
One of the most common questions we hear from buyers and sellers is: “How do REALTORS get paid?” And honestly, it’s a great question! Real estate commissions can feel a bit mysterious if you’ve never bought or sold a home before—or if it’s been a while since you’ve been through the process.
So, let’s pull back the curtain and explain how it all works, step by step.
First Things First: Commission Basics
REALTORS® are paid through commission, which is a percentage of the final sale price of the home. This percentage is agreed upon between the Seller and their listing agent in the listing agreement—a contract that outlines the terms of the sale, including how much commission will be paid and how it will be divided.
Here's the important thing to note: HST (13%) is applied to the commission, so that needs to be factored into the total cost.
Let’s look at an example:
If a home sells for $500,000 with a total commission of 5%, the commission would be $25,000.
Add 13% HST, and the total comes to $28,250.
Who Pays the Commission?
For Sellers
As the Seller, you’re the one paying the commission. This total commission amount is split between:
The Listing Agent: The Realtor who is marketing your home and representing you in negotiations.
The Buyer’s Agent: The Realtor who brings the Buyer to the table and helps them navigate the purchase.
The specific percentage allocated to each agent is usually determined when you sign your listing agreement, and it’s influenced by what’s common in your local market.
For Buyers
When Do REALTORS® Get Paid?
REALTORS® don’t receive their commission until the deal closes. That means everything—home inspections, financing, and legal paperwork—must be finalized before the funds are released.
Here’s how it works behind the scenes:
When a Buyer makes an offer, they typically include a deposit as part of the purchase agreement. This deposit is held in trust by the Listing Brokerage (think of it like a secure holding account).
Once the sale is complete, the funds from the deposit are used to cover commission costs (along with additional funds, if required).
The Listing Brokerage distributes the commission to the agents involved according to the terms of the listing agreement.
What Should Sellers Know About Commission Rates?
The exact commission percentage varies and is negotiated between the Seller and the Listing Agent. Some REALTORS® offer different service packages (e.g., full-service listings with professional marketing, staging, and negotiation, or limited-service options), so it’s important to clarify what’s included before signing an agreement.
In Ontario, the percentage offered to the Buyer’s Agent is not public information but is included in the listing details visible to other REALTORS®. Your Listing Agent will guide you on what’s typical in your market to help ensure your property is competitively positioned.
Let’s Talk About Transparency
At the end of the day, commissions are all about the value you’re getting. A good REALTOR® is there to guide you through the process, advocate for your best interests, and ensure the sale or purchase goes as smoothly as possible.
If you’re working with us, you can rest easy knowing we’ll be crystal clear about what’s included, whether it’s marketing strategies, staging plans, or negotiation expertise. No surprises—just straightforward service that works for you and your family.
Still Have Questions? We’re Here to Help!
Whether you’re buying or selling, understanding how REALTORS® get paid is key to feeling confident in your real estate journey. Have more questions about the process? We’d love to chat!
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