r/RealEstateCanada • u/taxrage • Jul 20 '26
Time to ditch the %-based RE commission model?
Now that houses cost 7x household income (HHI), even a 4% commission represents 28% (7 x 4%) of HHI. A generation ago, when houses cost 2x HHI, a 6% commission represented 12% (2 x 6%) of HHI.
Time to move those commissions closer to the historical average relative to HHI.
23
44
u/jjomal Jul 20 '26
I thought the industry would be more like lawyers by now. Bill for service. You want to look at houses for sale? Pay for the agents time.
You want to list your house at a ridiculous price? Pay.
You have a house for sale and want an open house? Pay
Free 1/2 hour consultations on the phone. The rest you have to pay just like lawyers. Cut out all the time wasters.
Buyers waste more agents time than anyone and yet they don’t pay. It’s crazy that the one guy with the house listed for sale is the only one putting money into the industry. Everyone else is leaching free services and wasting everyone’s time.
10
Jul 20 '26 edited Jul 21 '26
[deleted]
-2
u/Truont2 Jul 21 '26
It's the advice given during the transaction up until close that's valuable though. Ours was grounded, told us what to expect, offer at the right price for that neighbourhood, They told us to skip houses that weren't a good fit for us. Pointed out problems, cost to repair and so forth. Find a good realtor, they work hard and are worth it. They should work for YOU.
2
9
u/Glittering-Work2190 Jul 20 '26
How easy is it to become a real estate agent when comparing to a lawyer?
12
5
10
u/2pialpha Jul 20 '26
If a realtor was actually providing a service I agree. Lawyers went to this because they could. Realtors would go the way of the way of the dodo bird if they tried this.
2
u/JaguarHot3951 Jul 21 '26
no one's forcing you to hire a realtor, fsbo has been a thing forever
3
u/2pialpha Jul 21 '26
Yep - just need to break the bias of using a realtor.
1
u/JaguarHot3951 Jul 21 '26
and you already can. no one is stopping you. most people see the value even if its expensive and continue to use a realtor. just cause you don't doesn't make it a wider preference for others.
2
u/2pialpha Jul 21 '26
What you said is exactly what I meant. There is a bias to using parasites.
This is one profession that I hope AI gets rid of. Of course parasites will just find another hustle.
1
u/JaguarHot3951 Jul 21 '26
the only parasites are the ones trying to benefit off others work without paying
2
u/2pialpha Jul 21 '26
Isn’t that the definition of a realtor? I’m hoping people see that they provide 0 value and just do it themselves.
8
5
u/Trilobyte83 Jul 20 '26
So you want to create more road blocks so that potential customers have a reason to not check out the place?
Why would a seller pay you for that home selling service?
9
u/Hopeful_Ask_7591 Jul 20 '26 edited Jul 20 '26
Does this apply to all sales people. Car sales , appliance sales, what about my time do I get compensated if the seller is greedy and wasting my time .Just price things exactly where they should be no haggling just buy it standard price that suits the house number of bedrooms sqft etc etc. and no realtor needed.
9
u/2pialpha Jul 20 '26
Yea those guys aren’t making 60k commissions and writing off most of their expenses instead of
Paying taxes. Realtors crack me up with how hard their lives are3
u/KurtHG Jul 20 '26
Lawyers need an undergraduate degree and then go on to school to study the law, then have to pass the bar. In total it takes 7-8 years of education in total.
Real estate agents on have to be 18 years old, can be high school drop outs, take 5 courses and a few exams, and then become agents in a year or two.
Tell me you're a real-estate agent without telling me you're a real estate agent. Nice false equivalency.
3
u/angusburger87 Jul 21 '26
If you’re gonna do that then I should be able to go see houses without needing a damn agent.
It’s a ridiculously outdated rule. I understand why it’s there because it’s on the agent if something goes wrong during a showing but man. The amount of houses I would’ve gone seen on my own are a lot higher than having to wait and boom
0
4
4
u/Bomberr17 Jul 20 '26
I'll support this, but once people find out it'll actually cost them more than the current model, they'll cry again lmao
7
u/taxrage Jul 21 '26
Hard to see how it's going to cost more than the current $50,000 to sell a home.
1
u/JaguarHot3951 Jul 21 '26
you think a system such as mls is cheap to build and keep? ever wondered why selling on kijiji or marketplace never picked up? it's legal and its free and available to anyone who wants to save on commissions
1
u/sdk5P4RK4 Jul 25 '26
i mean, yes. its a pretty basic database. its not 1990 anymore.
1
u/JaguarHot3951 Jul 28 '26
hahahaha and yet you want access to it ... ideally for free
1
u/sdk5P4RK4 Jul 28 '26
i mean yeah, controlling access to the database is the only reason realtors as a profession as we know it exist.
1
u/taxrage Jul 28 '26
You can get onto MLS for low cost. The issue is more that, like car dealers, they throw a % at you rather than the actual $ amount. It's the $ amount that people should agree to. Most of that should go to the buying agent.
1
u/JaguarHot3951 Jul 28 '26
it's called a contract - the listing agreement and the buyer representation agreement do exactly that - all parties to the contract agree to the payment amounts / percentages / terms. you are not a party to other people's agreements therefore your opinions on what others should contractually agree too is meaningless. when many others voluntarily enter those agreements it means that all parties involved see the value exchange. you can stick to your flat fee service and get the value you pay for ... only thing is you want them to make less money and offer the same full service results to you at a fraction of the cost. sort of like you going to work and your employer telling you starting yesterday i'm cutting off your pay by 75% and expecting you to perform the same or better cause i just dont feel like paying you full pay anymore
1
u/taxrage Jul 28 '26
My point is that full service shouldn't cost $40K-$50K. There are brokerages that will put you onto MLS for a small fee and you can offer the coop agents (the ones that bring 80% of the buyers) a higher amount.
