Real Estate Commissions
In exchange for a real estate agent's services, you'll pay an agreed-upon sales commission-typically 5% to 7% of the selling price-to your real estate agent at closing. The commission you'll pay is established in the listing agreement.
You may be able to negotiate the commission rate down. Most often, this occurs if your real estate agent is also representing you in the purchase of your next home, and/or if the agent represents your potential buyer.
There are two other circumstances-both typically spelled out in the listing agreement-in which you will usually have to pay your agent's commission:
- 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 specified number of days following the expiry of the listing agreement, you accept an offer from a buyer who visited your home while the agreement was in effect
Finally, you will also have to pay the Goods and Services Tax (GST) and any applicable provincial sales tax on your agent's commission. Ask your agent or local real estate association which taxes you will be liable for.
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