How Do Realtor Commissions Work In Calgary?

How Do Realtor Commissions Work In Calgary?

Think of commissions or real estate fees as the cost of doing business with your Realtor® (and your buyer’s Realtor®) for successfully selling your home. The amount of this compensation can sometimes be negotiated and depends on your home’s final sale price and how much work your Realtor® has agreed to do for you.

Note that you can avoid paying commissions altogether by foregoing the services of a Realtor® and going the route of For Sale By Owner (FSBO). Going solo, however, has its drawbacks. Realtors® can bring with them a network of buyers and industry players, a deep understanding of the market, and a wealth of negotiating know-how.  Working with a real estate agent often results in higher offers than private sales offsetting the cost of commissions.

Are you thinking of enlisting a Realtor® to sell your house or condo in Calgary? The Mel Star Team has what you need: elite Realtors® who do more than post your home on the local MLS®. From taking care of your open house to creating “marketing bombs” for potential buyers, a Mel Star Realtor® always goes the extra mile to maximize your sale.   

What Is A Realtor Commission Fee? 

Commission fees are the main source of income for real estate professionals and are usually paid by the seller. This sum is traditionally split 50/50 between the seller’s Realtor® and the buyer’s Realtor®. 

Commissions are simply the cost of doing business with a real estate agent; the vast majority of real estate transactions in Canada involve at least one Realtor® in the process. 

Commissions are usually already included in the listing price of your home. 

How Are Commissions Calculated In Calgary? 

Commissions in Calgary follow the 7/3 rule: 7% on the first $100,000 of the home, and 3% on the remainder price.

For example, if you are selling your home for $850,000 (taxes included), the commission fees you will owe the Realtors® would be:

0.07 * $100,000 = $7,000
0.03 * $750,000 = $22,500
Total: $7,000 + $22,500 = $29,500

The total commission you would be responsible for would be $29,500. Because your Realtor® would be splitting the commission in half with the buyer’s agent, your Realtor® would end up with $14,750, of which a significant portion would be paid to their brokerage firm. 

Subtracting $29,500 from your final sale may seem significant, but keep in mind that your Realtor® most likely played an instrumental role in making the sale possible in the first place. Without their assistance, your home would probably not be able to command such a high price, bringing down your total earnings even regardless of commission fees. 

Can I Negotiate Realtor Commissions?

The vast majority of commission settlements follow the 7/3 formula, though limited adjustments are sometimes possible. If you really want your Realtor® to do the bare minimum, such as just listing your property on the MLS®, you can probably bargain for lower commissions. On the other hand, if your Realtor® is also answering phone calls, marketing your home through multiple channels, and arranging and leading showings一everything they can do to increase your chances of making a sale, then you will likely have to pay full commissions. 

Your objective is not to reduce the commissions as low as possible. This is because the amount of effort your Realtor® invests in your sale is directly proportional to the amount your home can command on the MLS®. Commission fees rarely exceed profits, making the extra services your real estate agent provides more than worthwhile. 

Can I Avoid Realtor Fees Altogether? 

You will not have to pay commissions if you sell your home yourself. However, going it alone rarely pays off:

You will have to pay other fees anyway: Not every homeowner knows how to deal with the paperwork that comes with the home-selling process. In Alberta, you will need to hire a lawyer, which can be expensive. You will also have to pay for marketing materials and listing fees. 

Your home will get less visibility: Because the buyer’s Realtor® will not earn any commission from your sale, they have no incentive to market your home to potential buyers. The outcome is that your home will garner less buyer interest than it deserves. 

Declining the services of a Realtor® to save on commission fees is rarely profitable because you will be making the selling process exponentially more difficult for yourself. 

Talking Commissions With The Mel Star Team 

The Mel Star Team takes pride in maximizing transparency throughout all stages of the home-selling process, including the commission settlement. Our Calgary Realtors® are happy to sit down with you and discuss the extent of services we will provide you with to make sure your home is sold at a profit as quickly as possible. If you currently have your home listed as For Sale By Owner (FSBO) and have been having difficulties attracting buyers or receiving offers at your desired price, call us at (403)-861-9944 or fill out the online contact form to connect with one of our Realtors®.

FAQs

Q: I am a buyer. Do I need to pay commissions?
A: No. The commissions are usually paid by the seller. 

Q: What services can I expect from my Realtor® during the sale process?
A: Your Mel Star Realtor® can come up with a listing strategy, prepare your home for sale, market it, and arrange and lead showings. Visit our seller’s homepage for a comprehensive rundown of our services.

Q: What is a foreclosed property?
A:  A foreclosure is the process of a lender (the bank) repossessing a home from a homeowner when they fail to make their mortgage payments.

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