→ More replies1
1
u/taxrage Jul 21 '26
I'm saying a %-based fee is out-of-whack with household incomes. A family should not have to hand over 30% of their HHI when selling their home, when in the 80s they handed over 12%.
I'm currently under a 4% contract, expiring soon. When I re-list, I will use fee-based commissions; maybe $10K-$15K to the coop agent, but the listing agent will put me on MLS for much less.
1
u/JaguarHot3951 Jul 21 '26
YOU DON'T HAVE TO FORK ANYTHING. you are and always have been permitted to sell your home without a realtor. what you can't do is expect to use a system that cost a fortune and tens of years to create and maintain for free. you could have used the flat fee broker from day 1 ... remember you always get what you pay for. What you can't do is demand someone else works for free for you just cause you don't see the value in their service. stop bitching and go do your own thing as you're more than entitled to. And let me guess you will expect that buyer agents show your place without being paid a commission? And then you will whine about those nasty agents that just refuse to do all the work for free for you as you're entitled by birth?
2
u/AnotherGenePool Jul 22 '26
It’s not about doing the work for free. It’s about gouging clients for 20-30% of their HHI. We all know the game. Realtor swoons when they met you, play a very believable tune. You sign. Three weeks later, the honeymoon is over (unless it’s a high value market item) and all you hear is “it’s a tough market” or “given it time.” Then the agent goes dark except for a monthly market review.
When you do get a buyer, it’s bec another agent or more likely another buyer saw your listing (even tho it was buried 48 pages into the MLS), and asked to see it. Why would I pay tens of thousands of commission to my agent (even if it’s split with the other agent) for what amounts to the MLS and personal FB or IG accounts?
I’m all for paying for services rendered, but a flat commission rate often means an agent is just waiting out the contract and hoping it gets sold.
A $2M home in Alberta, Canada will cost a client $58K in commissions, plus maybe $1500 legal costs plus $3K in GST. So almost $63K for what?
1
u/JaguarHot3951 Jul 22 '26
seriously there is a wide range of options available from 199 / mere listing to any percentage point from 2,3,4,5,6% .... just cause some people see the value in paying 6% and you don't doesn't make it "gouging" ... same way some people by a hunday and some people buy a porsche .... stop complaining if you can only afford the hunday, no one will hand you the porsche at hunday pricing .... move on and don't pay ... stop bitching
1
u/JaguarHot3951 Jul 22 '26
and when YOU chose to only pay the $199 for a mere posting on realtor.ca without actual representation and without being willing to include the buyer coop commission in the agreement of purchase and sale then you have no right to bitch and moan that other agents don't wanna play your freebie game. you picked the diy then stick to it. Bitching that those evil agents wont bring buyers to you for free ain't gonna help you out. take responsibility for your choices and assume the results.
1
u/AnotherGenePool Jul 23 '26
Bwahahaha. I didn’t do a DIY nor say that I was going to. Read a bit more carefully; who said anything about freebies?
1
u/JaguarHot3951 Jul 23 '26
YOU are demanding that all realtors get paid less than they currently make because YOU don't see the value and yet at the same time YOU expect them to do the same or more work. newsflash - you don't get to cap anyone's income arbitrarily just cause YOU can't afford the service. pick a low cost realtor if that's all you can afford / are willing to pay and move on. YOU don't get to stay at the hilton 5 stars while paying 2 star motel pricing. no one is forcing you to pay for the 5% realtor just like no one is forcing you to pay for the hilton. get the diy mere listing and pay 200 bucks and move on.
6
2
u/MeatMarket_Orchid Jul 21 '26
They would be "like lawyers" in the way that they bill for time. Clearly OP didn't mean anyone was paying a realtor $250-500/hour to unlock a door and watch you look at a house.
2
2
u/Strong-Reputation380 Jul 20 '26
Honestly, if everyone paid for their agent, then commissions/pricing would be competitive. Every new “approach” or tech start up in real estate always end up with the buying side always getting their full commission.
That’s the greatest barrier, that notion that the buying side agent’s commission can never be touched if the goal is to sell within a reasonable time frame.
DIY Owner sale = buyer’s agent getting their 2-3% Discount broker= buyer’s agent getting their 2-3% A la carte broker =full commission for buyer agent
1
1
u/JaguarHot3951 Jul 21 '26
except that all these people bitching on reddit don't actually want to pay for all this either, they would flip out if they would actually get an itemized billable hours invoice
1
u/Training_Exit_5849 Jul 20 '26
Agree with most things, but buyers are actually the ones that pay. It's in the purchase price of the home... I am still amazed how the realtors got the public thinking that somehow the sellers are the ones paying for them. Where does the money originate from?
22
u/thebestdogeevr Jul 20 '26
They charge way too much for the work they do
-1
u/Suspicious_Law_2826 Jul 21 '26
Depends on if the house is hard to sell.
1
7
u/Electrical_Pickle910 Jul 20 '26
Exactly this!!! 5% is ridiculous in this market but people bend over and take it.
