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Léa Plourde-Archer
Léa
Plourde-Archer

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How much does it cost to work with a real estate agent in Quebec?

Last modified: 2019/01/17 | Approximate reading time 3 mins

In a previous article, we discussed the pros and cons of working with a real estate agent. Among the benefits, we cited the experience, the market knowledge of the latter and the additional protections you will have access to. Of course, to take advantage of all these qualities and benefits, you should expect to pay the person for their efforts!

Real estate agents (also referred to as real estate brokers) are paid through a commission representing a certain percentage of the sale. When the total amount is presented, some people may be taken aback, and they will then decide to explore other avenues, including selling or buying their home without an agent. In a transaction, the seller pays the commission of both agents that are involved. The agents share an amount that equates to a certain percentage of the transaction.

In this article, we will present the reasons that explain the variations between the different percentages associated with the commission, the possibilities of negotiation and the different types of commissions.

What are the usual commission rates for a real estate agent?

In Canada, and more specifically in Quebec, the usual percentage that the real estate agent receives will vary between 4 and 7% of the value of the sale. This amount does not fall directly into the pockets of the broker. Indeed, the amount must cover several costs, including an amount that is given to the brand for which they work. They also pay for advertising, photos, insurance, employees, office rental fees and so on. Finally, if the buyer works with an agent, the latter will receive half of the percentage. So the agent is far from receiving the full amount.

Other factors may affect the percentage, including the signing of an exclusive mandate, an option offered by certain companies in the field of real estate. Last point: you will have to pay taxes (GST and QST) on the amount you give to the agent.

Handshake

Negotiating the commission during a real estate transaction: what you should know

In general, the commission rate you give to the agent is negotiable. However, it is not recommended to negotiate too much because you want to start your relationship with the agent on the right foot! Consider all the fees they have to pay and the amount of work they will have to do to sell your property. If you think you have some flexibility, you can always make an offer to the agent, but you need to be flexible, open and understanding.

Finally, instead of negotiating with a single agent, it may be better to compare the offers presented by several agents. In doing so, you can choose the one that suits you best, while getting the best price!

House for sale

Is it more expensive to use the services of a real estate agent who works for a major real estate company?

There are several major companies in the field of real estate. Some of these banners have networks all over the world, while others are unique to Quebec and Canada. To become a franchise member at one of these companies, who offer services and a certain amount of supervision, agents must pay a fee whose form varies according to the packages offered (percentages, monthly fees).

In the past, this fee could be very expensive but the rates had to be reduced because of the competition. Therefore, in most cases, there is no real difference in price for a real estate agent that is registered with a franchising company.

However, if you ever find that the prices presented by an agent are significantly more expensive when compared with another expert you have met with, don't forget to check if each is offering the same services. Indeed, some agencies offer very low rates, around 2 or 3%. However, do not rely on the fact that the same services will be offered as if you had paid 4 or 5%!

Dollar sign in notebook

Are broker commission rates going up or down?

Lastly, know that commission rates have tended to decline in recent years. This is due to several factors, including growing competition and the current dynamism of the market. About 35% of Quebecers decide to sell their property without the services of a broker, which makes it even more attractive for agents to offer good rates to reduce the attractiveness of doing things on their own.

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