How Do REALTORS® Get Paid?

Posted by Tyler Frederick on Wednesday, March 18th, 2020 at 1:59pm.

One of the most commonly asked questions in real estate is, “How do real estate agents get paid?” Many potential buyers and sellers are apprehensive about using a REALTOR® because they are unsure of hidden costs that may arise during a real estate transaction. This ambiguity can leave a potential client wary and apprehensive about employing a REALTOR®. In all reality, though, what they’re missing out on is having someone on their side who will most likely give them educated advice, help them save money, and point out potential pitfalls in the buying/selling process. 

How Much Do Real Estate Agents Make Per Sale?

Every real estate agent is paid on a commission basis and does not traditionally get paid for showings, appraisals, or any rendered services provided until a deal is closed! The commission structure can be different on each listing, however in Saskatoon we have a standard rate which is not posted on MLS listings. 

How REALTOR® Commissions Work

Traditionally, the seller in a transaction is responsible for paying the commission to both the buying and selling agents. Whatever the price of the home is, the seller pays a percentage of its value to both agents involved. 

In Saskatoon, the most common rate split is 6/4/2 (meaning 6% on the first $100,000, 4% on the second $100,000, and 2% on the balance of the price), however it can vary between transactions. Buyer agents in Saskatoon are most commonly awarded 3/2/1 (meaning 3% on the first $100,000, 2% on the second $100,000 and 1% on the balance of the price). Whatever the split, though, the commission is paid to the buyer and seller agents from the proceeds of the sale of the house at the lawyer’s office once the deal is closed.

How Do Commissions for Dual Agency Work?

In the event that a REALTOR® represents both the buyer and seller in a transaction, that agent makes both the buying and selling commission on the sale. The selling agent will represent both parties and afford them both limited resources to avoid a conflict of interest. If you are entering this situation, your REALTOR® is required to have you sign a Dual Agency Agreement explaining what he/she can and cannot disclose to each party. This is an important step in protecting you no matter what happens in the deal moving forward!

Other Real Estate Costs When Buying or Selling a House

REALTOR® commission fees aren’t the only costs you’ll encounter when selling a house. The legal costs in Saskatoon are generally around $1000 per transaction. Meanwhile, land titles fees are generally around the $500 mark. You will also need a home inspector which, on average, costs under $600.  And any additional inspections are on a transactional basis depending on the age and condition of the subject property. 

In the event that it is a condominium sale, the Estoppel (condominium package), including a budget, reserve fund study, condo meeting minutes, policies, et cetera is ordered for the buyer to review and paid for by the seller (generally under $300). And for acreages, you may want to do a well water test, which typically is under $75.

 

 

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