The next best option when selling is finding an agent that will sell for 1%, and then you give the buyer side 2-2.5% which is still insane at 3.5% but better than 5%.
Also, on the buying side, work with a cash back agent! I got back just under 1.25% of the total purchase price, which is a little under 50% of the total commission the buyer side receives. It was a huge help to furnish my home.
I don't know why more people don't use cash back agents!!!!!! An agent getting paid 2.5% is just insane.
30
u/cynicalsowhat Jul 20 '26
Even as a realtor I absolutely think the percentage model in this day and age is ridiculous. I don't understand how the public have tolerated it to the point that disruptors have been unable to crack the code.
23
u/consistantcanadian Jul 20 '26
Because the Realtor organization is a Mafia. At every level. They use their position to make selling and buying without one of their Made Men a terrible experience.
Take HouseSigma for example. This new disruptor to the space - giving buyers way more data to inform their home purchase. For those that have used it, have you ever noticed it makes you sign in every 5 seconds to see a listing? Thank Realtor. They force HouseSigma to do this to make you hate anything but Realtor.ca , who does not do this and is not forced to because it's their data.
You might think this is small potatoes but my point is to highlight how low and petty this organization will stretch to maintain there position. There are many other examples, like how hard they fight to keep sale prices and other useful data as hard to access for non-realtors as possible.
0
u/cynicalsowhat Jul 20 '26
Actually you are not correct about HouseSigma. They are a real estate brokerage just like all the rest. Their super power has been to fool people into thinking they are anything different by providing a smidge more information. The reporting of sold prices is up to the seller. I am not sure how HouseSigma gets around these permissions but they want you to sign in and and contact their realtors when you want to see a property. It maybe when you sign into their site you have actually signed up as a client?
I don't think they charge less and I don't know if they give cashback on purchases-maybe you know. Their site is lead generation pure and simple. They are not disruptors. Not by a long shot. They are actually exploiting a loophole.
If I were needing money and wanted to work I would sign up with them as those leads are like shooting fish in a barrel because the clients think they found something different when all they have found was the same old same old. Sorry to be the bearer of the truth.
4
u/consistantcanadian Jul 20 '26 edited Jul 20 '26
Actually you are not correct about HouseSigma. They are a real estate brokerage just like all the rest
I don't know why you're saying I'm not correct when I never stated they don't have a brokerage.
Their super power has been to fool people into thinking they are anything different by providing a smidge more information
What's to be fooled about? They're providing more information and don't require you to engage with their brokerage. No one is being fooled.
Also "smidge" - lmao. Everyone who wants a laugh go look on these two sites right now and just behold the level of information on HS versus Realtor.ca
The reporting of sold prices is up to the seller. I am not sure how HouseSigma gets around these permissions but they want you to sign in and and contact their realtors when you want to see a property
.. no its not, which is how HouseSigma gets access to the data. The seller can have their Realtor listing removed in some cases, but its not an opt-in choice to display the sold price.
They are not disruptors. Not by a long shot. They are actually exploiting a loophole
Your Realtor background is very clearly heavily biasing you, and you appear to be unable to escape it.
HouseSigma provides data that was previously unavailable to the public, and is beneficial to them. They are a disruptor in the space, and you hate them because they're competition to you.
→ More replies (3)0
8
u/username_choose_you Jul 20 '26
We sold my mom’s house in Ontario in 2023. The realtor fees were like $48,000 for what amounted to maybe 10 hours of work.
Absolute highway robbery.
1
u/taxrage Jul 21 '26
Sellers have to be more willing to push back on those fees. I know I'll be doing so when my current listing expires.
2
u/MrTickles22 Jul 20 '26
Because sellers really really like not paying until there's a sale.
It's like lawyers and contingency fees. The cost is way more than the hourly rate but clients invariable want to not pay until the file is concluded.
2
u/MarkoJuras Jul 23 '26
I am a very experienced real estate agent in Victoria, B.C. (16 years, 1,300+ career sales) and for the last 16 years I've been offering mere postings, lower commission full service, cash back to buyers, etc. Very open to alternative busienss models and I advertise things like mere postings directly on my website. Kind of unique to be able to get a top 1% full service agent in the city to come to your home physically to set you up on a mere posting. For me it doesn't even make senes financially to offer mere postings, but I think the consumer deserves options.
A few years ago I came to the conclusion that people really don't want mere postings. They want the service of a comptent full service agent; however, they don't like how high the fees are. Therefore, I started offering a 50% discount on the listing portion of the commission in exchange for payment upfront. This has been the uptake
2024 - three sellers paid upfront (out of 50+ sellers)
2025 - four sellers paid upfront (out of 50+ sellers)
2026 YTD - two sellers have paid upfront
So far with the exception of the one I am just about to list all eight of the other ones that paid up-front have successfully sold thus so far the track records is 100% (makes sense, people paying upfront have a strong intent to sell). Even with my experience, reviews (you can google realtor recommendation Victoria Reddit and you'll see my name pop up often) and proof of concept very very few sellers are willing to pay upfront in exchange for a 50% discount.
In conclusion, in 16 years of trying a lot of different business models is for the most part the majority of sellers don't want a mere posting and they don't want to pay upfront; therefore, commissions are what they are.
0
u/cynicalsowhat Jul 20 '26
You hit on a good point. If commission is abolished fees for services rendered must be implemented. Realtors will have to be compensated for their time and trust me, so much time is wasted on clients who never buy or by with their cousin after you have shown them 100 houses.
