As the vendor, it is your responsibility to pay a sales commission to the real estate agent for successfully selling your home. The commission that you will pay is established in the listing contract.
Typically expressed as a percentage of the final selling price, commissions are payable upon the closing of the sale.
You’ll generally be obliged to pay the negotiated commission if a sale is made under either of the following conditions:
- if you accept any offer made during the time the listing agreement is in effect – even if you sell your home yourself.
- if, within a pre-determined number of days following the expiry of the agreement, you accept an offer from a buyer who visited your home while the agreement was in effect (the specific time frame will be spelled out in the listing agreement).
- Commission rates in Canada today typically run in the 5% to 7% range depending on the type of listing agreement. In certain situations, they can be negotiated for instance, if your real estate agent is also involved with your next home purchase and/or represents your potential buyer.
- Finally, real estate commissions are subject to GST and, where applicable, to provincial sales tax. Your agent or local real estate association can tell you which taxes apply in your jurisdiction.