Commission
GTA Realtor · Commission, Demystified
Real estate commissions —
who pays, and to whom?
In Ontario, total commission is typically 5% + HST of the sale price — paid entirely by the seller. But "usually" is not "always." This page walks through the actual structure, what's negotiable, and what each side needs to watch for.
Definition · In one paragraph
In Ontario, residential real estate commission is typically 5% + HST of the sale price, split in halves: 2.5% to the listing brokerage, 2.5% to the buyer brokerage. The seller pays the full amount at closing; the listing brokerage forwards the buyer-side portion per the Listing Agreement. No law or regulation mandates any rate — commission is fully negotiable. Buyers usually don't pay commission directly, though a Buyer Representation Agreement (BRA) can require the buyer to cover a shortfall if the seller's offered co-op commission is below the BRA rate.
According to:
Trust in Real Estate Services Act (TRESA, 2023) · Ontario Real Estate Association (OREA) Form 200 / Form 300 · Canadian Real Estate Association (CREA) 2024 MLS® policy updates · Competition Bureau Canada.
How the Money Flows
How does the 5% + HST real estate commission flow between seller, buyer agent, and listing agent in Ontario?
One 5% + HST, flowing between three parties.
Party 1
Seller
Pays 5% + HST from the sale proceeds at closing — a single payment to the listing brokerage.
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Party 2
Listing Brokerage
Keeps 2.5% as its service fee and forwards 2.5% to the buyer brokerage per the Listing Agreement.
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Party 3
Buyer Brokerage
Represents the buyer. Receives the 2.5% as its representation fee — the buyer typically pays nothing separately.
"5% + HST" is usual, not required. Rate, split, and who pays — every line is negotiable.
Read by your role
What do buyers and sellers each need to know about real estate commissions?
Two halves. One for buyers. One for sellers.
Buyer commission · Direct answer
In most cases, the buyer pays nothing out of pocket for commission at closing.
The seller's Listing Agreement already commits 2.5% to the buyer's brokerage, paid directly from the seller's proceeds at closing. But "buyers don't pay" isn't quite accurate: that 2.5% ultimately comes out of the purchase price you paid. And there are three scenarios where you may owe money directly.
Three exceptions — when you may owe directly
01
BRA shortfall
Your Buyer Representation Agreement specifies 2.5%, but this listing only offers 2%. You cover the 0.5% gap.
Size of it:
On a $1M home, 0.5% = $5,000 + HST.
02
FSBO / mere posting
Homeowner-sold, or a "mere posting" where the seller bought only MLS® exposure. The seller may decline to pay any buyer-side commission.
Your options:
(a) build commission into your offer so the seller absorbs it; (b) pay your agent per the BRA.
03
Pre-con / special cases
In pre-construction, the developer pays your agent directly (3–5%) — it doesn't affect your price. Commercial, farmland, and overseas sellers may have other structures.
Why it matters:
Bringing your own agent to a pre-con sales centre is free — always do it.
Buyer action list
Read the BRA
Before signing: rate, term, geography, exclusivity, and the shortfall clause. This is the one document that can make you owe money directly.
Verify each listing
Before you offer, have your agent confirm the co-op commission on this specific listing. Know the gap before you sign the offer.
Put the gap in the offer
A gap doesn't mean you eat it. Your offer can request the seller raise co-op commission to your BRA rate — a standard negotiation point.
Buyer-only: two more things to know
Fact A
No minimum BRA term exists
No regulator or association — RECO, TRESA, CREA, OREA — mandates a minimum BRA term. 1 day, 1 property, 3 months, or 1 year are all valid. The term is fully negotiable.
Also negotiable:
coverage area, exclusive vs. non-exclusive, commission rate. A single-property BRA for one home you've actually decided on is a legitimate option.
Fact B
Two compliant paths for buyer rebates
If your buyer's agent agrees to give back part of the commission (buyer rebate / cashback), it must be handled in one of two ways — informal post-closing transfers are not compliant.
Option 1 — apply to the purchase price
Deduct the rebate amount from your offer price and write it into the Agreement of Purchase and Sale. Seller receives less, buyer pays less, fully documented.
Option 2 — write it into BRA Schedule A
Specify the rebate amount, trigger conditions, and payment timing in the BRA's Schedule A appendix. The lawyer applies it at closing per the schedule.
Fixed facts
What three things should both buyers and sellers know about Ontario real estate commissions?
Three things both sides should know.
Fact 01
Commission is always negotiable.