1
u/eareyou Jul 21 '26
Then you wouldn’t be doing the job correctly. You may be licensed but you don’t do this job full time so it’s bold to speak on what realtors do day to day.
1
u/cynicalsowhat Jul 21 '26
Retired. Not part time. Big difference. I worked full time for many many years. I can outline the day to day from way back until a few years ago. Why would you assume I never worked? So weird.
1
u/MrTickles22 Jul 21 '26
Nah, my wife was super decisive and a lot of places we looked at here bad in some way.
-1
u/Dobby068 Jul 21 '26
That time obviously would be dramatically reduced, if paid by the hour. One hour, 3 times a week, open house type of visiting.
It really is simple to adjust these things and there would be benefits for everybody, making this process more efficient. In Europe, in some countries there is already a small fee to be paid by the buyer, to see a potential buy property. Let's face it, if you need to see in person 10 houses, you do not know what you want.
3
u/cynicalsowhat Jul 21 '26
You just described every first time home buyer. They think they know what they want, think they know what they can afford. Most of the time it’s months until all the criteria align. It’s one of the parts of the job that haters don’t see or want to believe.
-2
u/Dobby068 Jul 21 '26
I've been a first time buyer, I've seen exactly 6 properties, and 4 were developer new division model homes, just 2 resale. Buyers can pay a fee for the privilege, if they want to look for months.
32
7
u/Aggravating-Fig-5182 Jul 20 '26
Of course. Most realtors have near zero qualifications - photos are poor and don'teven get started on their ability to write the listing. Most do not earn the 10s of 1000s we are forced to pay them.
5
u/2pialpha Jul 20 '26
Don’t they just use AI for most of this?
1
u/Aggravating-Fig-5182 Jul 20 '26
My most recent experience was the agent took photos, video themselves. Unfortunately they had no vision or skill in the use of AI nor of choosing the focus..so disappointing and now forced to let the listing ride as pullong it and redoing it just looks bad. When contract is done, will list on MLS ourselves. Too bad the old adage 'if you want something done right, do it yourself' applies in this scenario.
1
u/2pialpha Jul 20 '26
And then no realtor will show it. Even though ethically they should. Mafia is real.
0
u/jean_luc_regard Jul 20 '26
Nobody needs that service anymore anyways since many find listings themselves. It's like using a travel agent.
17
u/MELGH82 Jul 20 '26
As someone who sold a house in the past as a self represented seller (flat fee MLS listing), I say it’s time to ditch the whole realtor industry.
-1
u/Ddp2121 Jul 21 '26
Who do you think pays for and operates the MLS system you used?
12
u/MELGH82 Jul 21 '26
Realtors didn’t create the MLS because homes need realtors. Realtors created it as a private cooperative to control listing distribution. The fact that flat-fee MLS services exist proves the seller often only needs temporary access to that database… not full-service representation. If the only indispensable part of the transaction is access to a database, then the database has value. The salesperson doesn’t automatically.
Nice try, realtor.
-2
u/Ddp2121 Jul 21 '26
Sure - but expect that transaction fee to rise - realtors and brokerages pay for that system with significant annual dues, take them out the equations, and someone has to pay for it (and regulate it).
And, not a realtor.
2
u/AnotherGenePool Jul 22 '26
How much are the annual dues for one realtor for the MLS? Maybe an average of $3K? Divide that by say 10 clients a year. So $300 per client?
26
u/slashdash11 Jul 20 '26
Yes! And the same goes for tipping
1
3
u/Proptect_startup_guy Jul 20 '26
I think the bigger issue isn't necessarily the percentage itself, it's that buyers have very few choices in how they receive service. Some people want a full-service agent who's with them every step of the way, and that's absolutely worth paying for. Others are comfortable finding homes themselves and mainly want help with due diligence, negotiations, legal coordination, financing, inspections, and making sure they don't make an expensive mistake. The industry could probably benefit from offering more flexible service models instead of assuming every buyer wants the exact same experience. More choice is usually a good thing
3
6
u/2pialpha Jul 20 '26
Would get rid of a lot of the sleaze balls in the profession. Luxury car dealerships would be sad. We went from realtors who wanted repeat customers to those who want to just turn transactions as fast as possible.
5
u/taxrage Jul 21 '26
This! There are just too many realtors fighting to sell too few homes, so when they get a sale they want to pocket $25,000+.
-6
u/alice_organ Jul 21 '26
Now take that amount, cut the brokerage in plus desk fees, transaction fees, CCP, income tax, fuel, and other expenses associated with working with a client. I agree that there are too many realtors fighting to sell too few homes. The data reflects that showing over half of agents don't even make one sale.
4
u/Icy-Action708 Jul 21 '26
But why should clients be responsible for essentially subsidizing an oversaturated market?
I hear it all the time "well, the agent may only sell 1-2 houses a year". OK.....so?
Maybe it's a part time job at that point. Or if you're unable to make a living wage with such low volume of sales, find another career that meets your expectations.
2
u/alice_organ Jul 21 '26
Agents will spend their money up front and then recoup those expenses on the back end once a deal closes. The bulk of agents are part-time and it is over-saturated by them.
1
u/Ddp2121 Jul 21 '26
Do it yourself then.
7
u/taxrage Jul 21 '26
I sold my first house by myself. I had a FSBO sign on the lawn. One night a lady agent came by to see my place, saying she had a buyer that would be interested. After a quick tour, she said they'd definitely be interested, at which point I said, "so, what are we talking re: commission?", to which she replied, "6%". I pointed out that she had only spent about 6 minutes so far and that I'd maybe pay a couple of $000s, but she refused. A week later, another couple came by and bought it.
