Who Pays The Commission - Ontario Real Estate Agent Directory

Does The Buyer Or The Seller Pays The Real Estate Agent's Commission?

In most real estate transactions, the seller pays the commission of the real estate agent from the proceeds of sale, although there are exceptions to this.

Any commissions earned through a sale of listed property will be paid to the real estate brokerage that you have signed an agreement with.

Real estate professionals can be actual real estate brokers or real estate agents. The difference between the two is that all real estate commissions can only be paid through a licensed real estate brokerage. If someone is operating as a real estate agent, they are working through a brokerage.

When commissions are then paid, there is a prearranged split of fees between the brokerage house and the real estate agent.

Its not uncommon for both the buyer and seller to have a real estate agent under contract.

When this occurs on a sale, the real estate agents may co-broker or split the fees among themselves according to some predetermined ratio. At the same time, the splits don’t have to be even and can be predefined to provide more of the commission to the selling broker and less to the buyer’s broker and vise versa.

If the buyer’s broker has an agreement with the buyer that he or she will be guaranteed a certain amount of commission and that is not produced through a co brokering scenario, then the buyer may have to pay the balance owing directly to the buyer’s real estate agent or broker.

There are a couple of different ways to look at who is paying for the commission.

On the one hand, one could argue that the seller is paying the commission as in most cases the commission is taken as a percentage of the sale price and deducted from the proceeds due to the seller.

On the other hand, one could argue that the house is priced to include the cost of the real estate agent or broker and that the buyer is actually paying for it as they are the source of the proceeds.

Regardless of how you choose to look at it, make sure you understand your financial obligations to your broker or agent before signing an agreement for their services.

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