Are you planning to sell your house soon? You likely have several questions about the commission you’ll need to pay your real estate broker after the transaction.
Here’s the key information you need to know about the broker’s commission.
What percentage of commission does a real estate broker taking in Quebec?
In Quebec, the typical commission percentage that a real estate broker receives ranges from 4% to 7% of the sale price of your home. This is their primary source of income, from which they must cover various expenses such as management, travel, and advertising costs.
What do these percentages represent in concrete terms? Let’s look at a few examples:
| House value | 4% | 7% |
| $350,000 | $14,000 | $24,500 |
| $500,000 | $20,000 | $35,000 |
| $750,000 | $30,000 | $52,500 |
Several factors can influence the rate a real estate agent charges, as discussed later in this article.
While it’s common for a broker to take a commission between 4% and 7% of the sale price, you should know that you have the option to negotiate it. In fact, doing so could work to your advantage!
Who pays the real estate broker’s commission?
While it might seem like the commission would be shared equally between the seller and the buyer, this is not the case.
In fact, it is the seller who is responsible for covering the cost of the commission during a real estate transaction. The buyer, on the other hand, does not have to pay the broker anything to use their services. Why is this the case?
The reason lies in the fact that the seller’s broker has a much more involved role in the process than the buyer’s broker. The list of tasks the seller’s real estate agent must handle is extensive, including:
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Organizing the marketing of the property
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Planning property visits
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Drafting legal and official documents
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Following up with various professionals involved in the sale
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And much more!
Who pays the buyer’s broker?
Although the buyer’s broker also receives a commission, the buyer does not have to bear the cost. In most cases, the commission paid to the seller’s broker will be split between the two brokers if the buyer uses the services of an agent.
Therefore, whether you are a buyer or a seller, it’s important to discuss how the commission will be divided between the two brokers. The way the commission is split can affect the minimum amount each broker will receive.
Are there taxes to pay on the commission (GST/QST)?
Yes, taxes must be paid on the real estate broker’s commission. The commission amount is calculated before taxes, and the applicable GST (Goods and Services Tax) and QST (Quebec Sales Tax) must then be added, based on the current rates.
Can a real estate broker lower their commission?
Yes, a real estate broker can absolutely choose to lower their commission! It’s important to know that commissions are not regulated by law, so they can be negotiated between the real estate agent and their client, whether for a purchase or sale transaction.
However, some brokers working for large real estate firms may have internal policies that limit their flexibility when it comes to adjusting commission rates.
How to negotiate the fees to be paid?
The best way to ensure you don’t pay too much in brokerage fees is to compare offers from several real estate brokers in your area. Each broker is free to set their own rate, and some may offer lower rates to stand out from the competition.
It’s also a good idea to contact multiple real estate agents to compare not only the commission rates but also the services they offer and their working methods.
By the way, did you know we can connect you with real estate brokers in your region? This way, you can easily compare offers from several qualified brokers nearby and make an informed choice!
When to negotiate the commission rate?
The best time to negotiate your broker’s commission is when you are choosing them. However, there are other circumstances that can also create a favourable context for negotiation.
For instance, a savvy seller might wait until they receive a purchase offer. At that point, they can ask the broker to lower their commission in exchange for agreeing to accept the offer.
Additionally, a property owner might choose to negotiate a lower commission rate when renewing their brokerage contract. If the property has not been sold yet, the commission reduction could be a condition for deciding to continue working with the current broker instead of switching to someone else.
Negotiate the commission down, but by how much?
While it’s definitely in your best interest to negotiate the commission your broker will charge, it’s important to be realistic about the expected results.
A 1% decrease is generally more achievable than a 2% or 3% reduction. Additionally, keep in mind that a commission that is too low may not be motivating for a real estate broker, as they might feel less incentivized to give their best effort.
Factors that influence the commission percentage
As mentioned earlier, the commission typically ranges from 4% to 7% of the sale price of a house, and this 3% difference can vary for several reasons. Here’s why:
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Location: The location of your house plays a big role. If your house is in an area that is less attractive to buyers (due to various factors), your broker might ask for a higher commission to compensate for the additional effort required to make the sale.
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Condition of the house: A house in need of significant renovations is likely harder to sell, so a broker may request a higher commission to account for the additional work involved in marketing and selling it. On the other hand, a newly renovated home that appeals to modern tastes will likely sell more easily and might justify a lower commission.
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Price of the property: The price of your property also affects the commission rate. Since the workload is essentially the same regardless of the price, brokers usually ask for a higher commission on lower-priced homes ($175,000 to $200,000) and a lower percentage on higher-priced properties.
Are you looking for a real estate broker for your project ?
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