Real Estate Commission BC - How Realtors Get Paid

To those without specialized knowledge of the industry, it can be unclear exactly how realtors receive compensation for their work. Plenty of variables determine how much realtors are paid, which can vary significantly from market to market. 

Real estate commissions are not fixed rates in Canada. There’s a typical standard range that commissions typically fall within, but this standard changes over time and may depend on certain factors outlined below. 

Being a realtor is considered a challenging job, as it requires a wide breadth of knowledge and a range of responsibilities. Realtors face the pressure of only being paid once sales have been completed, and realtors are affected by market downturns to a more noticeable degree than many professions.

In British Columbia, both buying and selling realtors are paid through the seller’s commission. The funds are transferred to the selling agent’s broker, who splits the fees between the buying and selling agents. The buyer and seller will tend to be responsible for paying a percentage of their commission to their broker. In BC, home sellers are responsible for paying 5% tax on their realtor’s commission. 

In British Columbia, graduated commissions are common—which means the percentage changes after certain property value thresholds. In British Columbia, commission rates tend to be around 7% on the first $100,000, followed by 2-3% on the remaining amount. In other markets, commissions that are a fixed percentage of the home sale price may be more common.

Important Facts to Know About Real Estate Commissions in British Columbia

Typical Real Estate Commissions in BC

Typical real estate commissions across the province tend to be graduated, and range between seven and eight percent on the first $100,000, with between two and three percent charged on the remaining amount. The total commission amount is then split between the buying and selling realtors. 

In Vancouver, on a home sale of $1,235,900 (the current benchmark price of homes across the Metro Vancouver area), a seller could expect to pay $37,167 in total commission. That commission fee is based upon 7% charged on the first 100,000% and 2.5% charged on the remaining amount. 

While a 50-50 split between the buying and selling realtor is typical in some markets in North America, it’s common in British Columbia for a selling agent to receive around 55% of the total commission and the buying agent to receive around 45%. Based on the above example, that would be $16,330 for the buying agent and $19,068 for the selling agent, with the property seller also being responsible for $1,770 in tax on the commission.

Typical Real Estate Commissions Across the Province

In Vancouver, you’ll tend to see buyer’s agent commissions around 3.1% for the first $100,000 of the purchase price of a home and around 1.2% on the remainder, while the numbers for selling agents are around 3.9% on the first $100 000 and 1.3% after that.

In the Victoria and Kelowna markets, you’ll commonly see an even split between buying and selling agents, each earning 3% on the first $100,000 and 1.5% on what remains. In some markets, a slightly higher split in favour of the buying realtor may be more common. 

Real estate commissions are notably lower in British Columbia compared to in some other provinces. This difference is particularly felt with higher-valued properties because of BC’s graduate commission system. For example, Ontario has a fixed-rate commission system which can lead to significantly higher commissions when selling prices are high. 

Responsibilities for Selling Agents in British Columbia

Selling agents tend to be responsible for covering expenses associated with marketing and preparing your home for sale. Costs related to marketing may come in the form of professional photography, copywriting services, market research tools, and the costs of online and physical advertising. 

Realtors who work for large real estate companies will tend to pay a percentage of their commission to the company they work for. Realtors who work under such companies may also pay what’s called a “desk fee” in exchange for services and support provided by the company. 

For instance, the large real estate company RE/MAX is known for offering high-earning agents a 95/5 commission split. That means realtors pay only 5% of their commission to RE/MAX in exchange for the benefits and support the company provides, in addition to being associated with a well-known name. Furthermore, these realtors also pay a fixed monthly amount. For realtors who want to avoid paying the monthly amount or who do not qualify, alternative payment plans are offered that involve paying a higher percentage to the company.

Commission Fees Aren’t Standardized in British Columbia.

In BC, each market has its own standard commission fees that will tend to be adhered to. It is possible for sellers to negotiate lower commission rates for the sale of their home, but most real estate professionals will stick to standard rates. For particularly high-valued properties, sellers may find themselves able to negotiate lower commission fees, knowing that their realtor will still stand to earn a significant amount on the sale. 

It’s always a good idea to research and familiarize yourself with the standard commission rates in your market. When researching different realtors, you may come across 1% agents who offer bare-bones services for a reduced percentage. While a 1% commission rate may be significantly lower than industry standards, those who enlist 1% realtor services may find themselves leaving money on the table compared to enlisting an experienced agent who provides the full range of services. 

Realtor commissions for pre-construction homes tend to be lower than those for built homes, as the developer instead does much of the work that an agent would typically do. Still, it’s generally advisable to enlist a realtor’s services when considering the purchase of a pre-construction home, as they can help you navigate important clauses and options. 

Average Salaries for Realtors Across BC Markets

Because realtors’ salaries tend to take the form of commissions, they can be unpredictable to some degree and highly variable from year to year. Based on last year’s data, the average number of real estate transactions per realtor per year is 11 in British Columbia, and the average commission for realtors per transaction is $9,541. 

These numbers averaged out across all agents would put the average salary for real estate agents in the low six figures. However, these transactions are not equally distributed, and highly-qualified agents command far higher salaries than inexperienced realtors. For realtors who are just beginning their careers, it may be the case that it takes a while before they have established the resources and network to complete sales on a regular basis. 

Across the country, the median salary for realtors is $46,212, with data from Canada’s job bank showing yearly earnings range from around $30,000 to the strong six figures. In recent years, competitive real estate markets in the province have seen properties selling at historic prices and in very short time frames, which has been a boon for many of the province’s high-performing realtors. 

While most realtors are primarily paid through commissions that are a percentage of the sale price of properties, some realtors earn additional money through real estate coaching, conducting other tasks associated with the sale of a home, and by flipping or renting out properties.

Some renters even enlist the services of real estate agents to help find a rental property. After all, realtors tend to have superior knowledge of the housing market they serve, which can be used in the service of others.

What If A Sale Doesn’t Close?

Home sellers tend not to be responsible for paying commission until a transaction is complete. However, there are instances in which, based on the terms set out between the seller and realtor, a commission can be collected so long as there’s a legal contract of sale, even if the sale doesn’t close. 

For instance, there was a case in the Fraser Valley in 2017 where a seller was found responsible for paying a commission on his sold property even though the buyer disappeared before the closing date. The contracts were signed, and the deposits had been paid, but in the end, the buyer did not pay the agreed-upon $1.35 million for the home, forfeiting his deposits. Due to the terms of his contract, the realtor had fulfilled his obligation and was entitled to the commission.

Such cases are extremely rare, but this instance highlights the importance of knowing your rights and responsibilities as a seller and working with a realtor you trust to provide you with all the information you need. 

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