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What’s Better Than Low Commission REALTORS®? No REALTOR® At All!

Many homeowners dream of selling their home and walking away with a tidy profit.


When the rubber meets the road, selling a house is very expensive. There are all kinds of costs to consider: hiring a home stager, doing repairs and upgrades, paying lawyers’ fees, and absorbing a mortgage prepayment penalty are some of the expenses that a homeowner may incur during the selling process. But for many people, the highest cost of selling a house is the commission fee due to their real estate agent. 

In Canada, by law, there is no set commission fee for REALTORS®. Each real estate office, and indeed each real estate agent, can set their own fee. That said, it’s fairly common for REALTORS® to charge 5% of the final sale price. In January 2023, the average resale residential home in Ontario was $798,835. At 5%, the commission on that sale is $39,941.75, and then the HST on top of that makes it over $45,000.

It IS possible to avoid paying some or all of a REALTOR®’s commission. Homeowners who are hoping to save on commission fees might:

  • Negotiate a lower commission rate with the REALTOR® of your choice;
  • Hire a low commission REALTOR® (aka discount broker);
  • Pay for select services offered by a REALTOR® for a flat fee; or
  • Choose the For Sale by Owner (FSBO) route.

While saving any amount of money is terrific, it’s also fair to say that the only thing better than a discounted commission rate or a low commission realtor is no REALTOR® at all.

Negotiate a Lower Commission Rate

Because real estate agents are free to set their own commission rates, it’s possible that one may be willing to work for less than their usual rate. It doesn’t hurt to ask!

In the example above, 5% commission works out to $40,000 on a $800,000 sale. If you can negotiate even a 1% reduction in commission, you could keep an additional $8,000 in your pocket.

While some REALTORS® will refuse to negotiate at all, others may be willing to look at different factors in order to set a fair commission fee for your home.

How Much Effort Will it Take to Sell?

A skilled REALTOR® should be able to estimate the amount of time your home will need to remain on the market. Factors like your home’s listing price, the desirability of its location, and how brisk the real estate market is in your area will affect how long it takes to sell your home.  If an agent expects that your home will sell quickly, with a minimal amount of effort, they may be willing to accept a lower commission fee.

What’s The Expected Final Sale Price?

If your home is of higher-than-average value, a REALTOR® may be willing to work for a lower fee. This is especially true if they estimate that your home will take the same amount of time and work to sell as an average-priced home. They may agree that a larger payment  isn’t justified just because your home sells for more than other houses they have on the market.

 

While a lower commission fee may be your ultimate goal, it’s important to make sure the REALTOR® you choose is competent. Look at things like their sales record; their knowledge of your community; and the services they provide. And, of course, always ask for references. A REALTOR® who offers to work for a lower fee, but who can’t sell your home, isn’t of much help.

Hire a Low Commission REALTOR®

There are REALTORS® who work for lower commission fees; some work with brokerages dedicated to providing services in exchange for a lower rate. In Ontario, brokerages like One Percent Realty, 2% Realty, and Modern Solution Realty as well as independent agents may charge a lower commission rate. 

Be sure to confirm which services your discount real estate brokerage provides for their stated fee. Some may offer lower rates with the expectation that the homeowner performs some of the usual tasks of a real estate agent.

Also, always read the fine print. Some discount brokerages may claim to work for 1% or 2% commission, but their fine print will state that that discounted commission is for the seller’s agent only. In these cases, the seller will still need to pay the commission due to the buyer’s agent. Assuming the buyer’s agent will be entitled to their usual 2.5% fee, the commission you pay may be 3.5 to 4.5%. That will still result in a savings for you, but perhaps not as steep of a savings as you expected.

Pay for a Flat Fee Listing

The term “Flat Fee Listing” usually applies to a single service only: hiring a real estate agent to list your home on the Multiple Listing Service (MLS®). 

The MLS® is a vast collection of smaller, local real estate databases. It is the most powerful marketing tool in real estate. Real estate agents use the MLS® to exchange information about properties they are selling and that information is also posted to the REALTOR.ca® website for the public to view.

Only licensed real estate agents can list on the MLS®. However, a homeowner who wants to sell their own home can hire an agent solely to list their property on the service. This allows the homeowner to tap into the rich marketing potential of the MLS® at a much lower cost. In Ontario, the cost for a basic MLS® post usually starts at about $99 plus HST. 

Some REALTORS® who offer a flat fee listing service may bundle in other services for an additional cost. Each REALTOR® will offer different “a la carte” services, but common ones include: 

  • Suggestions for a listing price;
  • Posting ads to other real estate websites;
  • Staging or staging advice;
  • Professional-quality photographs;
  • A lawn sign and/or open house signs;
  • Lockbox rental;
  • The option to extend your listing on the MLS® if your property is slow to sell.

The cost of the additional services will depend on which you choose, whether the real estate agent offers a bundle deal, and the real estate’s own pricing scale. But typically, a bundle of additional services will run to about $700-800 plus HST.

Sell Your Own Home

All of the above options require paying at some commission fees to a real estate agent. But if you’re able and willing to take on the task of selling your own home, you can keep most or all of those expected REALTOR® fees in your own pocket.

It’s true that selling a house will take some time and research.  But in the end, who knows your house better than you. As a private seller, you will need to:

  • Do the research to determine your home’s fair market value and set your listing price.  This is easily done online; check out Housesigma.com or Zoocasa.com. 
  • Prepare your home to list by doing repairs and minor upgrades, decluttering, deep cleaning, and staging. Easily find local handyman, housecleaning services, and home stagers on our Directory
  • Prepare marketing materials, including photographs, videos, paper brochures, and online listings.  Find a photographer and marketing services on our Directory.
  • Take the calls and arrange the Showings to potential buyers.
  • Work with a real estate lawyer to close the sale.  If you are looking for a lawyer, easily find one on our Directory.
  • Easily negotiate offers with potential buyers on our DIY Negotiation platform, that allows you to easily compare all offers in one convenient location.

It’s definitely a commitment to sell your own home but it’s worth it. At even 1% commission, you would still need to pay $8,000 to your REALTOR® to sell that $800,000 home.  Just think about what you could do with the money that you save …