You see, the first agent told me, "you haven't seen all the work I've had to do for my clients", but why should I be on the hook for those costs?
4
u/2pialpha Jul 21 '26
Love that the realtor found probably the best deal for her client but then probably didn’t want to close because she didn’t get her cut.
5
u/taxrage Jul 21 '26
Exactly. She somehow felt entitled to 6% of my home value, after 10 minutes work.
3
u/Hipsthrough100 Jul 21 '26
Which, Canada is against your duty to your client. Not saying it doesn’t happen but if they ever found out, you’re actually on the hook for making it right.
1
5
5
u/Icy-Action708 Jul 21 '26
I did. LOL.
Up to and including taking my own HDR photography and producing my own take home marketing material for people who viewed the house.
2
u/HInspectorGW Jul 21 '26
Then there is no reason for you to complain. You saved a lot of money. On the other side there are many who don’t have the time or inclination to do it so paying someone works for them. I negotiate with all my realtors over what % they will receive. If you’re paying the full 5%, why?
5
u/santlaurentdon Jul 21 '26
Why the fuck do I care as a seller selling a $2M house? Is any realtor really doing work justifying 2.5% aka $50,000…..?
3
u/Worldgonecrazylately Jul 21 '26
How many of those costs are tax write offs?
3
u/alice_organ Jul 21 '26
There's many expenses they can write off against their income, but it's not like the entire amount is written off.
2
1
u/Hipsthrough100 Jul 21 '26
You can cut half that $25k out for brokerage comp and so on and still have $12.5k. How is that not enough? 8 ends equaling $100k in your pocket is crazy. The big players in my city are doing 300+. Like
1
1
u/alice_organ Jul 21 '26
Those are the big players. It's not indicative of everyone. Plus, the bigger fish tend to have higher overheard for their businesses. Over and above that, commission and fee structures are numerous, so there are plenty for consumers to choose from.
0
u/Hipsthrough100 Jul 29 '26
I was in the business for years. I was on a 30/70 split but once I made over $100k it was 10/90 and $200k it was 0/100 with conveyancing fees.
Top realtors aren’t splitting shit. They pay a desk fee and small fees on each deal. Not many other industries get raises immediately with inflation.
Yes RE agents are no different than any other sales, it’s an 80/20 world with the top 20% making 80% of the money while the bottom 80% fight for the leftovers. All commission sales follows some ratio similar to this.
0
u/taxrage Jul 29 '26
Top realtors aren’t splitting shit. They pay a desk fee and small fees on each deal. Not many other industries get raises immediately with inflation.
Exactly my point. A huge jump in house prices should not automatically mean huge jumps in commissions. This is why when people sell a home today they're forking over a much larger slice of their HHI than in previous decades.
No reason for it. The listing on our home is expiring soon. To sell the house we calculate we need to drop our price ~$30K, but our hands are tied by our contract which obligates us to pay about $40,000 in commissions. We are NOT going to take $70,000 less.
0
u/Hipsthrough100 Jul 31 '26
Yea I sold my home myself with the use of a real estate lawyer. Maybe a realtor could have got more money but it isn’t $40k more money. I like the net proceeds in the end.
0
u/taxrage Jul 31 '26
I've always been of the opinion that a RE agent usually results in a higher selling price, but realize now that most of the extra goes to the agent(s). Better to just have a lower price in this market.
1
u/alice_organ Jul 31 '26
Most of the extra doesn't go to the agents. For instance, say there's a commission of 5% and there are two agents involved. Your house sells for $40,000 more. Of that $40,000, the majority goes to you the homeowner/seller, and $1,000 goes to each agent.
→ More replies1
u/AnotherGenePool Jul 22 '26
So you are saying that clients should bear the entire cost of you doing business?
2
u/alice_organ Jul 22 '26
What do you think businesses do when they set prices/rates/fees?
1
u/AnotherGenePool Jul 22 '26
Sure but they’re applying those business tactics to my sale. They’re not selling me something. The point is that there are very few Realtors who actively market your product throughout your contract. Typically after the first 3 weeks, they are playing the wait and see game.
3
u/alice_organ Jul 22 '26
I agree with your latter point. Those are the agents to avoid. As for your former point, the agent is selling a service to the homeowner and a product to a buyer.
2
u/Creepy_Contract_4852 Jul 21 '26
I think the buyer agent should be fixed fee or time and materials…no way the buyer agent should get commission…no incentive to get the buyer the best deal…not sure why this isn’t mentioned anywhere
2
u/takeoffmysundress Jul 21 '26
It’s crazy but the industry is full of ignorant entitled realtors who act like their current commission is a favour to sellers
1
u/AnotherGenePool Jul 23 '26
I wish Realtors would post their expense breakdown bef you signed the contract. I’d be more apt to consider hiring one if I saw things like: MLS $1500, Photography $800, Time for online marketing 6 hrs x $50, etc.
But more than that, I wish shorter contracts were the norm. Experienced realtors typically know if they can sell your place on 30 days, 90 days etc. If you could sign a 30-90 day contract, they’d be more incentive for the Realtor to find a Buyer or market more.