No Canadian law, regulator, or industry body sets commission rates. "Usually 5%" is market convention, not obligation. Agents also can't collude on rates — that's explicit Competition Bureau enforcement territory.
Fact 02
The detail lives in Schedule A.
MLS® listings typically run for ~60 days per industry convention, and can be renewed. The key rule: every service commitment, marketing guarantee, guaranteed-sold program, and cancellation or price-reduction term must appear in the Listing Agreement's Schedule A. Read every line before signing — verbal promises don't count, and a guarantee on a flyer that's not in the contract simply doesn't exist.
Fact 03
TRESA forces disclosure.
According to TRESA (2023): the Trust in Real Estate Services Act requires disclosure of identity, agency relationship, multi-representation risk, and commission amounts and structure. Before signing any OREA form, you're entitled to a full explanation — not a rushed signature.
FAQ
Other questions you might have.
Q. Do buyers really pay zero commission?
Technically, yes — the seller pays commission at closing. But two caveats: (1) the money originates from the purchase price the buyer paid; (2) the BRA shortfall clause is a real exception. If your BRA specifies 2.5% and the listing only offers 2%, you cover the 0.5% gap. On a $1M home, that's $5,000 + HST out of your pocket.
Q. Is commission always 5%?
No. 5% + HST is a Greater Toronto Area convention — not a law, regulation, or industry requirement. What usually gets negotiated is the listing half: the rate, a tiered structure (for example, 2.5% on the listing side for the first $1M and 1.5% above), or a flat fee ($10k–$25k). I recommend leaving the buyer side at 2.5% — see the seller section above for why. Which model fits depends on property type, price range, market conditions, and the service intensity you need.
Q. If my home doesn't sell, do I still owe commission?
Usually no — standard Listing Agreements tie commission to a successful closing. But watch two clauses: (1) Holdover — if you sell privately within 60–90 days after expiry to a buyer introduced during the listing period, commission may still be owed; (2) Early termination — some contracts require marketing-cost reimbursement if you cancel early. Read both before signing.
Q. If I sell privately (FSBO), do I pay any commission?
No listing agent = no listing commission. But if a buyer brings their own agent, you'll typically be asked to pay the buyer-side (2–2.5% + HST) — otherwise the buyer's agent either charges the buyer directly or builds it into the offer price. A middle path: a "mere posting" service puts your home on MLS® for a flat fee (hundreds to low thousands) but leaves showings, negotiation, and paperwork to you.
Q. How does commission work in pre-construction?
In pre-construction, the developer pays the buyer's agent directly — typically 3–5%, often in installments tied to construction draws (signing, occupancy, closing). It does not affect your purchase price. The implication: bringing your own agent to a pre-con sales centre is "free" — and important, because the developer's on-site sales rep represents the developer, not you.
Q. Does Arthur offer a "Guaranteed Sold" program?
Yes — conditions: ______________________ (leaving this blank; we'll fill it in when we talk).
Seriously, though: every "if it doesn't sell in X days, I'll give you $X" or "I'll buy it myself" guarantee needs its trigger conditions, floor-price formula, commission adjustments, and buy-back ceiling written into the Listing Agreement's Schedule A. Any guarantee that lives only in verbal pitches or marketing flyers — if it's not in the signed contract, it doesn't exist. This rule applies to me, and to any other agent making similar promises.
My own service guarantees — phased commitment (3 days → 2 weeks → 3 months), four written service terms, and the 18-month free resell guarantee for buyers — all attach to the OREA Schedule under the same logic. See the Service Guarantee page.
Seriously, though: every "if it doesn't sell in X days, I'll give you $X" or "I'll buy it myself" guarantee needs its trigger conditions, floor-price formula, commission adjustments, and buy-back ceiling written into the Listing Agreement's Schedule A. Any guarantee that lives only in verbal pitches or marketing flyers — if it's not in the signed contract, it doesn't exist. This rule applies to me, and to any other agent making similar promises.
My own service guarantees — phased commitment (3 days → 2 weeks → 3 months), four written service terms, and the 18-month free resell guarantee for buyers — all attach to the OREA Schedule under the same logic. See the Service Guarantee page.
Clarity
Commission questions? Just ask.
30 minutes to run your specific numbers.
No pitch. You tell me the property, price range, and goal; I walk through the real commission math, the negotiable room, and the clauses in the standard OREA forms that matter for your case.
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Direct
416-888-6161
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Email
home@
arthurzhao.realtor
arthurzhao.realtor
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Office
8300 Woodbine Ave
Unit 500, Markham ON
Unit 500, Markham ON
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