Realtors charge a commission fee for the service of selling your home. The commission is in place to not only pay the realtor who is listing your home, but it also includes a commission amount that is paid to the realtor who brings a buyer to purchase your home. This ensures that buyers can utilize the services of a realtor for no cost and encourages them to look for a home without an additional obstacle.

Under Real Estate law in Alberta, commission for the sale of  a home is always NEGOTIABLE. An example of real estate commission is 7% on the first $100,000 and 3% on the balance of the sale price (just an example as there is not set amount, it is always negotiated between the seller and listing realtor).

The commission amount is paid to the listing brokerage that the listing realtor works for – in my case ReMax Real Estate (Mountain View) Ltd.. Usually half of the total commission paid is then paid to the realtor’s brokerage who brought the buyer (the buyer’s realtor), so using the same example as above 3.5% on the first $100,000 and 1.5% on the balance of the sale price. It is also important to know that when a Realtor sells your home, it is considered a service so GST is charged on the total commission to be paid (just the commission amount, not the whole house). An example to illustrate the above is as follows:

Example

Home sells for $400,000 with a commission of 7% of $100,000 and 3% of $300,000 (the balance of sale price). 

Therefore 7% on $100,000 = $7,000 
+ 3% of balance of $300,000 = $9000
resulting in a commission of  $16,000
+ GST (5%) $800
= $16,800 total commission to the listing brokerage.

The listing brokerage then sends the buyer’s realtor 3.5% of the first $100,000 ($3,500) and 1.5% of the balance of sale price ($4,500) plus the GST on the total $8000 ($400) for a total of $8400. This is why there is no cost to the buyers to utilize a realtor, the total cost of sale is carried by the seller of the property.

REMEMBER: Commission is negotiable so it is important to talk with your realtor about your goals, listing prices, potential selling price and have them detail out the actual total costs involved so you are aware. Also have them write it down for your reference when you are signing the listing contract so that it is the same.

In addition, remember that commission is how a realtor makes a living and takes care of the expenses and of course his/her own family.