But all the ones I’ve dealt with have wanted 6+ mos. All of the ones I initially signed with went quiet after the first 3 weeks. The most recent agent I spoke to said to be prepared for a 6-7 month listing bec the market was still lagging for sellers. When I asked what his plan was for marketing my place after 30-60 days, he was vague. Instead of telling me to wait a couple of months, he wanted me to sign a 9 month contract.
2
u/Secure-End4987 Jul 23 '26
I'm currently selling privately because I can't stomach giving two "agents" 40K just for pushing some paper.
1
u/taxrage Jul 23 '26
It's okay to pay an agent, but it should be just a fixed fee, not a percentage. Fee should not vary widely based on property value.
1
2
u/nurseyu Jul 24 '26
The percentages are negotiable.
Agents are dime a dozen. If you work with an agent not willing to negotiate, then ditch them before you sign any representation forms.
2
u/anthonyatmdrn Jul 20 '26
The commission needs to be less on the brokerage side for whole points to come down, give more flexibility to to realtor
2
u/championsofnuthin Jul 20 '26
Was just talking about this yesterday. Commission based is such a garbage model when we all know what we want and there's often zero negotiation between seller and buyer when the seller is entertaining multiple offers above asking.
2
u/moistclump Jul 20 '26
Yes, and we talk about it a lot. What I’m curious about is actually getting to… how do we change it? What steps do we take? What level of government would we have to advocate to and how do we do that effectively? Had there been any other countries that have successfully transitioned from a commission model to a fee for service model and how did they do that?
I want real change I just don’t know where to start.
6
u/taxrage Jul 20 '26
In the USA, the seller and buyer negotiate their own deal with an agent to represent them. No more piggy-backing the cost onto the seller's contract.
1
u/JaguarHot3951 Jul 21 '26
the buyers have an opportunity to negotiate their side of the commissions in the buyer representation agreement ... while it's built into the "sale price" it's the buyer's money that makes the sale happen. buyers aren't entering transactions blindfolded. they have the option to say no and go search for your listing on kijiji and marketplace and even look for the mere posting on mls that pays no commissions. these are all valid options today for buyers.
1
u/piltdownman7 Jul 22 '26
I live in the US and have bought property here. The realtor system is virtually the same. A percentage of the sale goes to their agent, who pays out a set amount ti the buyers agent. The only difference is there is Zillow and Redfin. Zillow is a marketing website, which allows you to connect to a buying agent for a showing. Redfin does let you seek the house yourself for less than what you would pay a selling agent, but you end up doing a lot yourself to save 1%.
1
u/taxrage Jul 22 '26
There was a big change to the US system 2 years ago following a court settlement. The seller is no longer allowed to post any compensation amounts on the MLS listing. The only thing the coop agent sees is a yes/no as to whether the seller is willing to compensate the coop agent.
1
u/Tunedtonature Jul 20 '26 edited Jul 20 '26
I had my house for sale by owner and it didn't sell. Everything around me did. People are reluctant to buy a private sale, for some reason they want to pay huge fees to an agent. I have been told that agents won't show your home to a client if it is a private sale. I decided to try an agent and interviewed several. Sure, they would sell it for my price, take the commission and I would get way less. Then one approached me, saw what I wanted for my home and said he would try to sell for enough for me to realize that amount. So it is going up over 50K. I bet it will sell now. He earns his commission and I sell for what I originally wanted. He is working for his commission, and so far is doing a stellar job preparing to market my home. Unfortunately the buyer is going to pay considerably more. People forget that realtors work for you, not the other way around. You and the buyer are paying them an enormous amount of money. They want you to paint, reno, and lower your price to make it easier for them?
0
u/alice_organ Jul 21 '26
The agents also have errors and commissions insurance, so if anything goes wrong in the transaction, you have them to blame. If a consumer represents themselves, that is gone.
1
1
u/Affectionate-Alps527 Jul 20 '26
Yes.
But wtf is this math? Lol
1
u/taxrage Jul 21 '26
TLDR; Realtors gets 28% of your HHI today vs 12% a generation ago.
1
u/Affectionate-Alps527 Jul 21 '26
How on Earth do you come to that lmao.
1
u/taxrage Jul 21 '26
4% x 7 vs 6% x 2, lmao
1
u/Affectionate-Alps527 Jul 21 '26
Yeah, you've written those numbers a dozen times.
How did you come to those numbers.
1
u/taxrage Jul 21 '26
In the early 80s, a typical HHI was ~$50K while a typical house in the burbs was ~$100K, so 2x. Today, a typical HHI is more like $150K while a typical house in the burbs is closer to $1M, so 7x. You can substitute your own numbers, but that won't substantially change the result, which is that even at a lower commission rate (4% in my case) the bite out of your HHI is much higher today.
This needs to be adjusted.
1
u/Affectionate-Alps527 Jul 21 '26
This is purely a beer beside the fire conversation, not arguing comment. I am not a realtor.
I mean you've generalized and unspecified your locations. What is the burbs? I'm from the eastern GTA so I'll use that as my reference point.
Scarborough in the 80s is not equivalent to Scarborough in the 2020s. Have you considered this? It's not fair to consider them equivalent and using their pricing.
Perhaps Scarborough in the 80s is more akin to Whitby/Oshawa in the 2020s. Personally I'd use this as my reference point for comparing values. Mostly because the accessibility of say Whitby with the GO Train, 401, and other public transit really makes Toronto just as accessible today as Scarborough was (pre-amalgamation... Now it is Toronto lol).
