the final sale price of the property. The standard commission rate in Ontario is approximately 5% of the sale price, though rates vary by province and are always negotiable.
The total commission is usually split between two agents: the listing agent (who represents the seller) and the buyer's agent (who represents the buyer). Each agent typically receives approximately 2.5% of the sale price. After receiving their share, each agent then pays a portion to their brokerage, which provides office space, administrative support, marketing tools, and regulatory compliance.
5%
Typical Total Commission
2.5%
Per Agent (Split)
+HST
13% Tax in Ontario
100%
Negotiable
Commission Breakdown Example
Here's how a typical 5% commission breaks down on properties at common price points in the Greater Toronto Area:
Sale Price
$500,000
Total (5%)
$25,000
Per Agent (2.5%)
$12,500
Total + HST
$28,250
Sale Price
$800,000
Total (5%)
$40,000
Per Agent (2.5%)
$20,000
Total + HST
$45,200
Sale Price
$1,000,000
Total (5%)
$50,000
Per Agent (2.5%)
$25,000
Total + HST
$56,500
Sale Price
$1,500,000
Total (5%)
$75,000
Per Agent (2.5%)
$37,500
Total + HST
$84,750
Use our realtor fee calculator for a detailed breakdown based on your specific sale price.
What Does the Commission Include?
A realtor's commission covers far more than simply listing a home or opening doors. Here's what you can expect from a full-service real estate agent in Ontario:
For Sellers
- Comparative market analysis and pricing strategy
- Professional photography, videography, and virtual tours
- MLS listing and digital marketing campaigns
- Home staging consultation and recommendations
- Open houses and private showings coordination
- Offer negotiation and contract management
- Coordination through closing with lawyers and other parties
For Buyers
- Neighbourhood research and property search assistance
- Access to exclusive listings and pre-market opportunities
- Scheduling and attending property showings
- Market value assessment for target properties
- Offer preparation and negotiation strategy
- Home inspection and condition review guidance
- Referrals to mortgage brokers, lawyers, and inspectors
Factors That Affect Commission Rates
While the standard rate in Ontario is 5%, several factors can influence the commission rate you negotiate with your agent.
Property Price
Higher-priced properties may command lower percentage rates since the total dollar amount is larger. A 4% commission on a $2 million home is $80,000 — significantly more than 5% on a $500,000 property.
Location and Market
In hot sellers' markets where homes sell quickly with minimal effort, rates may be slightly lower. In slower markets where extensive marketing and longer listing periods are needed, rates may be higher.
Level of Service
Full-service agents who provide comprehensive marketing, staging, photography, and hands-on support typically charge standard rates. Limited-service or flat-fee alternatives may charge less but provide fewer services.
Agent Experience
Top-producing agents with proven track records and extensive local knowledge may charge premium rates, while newer agents may offer competitive pricing to build their client base.
Commission Rates Across Canada
Commission structures vary from province to province. Here is an overview of typical rates across Canada. All rates are negotiable and represent common market practices.
Ontario
5% (2.5% + 2.5%)
Flat percentage is most common
British Columbia
7% on first $100K, 2.5% on balance
Tiered structure is standard
Alberta
7% on first $100K, 3% on balance
Similar tiered structure to BC
Quebec
4% - 6%
Varies widely by region and agent
Manitoba
5% - 6%
Typically 5% in Winnipeg
Saskatchewan
5% - 6%
Often 6% in smaller centres
Atlantic Provinces
5% - 6%
NS, NB, PEI, NL
Recent Changes to Commission Rules
The Canadian real estate industry has seen significant changes to commission transparency and buyer representation rules in recent years. These changes affect how commissions are communicated and negotiated.
Increased Transparency
The Canadian Real Estate Association (CREA) and provincial regulatory bodies have implemented rules requiring greater transparency in commission structures. Agents must now clearly disclose how commissions are structured, how they are shared, and what services are provided for the fee.
Buyer Representation Agreements
Buyer representation agreements are becoming more common and, in some jurisdictions, required. These agreements clarify the relationship between the buyer and their agent, including how the agent will be compensated. This gives buyers more clarity and control over the commission structure.
Competition Bureau Influence
Canada's Competition Bureau has advocated for more competition and transparency in real estate commission structures. This has led to the emergence of alternative service models including flat-fee listings, discount brokerages, and unbundled services, giving consumers more choices.
Frequently Asked Questions
What is the average realtor commission in Canada?
The average realtor commission in Canada is typically between 4% and 6% of the home's sale price, with 5% being the most common rate in Ontario. This total commission is usually split between the listing (seller's) agent and the buyer's agent, with each receiving approximately 2.5%. Commission rates are negotiable and can vary depending on the property, market conditions, and the services provided.
Who pays the realtor commission in Ontario?
In Ontario, the seller traditionally pays the full commission, which is then split between the seller's agent and the buyer's agent. The commission is deducted from the sale proceeds at closing. However, recent changes following the Canadian Real Estate Association's (CREA) updated rules mean that buyer-broker compensation is becoming more transparent, and in some cases buyers may negotiate separate agreements with their agents.
Are realtor commissions negotiable?
Yes, realtor commissions are fully negotiable in Canada. There is no legally mandated commission rate. The commission rate is agreed upon between the seller and their listing agent before the property is listed. Factors that may influence the negotiated rate include the property's price, market conditions, the agent's experience and marketing plan, and the level of service provided.
How is the realtor commission calculated on a $500,000 home?
On a $500,000 home with a standard 5% commission rate, the total commission would be $25,000 plus HST (13% in Ontario), bringing the total to $28,250. This would typically be split equally between the buyer's and seller's agents at $12,500 each (plus HST). The agents then split their portion with their brokerage according to their individual arrangements.
What services does a realtor commission cover?
A realtor's commission covers a comprehensive range of services including market analysis and pricing strategy, professional photography and marketing materials, MLS listing and syndication to multiple platforms, staging advice, open houses, showings and negotiations, contract preparation and review, coordination with lawyers and mortgage brokers, and ongoing guidance through the closing process. The commission also covers the agent's business expenses including brokerage fees, licensing, insurance, and continuing education.
How do realtor commissions compare across Canadian provinces?
Realtor commissions vary across Canada. In Ontario, the typical rate is 5% (2.5% per agent). In British Columbia, rates are often tiered at 7% on the first $100,000 and 2.5% on the balance. Alberta typically sees 7% on the first $100,000 and 3% on the remainder. Quebec rates range from 4% to 6%. Atlantic provinces generally range from 5% to 6%. These rates are all negotiable and represent common market practices rather than fixed rates.
Have Questions About Realtor Commissions?
The Battaglia Team offers transparent, competitive commission rates backed by a full-service marketing plan and over 25 years of experience in Mississauga real estate.
Call us today at +1 (416) 564-6611