How real estate commission works in Canada
Real estate commission in Canada is:
- Paid by the seller from the proceeds of the sale.
- Split between two agents — the listing (seller’s) agent and the cooperating (buyer’s) agent.
- Negotiable — there is no standard or mandated rate. Rates are set by agreement between the seller and their agent.
- Subject to GST/HST — commission is a taxable service, so the effective cost includes applicable sales tax.
Current commission rates by market
| Market | Typical total commission | Listing agent | Buyer’s agent | Total on $660,000 sale |
|---|---|---|---|---|
| Toronto (GTA) | 4.0–5.0% | 2.0–2.5% | 2.0–2.5% | $26,400–$33,000 |
| Vancouver | 3.5–4.5% | First $100K at 7%, balance at 2.5% (tiered) | 3.255% (tiered) | ~$23,000–$30,000 |
| Montreal | 4.0–5.0% | 2.0–2.5% | 2.0–2.5% | $26,400–$33,000 |
| Calgary | 3.5–4.5% | 1.75–2.25% | 1.75–2.25% | $23,100–$29,700 |
| Ottawa | 4.0–5.0% | 2.0–2.5% | 2.0–2.5% | $26,400–$33,000 |
| Edmonton | 3.5–4.5% | 1.75–2.25% | 1.75–2.25% | $23,100–$29,700 |
| Halifax | 4.0–5.0% | 2.0–2.5% | 2.0–2.5% | $26,400–$33,000 |
| Winnipeg | 4.0–5.0% | 2.0–2.5% | 2.0–2.5% | $26,400–$33,000 |
Vancouver uses a traditional tiered structure for the listing side: 7% on the first $100,000 of the sale price and 2.5% on the balance. The buyer’s agent side follows a similar tiered formula.
Don’t forget the tax
Commission is subject to GST/HST, which the seller also pays:
| Province | Tax on commission | Total on $30,000 commission |
|---|---|---|
| Ontario | 13% HST | $3,900 |
| British Columbia | 5% GST | $1,500 |
| Alberta | 5% GST | $1,500 |
| Quebec | 14.975% (GST + QST) | $4,493 |
| Nova Scotia | 15% HST | $4,500 |
A $30,000 commission in Ontario actually costs the seller $33,900 after HST.
How commission is split
The flow of money
- Seller and listing agent agree on total commission and cooperating commission (offered to buyer’s agent) in the listing agreement.
- Home sells. Commission is deducted from sale proceeds at closing by the seller’s lawyer.
- Listing brokerage receives the total commission.
- Listing brokerage pays the cooperating commission to the buyer’s brokerage.
- Each brokerage takes a desk fee or split (typically 10–30%) before paying the individual agent.
- The individual agent receives their share.
What the agent actually keeps
| Gross commission to agent | Amount |
|---|---|
| 2.5% on $660,000 sale | $16,500 |
| Less: brokerage split (20%) | −$3,300 |
| Less: HST remittance (Ontario) | −$1,914 |
| Less: marketing costs (average) | −$2,000 |
| Less: insurance, licensing, desk fees | −$1,500 |
| Agent net income | $7,786 |
This is why agents resist commission cuts — their effective income is already substantially less than the gross commission number.
Recent changes affecting commissions
Increased transparency
Following legal challenges in the US (the NAR settlement in 2024) and Canadian Competition Bureau scrutiny, several changes are underway:
| Change | Status | Impact |
|---|---|---|
| Cooperating commission visibility | Required on MLS in most boards | Buyers and sellers can see how much is offered to buyer’s agents |
| Buyer representation agreements | Increasingly common | Buyers sign agreements specifying their agent’s compensation before viewing homes |
| Competition Bureau review | Ongoing | Examining whether commission structures reduce competition |
| Unbundled services | Growing | More agents offer à la carte pricing rather than full-service-only |
What this means for sellers
- You have more leverage to negotiate as commission structures become less opaque.
- You should explicitly discuss both the listing commission and the cooperating commission with your agent.
- Consider what services you actually need — you may not need a full 2.5% listing agent if you only want MLS access and transaction management.
What this means for buyers
- You may be asked to sign a buyer representation agreement before an agent shows you homes.
- Understand that the cooperating commission offered by the seller may not match your agent’s expected compensation — you may need to cover the difference.
- In rare cases, buying a FSBO property may mean paying your buyer’s agent directly if the seller offers no cooperating commission.