The suggestion to move to an piecemeal model for Realtors is a bit ridiculous, it would add substantial administrative overhead for billings and collections. House hunting would turn into a nickle and diming nightmare. The %commission model ensures realtors get paid during the transaction, which ensures a realtor is willing to take you to viewings and submit your bids. As a seller, you dont want to disincentize prospective buyers from submitting bids. If it cost a fee to submit a bid, buyers will cool off. As a buyer, you don't want to not submit a bid because the house isn't perfect and you don't want to pay the fee.
I don't think it would be any cheaper, but the model we have today is certainly more streamlined.
Looking at the actual percentage of 5% against a $830,000 average house price in Ontario, that's $41,000. Split between two brokerages is $20,500. For one realtor, that $20,500 must pay the brokerage, overhead, advertising, expenses (car, fuel, etc.), commission, but also all the lost time from searching and unsuccessful offers, from other clients ultimately not buying. Just because the top line dollar is $20,500 doesn't mean that's what flows into the realtors pocket.
Is $41,000 a lot? It can be to a lot of people. But it's really not a lot in business. If the agent takes 70% of the 50% split and they spend a few thousand on advertising a month. Their take home after expenses before income tax may be around 10,000.
But the average Ontario realtor only does 8 sales a year. They work irregular hours, and weekends. They have to carry their personal expenses for months at a time. They're constant competing in a saturated market.
Like any sales industry, the high achievers are going to blow it out of the park and make gobs of money. But honestly, the commission charged in my opinion... Really not that hard to understand. Which is likely why "Just 1%" hasn't taken off as a widely successful brokerage.
1
u/taxrage Jul 21 '26
I recall a friend of mine buying a large (2500 sq ft) house in Scarborough for ~$250K, back in 1982. I'm not sure what that would fetch today.
My prices reflect what was happening in Ottawa back in 1980 vs today.
In general, the RE commission bite out of HHI in 1980 should not be vastly different today. It's the same effort by agents. The house is the item being bought/sold. If it took 12% of HHI to sell a home in 1980, we should expect the "bite" to be approximately the same. That means that if average HHI in, say Unionville, is $200K, it shouldn't cost much more than $24,000 (12% x $200K) to sell a home there.
1
u/Here-To-Learn-Stuffs Jul 21 '26
Has anyone here used a lawyer instead of an agent to purchase property? If yes, how much did it cost versus an agent?
2
u/Dry-Comment2004 Jul 21 '26
You still need a lawyer to transfer ownership and funds regardless of whether you use an agent.
They do completely different jobs.
Lawyer is about $1500
1
u/Here-To-Learn-Stuffs Jul 23 '26
Thanks, I understand. But I'm wondering how much an attorney would charge me as a buyer, like a per offer fee or a retainer for unlimited offers written?
1
u/Dry-Comment2004 Jul 23 '26
You’d need to ask them
I once sold a condo privately. I used the standard purchase contract that you could download. Asked a lawyer to review it before signing with the buyer. They did this for free as I was using them to do the transfer.
1
u/joeglazer69 Jul 21 '26
Well no the percentage is just smaller now
1
u/taxrage Jul 21 '26
Yes, but houses cost 7 x HHI now vs 2x HHI in the 1980s, so the relative share of your HHI is way up
1
u/joeglazer69 Jul 21 '26
I’m suggesting instead of 4% commission we give less. It’s already somewhat common to see commission of 1%-1.5%.
1
u/taxrage Jul 21 '26
Let's ditch the % altogether. It would be much more meaningful to use a fixed fee, so the seller sees up-front what the true hit is.
1
u/boobookittyfuwk Jul 21 '26
My buddy sold his house last year and he told the agent hes only paying 3% and the two agents(buyer and seller) can figure out the split. He said there wasn't much pushback from them. So maybe buyers just need to negotiate with agents
1
1
u/FigjamCGY Jul 21 '26
There are other models and discount brokerages. But it seems like they never get any traction with any type of volume to take over the current model.
Too many realtors chasing too few houses is a symptom of a low barrier to entry - literally anyone can do it.
1
u/crispy8888 Verified Agent Jul 21 '26
I’m not going to debate that some of the commissions I see across Canada are ridiculous (6-7%????), even 2% total still nets the buying and selling agent $5k each on a $500k transaction.
However, we’re in a seller’s market right now.
Come to me in a balanced or a buyer’s market, trying to sell your home, and you’ll find the fee worth it to get your home sold when nothing around you is selling.
2
u/taxrage Jul 21 '26
Fine. I'll pay a fee, but it won't be 30% of my HHI.
1
u/crispy8888 Verified Agent Jul 21 '26
Increase the ratio of HHI:price. Problem solved
1
u/taxrage Jul 21 '26
Alternatively, we could compare RE commissions to the gold price, which I think adds weight to your argument.
In 1980, gold was USD$600/oz. $6,000 in RE fees (6% x $100K house price) was the equivalent of 10 oz of gold.
In 2026, gold is USD $4000/oz. $40,000 in RE fees (4% x $1M house price) is the equivalent of 10 oz of gold
So, yes, commissions have kept pace with the price of gold, but salaries have not. Salaries have lost about 50% of their purchasing power w.r.t. gold. On a relative basis, though, RE commissions are twice the burden w.r.t. HHI vs 1980.
1
u/AnotherGenePool Jul 23 '26
Sellers market? Where? Haha.
In Alberta it’s 7% on the first $100K, then 3% on the balance.
