How Do Ontario Realtors Get Paid? - Part 21 - Canada

This article discusses some scenarios applicable to compensation for the services of Realtors.

A straightforward but often misunderstood topic when buying and selling real estate is: how do Realtors get paid?

Ontario Realtors earn commissions from the purchase and sale of property. The sellerís Realtor negotiates a commission that will be paid between his or her brokerage and the buyerís brokerage. As per section 36(1) of the Real Estate Business and Brokers Act, 2002, the commission payable to the brokerages shall either be an agreed amount or a percentage of the sale price, but not both.

If a property does not sell, the seller will generally not be liable to pay anything to their and the buyerís brokerages and Realtors.

There is no legal requirement that governs what percentages are appropriate. So long as the Realtor fulfills his or her professional, ethical, and fiduciary duty towards his or her client, the negotiated overall commission is what usually governs the deal.

If a real estate salesperson is involved in the purchase and sale (which is the normal course), then the commission payable is further broken down between the respective brokerages and their real estate salespersons.

This may be a 75:25 allocation in favor of the real estate salesperson or a simple transaction fee (e.g. $300) that the salesperson must pay to the brokerage to facilitate the transaction.

While in most cases there is no direct cost to a buyer for their Realtorís services, a buyer may be liable to pay for some or all of their Realtorís commissions if they agree to it in a Buyer Representation Agreement (as discussed above).

ABOUT THE AUTHOR: Michael Carabash, B.A., LL.B., M.B.A.
Dynamic Lawyers Ltd. was founded by Michael Carabash, a Toronto business lawyer with Carabash Law. Virtually everyone has a wide range of legal issues they need help with - such as writing a will, fighting a traffic ticket, buying or selling real estate, writing a contract for services, reviewing a lease agreement, having documents notarized or commissioned, dealing with a motor vehicle accident, etc. Michael wanted ordinary people in need of common legal services to be able to conveniently and cost-effectively get answers and quotes from local lawyers. At the same time, he also wanted lawyers to be able to market their services directly and effectively to the public.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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