Many people don’t really understand who pays what in a real estate transaction. Tune in to understand everything you need to know about real estate commissions and who pays what.
The question of real estate commissions and how much it costs to have real estate representation is one of the most asked questions in real estate. Kelowna Realtor® Danny Kupkowski explains everything you need to know.
That's right! Here in BC, when buying a home, using a REALTOR® does not cost you out of pocket. As a buyer, your expectation should be that you can have real estate representation and not have to pay real estate commission.
There is an exception, though. Most buyers will sign a buyer's agency contract when working with a REALTOR®, that outlines the terms of the arrangement and that the real estate agent will work solely for them in a real estate transaction and in their best interests. One part of this agreement may be a stipulation that the buyer's agent will receive an industry-standard commission from the seller, and if the seller is offering less than the standard that the buyer will pay the difference.
Generally, real estate commission is paid by the seller, from the proceeds of the home sale.
When the home is listed, the seller and their REALTOR® enter in to a listing agreement that outlines the agreed upon gross commission, listing agent commission, and buyer's agent commission.
The commission is shown on the seller's statement of adjustments at closing, and deducted from the proceeds of the sale price.
Real estate commissions are not set rates, but rather are determined by the seller and the seller's agent.
There are exceptions to this in the form of discount real estate brokerages, or arrangements made between the seller and their agent. Keep in mind that saying of "you get what you pay for". In addition to their time, the REALTOR® has many costs associated with their service to you, including customer service, administration and marketing. And while you may still get outstanding service at a discount commission, the value can be diminished when it comes to negotiation. In other words, at the negotiation table, once you have lost value, the only other thing you can change is price.
Whether you are buying, selling or both, it's important to use a REALTOR® or real estate team you trust. At Nyrose & Associates, our clients are our partners and we aim to be their choice for life. So when we're discussing commission, we will look at the current relationship, future relationship and referrals. It isn't always about dollars! We look at the whole picture and potential future business, too.
For more information or to discuss buying or selling a home, please give us a call at 250-258-9888.
Every day, we get asked questions from interested buyers, sellers, homeowners and industry professionals. We love to share our knowledge. Do you have a question you’d like the team to answer? Email firstname.lastname@example.org with your question and we’ll get it answered!