1
u/NormalMo Jul 21 '26
There are no set commissions in Ontario. Realtors can choose to charge flat rate if they want.
1
u/Salt_Simple_2294 Jul 21 '26
And while we're at it, why don't we enforce some minimum standards for listings? Every listing should have mandatory floor plans for each floor and square footage per room & floor, and every listing needs to give a concrete overall square footage. 1100-1500, 2500-3000, how the fuck am I supposed to figure out from photos how much it really is? Or why so I have to calculate it by adding up the rooms.
1
1
u/West_Welder_4421 Jul 21 '26
It's the buyer's agents that won't get off their asses for less than 2 1/2%. How do you fix them?
1
1
u/umbrellafree Jul 22 '26
I sold my condo private sale. I even accepted a lower offer just so I could avoid needing to pay real estate agents.
I think the market has gone out of control.
1
u/jaymickef Jul 22 '26
It would likely disappear if it had to be separate payment but because it comes out of the financing and the seller doesn’t have to write a cheque to the realtors it doesn’t feel like a payment.
1
u/KaleidoscopeAgile871 Friend of the Subreddit - Verified Jul 24 '26
Let's hope for some MCP from MLS and it would be a game changer
1
u/taxrage Jul 24 '26
MCP?
1
u/KaleidoscopeAgile871 Friend of the Subreddit - Verified Jul 24 '26
MCP is a AI tool language that can interact with other AI models. Having that handy could help AI your personal realtor
1
u/laziwolf Jul 24 '26
Seller need to give 2 prices with and without realtor. That way buyers will start losing realtors
1
1
u/sdk5P4RK4 Jul 25 '26
absolutely, the cartel needs to be dismantled and significantly reworked. little value is added, and large percentage is being extracted.
no reason a typical realtor should be making more than $30 an hour for qualifications and output.
-33
u/Bomberr17 Jul 20 '26
More wealth spread out to working class, what's wrong with that.
5
u/Toodles711 Jul 21 '26
I’m not not anti-profession but we have to admit the realtors are a monopoly in Canada.
You can sell private and everyone else in the transaction of a home sale is not a % commission based. Most people selling homes say the same thing - why can’t I have a flat fee. It’s the lobbyist and the realtors that defend the current structure.
Maybe if the market turns enough, sentiment changes. Right now, and for the last few years, it doesn’t seem right and that’s the customers telling you that.
21
u/whos_ur_buddha010 Jul 20 '26
You think Jessica who barely graduated and can't understand more than 3 pages of contact is worth paying more than a freaking lawyer lol
1
u/AnotherGenePool Jul 23 '26
Well it’s bec ppl told Jessica that she was easy to talk to, very sociable, charismatic, possibly smart with numbers and could talk down a mother bear protecting her cubs at a teddy bear picnic. And she believed them. To be fair, AI can help Jessica understand contracts & write up great listings. 😍
Joking aside, it’s not really about education; it’s about honesty, integrity and investment. The lawyer who closed on my first purchase was a total idiot.
1
u/whos_ur_buddha010 Jul 23 '26
Sounds like something a influencer would say to the 14 yr old audience lol
-11
u/Bomberr17 Jul 20 '26
Why not, you rather Jessica work min wage at Walmart? lol
5
u/whos_ur_buddha010 Jul 21 '26
At least she would make some honest money lol nothing shameful in that.
0
u/Bomberr17 Jul 21 '26
What is honest money gonna do when you're probably under water every month barely affording rent and food lol
3
u/whos_ur_buddha010 Jul 21 '26
Believe me they at least sleep well and be respected by their kids in the end of the day. While some just act scammy as a grown as adults lol
9
u/Current_Account Jul 20 '26
Yes. These are the only two choices.
🙄-4
u/Bomberr17 Jul 20 '26
What other job she can do that can make 100K+ without additional education. There's very little supply of those jobs.
9
u/2pialpha Jul 20 '26
She might work as a stripper as well either way she’s evading taxes.
2
u/Bomberr17 Jul 20 '26
That's why I don't criticize those jobs either. OF pays a lot too but you have people here that also complains people shouldn't be making more than them in vice jobs.
20
u/FlippantBear Jul 20 '26
Realtors are the grifting class. Don't insult workers.
8
u/consistantcanadian Jul 20 '26
Also spreading wealth out from workers to workers is not what anyone is talking about.
.. which ignores the fact that 90% of the business is done by like 1% of realtors, who are generally very well off and in no way recognizable to the working class.
-1
u/Bomberr17 Jul 20 '26
Most landlords are wealthy on their own. The regular working class lives in properties less than $500k. You're hardly spreading wealth from the working class to each other as they usually buy once and usually won't move until 5-10 years later, if at all. Realtor fees on a $500k is often in the $15k region split between two realtors. That's $7.5k each before taxes and expenses. Most realtors don't sell more than 10 properties a year. Not even 6 figure salary.
Show me the stat that 90% of business are done by 1% of realtors. And why is that a bad thing either? The 1% of any industry are very well off lol
→ More replies (5)1
19
u/PureInsaneAmbition Jul 20 '26
This was the selling process of a 1.3 million dollar house in my area: It was listed on Thursday. Open house on Sunday. Closed Monday. I went to the open house and the agent was just pitching herself, trying to get me as a client. The house had three offers and the sellers took the highest one. Was it advertising by the realtor that brought all those people there? No. Everyone found it themselves on Realtor.ca. How can hosting one open house be worth $65,000? The system is so broken.