Real Estate Commissions in Alberta: What You Need to Know
Thinking about buying or selling a home in Alberta? One of the key things to understand is how real estate commissions work. It might sound complicated, but it’s pretty straightforward once you break it down.
1. How Commissions Are Set
Percentage of Sale Price
Most real estate commissions are based on a percentage of the sale price. Commissions are typically paid for by the sellers, at a percentage of 7% on the first $100,000, and 3% on the balance remaining. This amount is then split between the seller’s agent and the buyers agent (3.5% on first $100,000 and 1.5% on the balance remaining). At times, buyers may be responsible for their buyer agent fees, such as when they sign a buyer representation agreement with their buyers agent and then choose a listing that doesn’t offer the same commission as what their buyer agent charges (ex: 2% Realty listing or a For Sale by Owner property).
Flat Fees
Some agents might offer a flat fee instead of a percentage. This can end up being a good deal if you’re selling a higher-priced home.
2. Time to Negotiate
Negotiable Rates
Commissions aren’t set in stone. Sellers can chat with their agent to negotiate a rate that works for everyone. It’s all about what you’re comfortable with! However, it is wise to keep in mind that you get what you pay for. If you are aiming to drop the commission percentage, double check to see if the reduction in commission will reduce your services.
Dual Agency
Sometimes the same agent represents both the buyer and the seller. This can change how commissions are handled, so make sure to discuss it upfront.
3. Splitting the Commission
Between Agents
When one agent lists the property and another brings the buyer, the commission usually gets split between them. Each agent takes a share, so it’s fair all around.
Brokerage Fees
Agents work under brokerages that also take a cut of the commission. The split can vary, so it’s good to ask your agent how it all breaks down.
4. Listing Agreements
Exclusive Right to Sell
Most listings are exclusive, meaning the agent has the right to sell the property. This usually guarantees them a commission no matter who brings in the buyer.
Open Listing
An open listing is less common. It allows multiple agents to sell the property, but only the one who finds the buyer gets paid.
5. When Do You Pay?
At Closing
Commissions are generally paid when the sale closes and come out of the sale proceeds. If the deal falls through, the agent usually doesn’t get paid.
6. Extra Costs
Marketing Fees
Agents might charge extra for marketing, advertising, or other services. These should be laid out in the listing agreement, so you know what to expect.
Referral Fees
If you’re referred to an agent, the person who made the referral might get a cut of the commission. Just something to keep in mind as you will likely come across some paperwork to sign acknowledging this!
7. Legal Musts
Written Agreement
In Alberta, it’s required to have a written agreement that details the commission and what services the agent will provide.
Disclosure
Agents have to be upfront about any potential conflicts of interest, especially if they’re representing both parties.
8. Regulatory Body
Real Estate Council of Alberta (RECA)
The RECA keeps an eye on real estate practices in the province, ensuring agents play by the rules and maintain high ethical standards.
9. Market Influences
Competition and Trends
Commission rates can change based on market conditions and competition, so it’s worth keeping an eye on what’s happening in your area.
10. Think It Through
Cost-Benefit Analysis
Before you sign with an agent, consider the commission cost versus the benefits they offer. A great agent can bring market knowledge, negotiation skills, and marketing muscle to the table! Every Realtor is different – so it is important to interview multiple Realtors and ask your questions, and find out how they will work to sell your home. Just because you meet with someone doesn’t mean you need to hire them!
So there you have it! Understanding real estate commissions in Alberta doesn’t have to be overwhelming. Just remember to communicate openly with your agent, and don’t hesitate to ask questions. Happy house hunting or selling!
Thinking of buying or selling and want to chat more about hiring a Realtor? Have more questions? CONTACT US
Contact Tanya and Kelly with Urban Haven Real Estate Group at CIR Realty
587-415-1705 or urbanhavengroup@gmail.com