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This FAQ explains how agents earn commission and other fees, and the required disclosures they must make to you when earning money from other sources connected to your real estate transactions.
No. While some brokerages may have a commission that all real estate professionals at the brokerage charge, any commission amount can be negotiated between you, your real estate professional and brokerage.
Sometimes consumers believe that if a brokerage or real estate professional does not agree to offer the commission rate the consumer wants, that is a violation. That, however, is not the case. If you and your real estate professional are unable to agree on the amount of commission being earned by your real estate professional’s brokerage, either party can decide that the agency relationship is not possible.
In some instances, your real estate professional may receive a referral fee, or some other form of remuneration, from a third party. This can happen if they refer you to a property inspector or other contractor, or even if they refer you to another real estate professional for additional services. Whatever the case may be, your real estate professional must disclose any remuneration they are earning from a third party to you in writing.
If you are a buyer, there is a good chance that a portion, or all of the commission being paid to your real estate professional’s brokerage will come from the seller. In that case, your real estate professional will disclose to you, how much they will be receiving for representing you in the transaction.
Yes. If the services you are being offered are modified, or both you and your real estate professional agree that there will be an increase or decrease in the services they will provide, the commission structure can be renegotiated.
As noted above, if either you or your real estate professional suggest a change in commission structure, the other party does not have to agree to the change. If no agreement is reached, the original terms of your listing will continue (whether that be diarized in a written service agreement or not).
Can I list my home for a set price and then allow my real estate professional to keep any amount over that list price that I may get?
No. Real estate professionals are prohibited from charging you a commission based on the difference between the list price, and the ultimate price a buyer pays. This prohibition serves to protect you by eliminating the perception that your real estate professional recommends listing your home below market value so they can increase the amount they will earn.
Your real estate professional must always act in your best interest and that includes doing everything possible to eliminate even the perception of wrongdoing.
If I want to cancel my listing contract with my real estate professional, do I still need to pay the commission?
The terms outlined in your contract will specify whether or not you have to pay commission after terminating a service agreement (such as a listing contract).
Your real estate professional will explain all the terms in the listing contract prior to you signing it to ensure you understand what your obligations are. That includes what happens if either party wants to terminate the agreement.
I agreed to pay a percentage of the sale price as commission when I listed my home. How do I know how much that will be?
Many listing contracts provide that the commission will be calculated based on a percentage of the sale price. That means the more your home sells for, the more commission will be earned by the brokerage you hired. When you get an offer, your real estate professional will provide you with a Disclosure to Seller of Expected Remuneration form. On this form your real estate professional will convert the percentage from the listing contract into a dollar figure so you know how much you will be paying should you accept that offer.
It is important to note, however, that the dollar figure does not include other fees you may be expected to pay such as lawyer or notary fees etc.
Please read the Disclosures Consumer Guide for more information.
This content was developed with financial support from the Real Estate Foundation of BC.