How to negotiate commission
Strategy 1 — Negotiate the listing side
The most common approach. You can ask your listing agent to reduce their portion:
| Approach | How it works | Typical outcome |
|---|---|---|
| High-value property | “At $1.2M, 2.5% is $30,000 — that’s a lot for one side” | 1.5–2.0% listing commission |
| Repeat business | “We’ll use you to buy our next home too” | 0.25–0.5% discount |
| Easy sale | “This will sell in a week in this market” | Agent may agree to reduced rate |
| Competitive interview | Get quotes from 3 agents — negotiate based on the lowest | 0.5–1.0% below their starting offer |
| Tiered structure | “Full rate up to $600K, 1% above that” | Saves money on the margin above a threshold |
Strategy 2 — Reduce the cooperating commission
Proceed with caution. Reducing the buyer’s agent commission below the market norm (usually 2.5%) means some agents may deprioritize showing your home.
| Cooperating commission | Likely impact on showings |
|---|---|
| 2.5% | Maximum exposure — standard in most markets |
| 2.0% | Slight reduction — most agents still show |
| 1.5% | Noticeable reduction — some agents skip your listing |
| 1.0% | Significant reduction — many agents won’t show |
| 0% | Only unrepresented buyers will see your listing |
Strategy 3 — Flat-fee or discount agent
| Option | How it works | Cost |
|---|---|---|
| 1% listing agent | Full service at 1% listing commission | 1% + buyer agent commission |
| Flat-fee brokerage | Fixed fee regardless of sale price | $5,000–$10,000 + buyer agent |
| MLS-only listing | Just MLS access — you do everything else | $500–$3,000 + buyer agent |
| Hourly consulting | Agent on retainer for specific tasks | $150–$400/hour |
Commission by property value
The impact of commission grows dramatically with home value:
| Home price | 5% total commission | 4% total commission | 3.5% total commission | Your savings (5% → 3.5%) |
|---|---|---|---|---|
| $400,000 | $20,000 | $16,000 | $14,000 | $6,000 |
| $600,000 | $30,000 | $24,000 | $21,000 | $9,000 |
| $800,000 | $40,000 | $32,000 | $28,000 | $12,000 |
| $1,000,000 | $50,000 | $40,000 | $35,000 | $15,000 |
| $1,500,000 | $75,000 | $60,000 | $52,500 | $22,500 |
| $2,000,000 | $100,000 | $80,000 | $70,000 | $30,000 |
Plus HST/GST on all amounts.
At $1M+, even a 0.5% reduction in total commission saves $5,000–$10,000 — absolutely worth the negotiation effort.
Alternatives to traditional commission
Discount brokerages in Canada
| Brokerage | Model | Typical cost |
|---|---|---|
| 2% Realty | Full service at reduced rate | 2% total (listing + buyer) |
| 1% Realty | Full service at reduced rate | 1% listing + buyer agent commission |
| Redfin (where available) | Salaried agents, reduced commission | ~1.5% listing |
| Justo | Technology-assisted, reduced fees | 1% listing + buyer cashback |
| Unreserved | Auction-based sales | Buyer pays 3% premium (no seller commission) |
| PropertyGuys.com | FSBO with support | $1,000–$3,000 flat fee |
Cash-back to buyers
Some buyer’s agents offer cash-back rebates — a portion of their cooperating commission returned to the buyer after closing. This is legal in most provinces but varies:
| Province | Buyer cash-back legal? | Notes |
|---|---|---|
| Ontario | Yes | Must be disclosed |
| British Columbia | Yes | Must be disclosed to lender |
| Alberta | Yes | Must be disclosed |
| Quebec | Complex | Subject to OACIQ rules |
| Manitoba | Yes | Must be disclosed |
Typical rebate: 0.25–1.0% of the purchase price, or $1,000–$6,000+ on a typical home.
Caution: If you receive a cash-back rebate, it must be disclosed to your mortgage lender. Some lenders reduce your allowed purchase price or down payment credit by the rebate amount. Failing to disclose is mortgage fraud.
What you’re paying for: agent services broken down
| Service | Value to you | Can you DIY it? |
|---|---|---|
| Pricing strategy (CMA) | High — mispricing costs more than commission | Moderate (with research) |
| MLS listing | High — essential for market exposure | Yes (flat-fee services) |
| Professional photography | High — directly affects clicks and showings | Yes ($300–$800 out of pocket) |
| Marketing plan | Moderate — social media, flyers, open houses | Yes (time-consuming) |
| Showing coordination | Moderate — scheduling, lockbox, follow-ups | Yes (requires availability) |
| Offer management | High — multiple offers, escalation clauses | Moderate (with lawyer support) |
| Negotiation | High — experienced agents extract more value | Varies by your skill |
| Transaction management | High — conditions, timelines, document coordination | Moderate (lawyer handles legal) |
| Market knowledge | Moderate–High — neighbourhood comparables, trends | Moderate (with online tools) |
Questions to ask when hiring an agent
- What is your total commission, and how is it split with the buyer’s agent?
- What services are included — staging consultation, professional photos, video tour?
- What is your marketing plan for my property?
- How many homes have you sold in my neighbourhood in the past 12 months?
- What is the average days on market for your listings vs. the area average?
- What is your sale-to-list price ratio for recent transactions?
- Is the commission negotiable? What would a tiered or reduced-rate structure look like?
- How long is the listing agreement, and can I cancel early?
- Will you personally handle my sale, or will it be passed to a team member?
- Can you provide references from recent clients?