Edmonton Realtor® Commission: Where Does Your Money Go?

So, how much do Realtors® get paid anyways? Edmonton’s top Realtor® breaks down some of the myths surrounding real estate Realtor® commission. 

I know what you’re thinking: Cue the violin; Wally is asking us to feel bad for poor, struggling Realtors®! I’m the first to admit that the Edmonton real estate market has been good to me and I’m very fortunate to have a successful, long-term career that allows me to support my family and live a comfortable life. With this in mind, I can understand when clients see the final commission amount and want to know exactly where that money is going. I’ll do my best to explain how it all works and I’ll leave it to you to decide if the amounts are justified or not.

How much Realtor® commission do real estate agents earn in Alberta?

Realtors® in Alberta generally charge 7% on the first $100,000 and 3% on the remainder of the home’s selling price. These amounts are shared 50/50 with the cooperating Realtor® (the buyer’s agent).  Each agent then owes a percentage to their brokerage. This amount varies depending on the brokerage, and can be either a flat fee per month or a percentage of the commission. To keep the calculation simple, let’s say about 20% goes to the brokerage. Naturally, income tax must be paid too. Add to this business expenses such as membership dues, licensing and board fees, insurance, and operating costs, as well as listing costs which include signage, high quality photos and video, marketing materials and everything else it takes to ensure your home selling experience is an incredible one. At the end of the day, the final amount your Realtor® takes home is considerably less than the starting amount.

Who pays the commission in a real estate transaction?

The seller is responsible for paying the Realtor® commission. Buyers do not pay commission. As a buyer, keep this in mind if you come across an agent who promises not to charge a commission when representing you (as a buyer) – this isn’t an incredible act of kindness on their part. They’re getting paid by the seller! 

Before you ask to negotiate that commission...

Consider asking potential agents exactly how they plan to market your listing instead. With options like for sale by owner or discount brokerages readily available, lots of consumers are considering these cheaper alternatives.

Now, when you think about how much Realtor® commission actually ends up in the agent’s pocket in a traditional calculation, consider the impact for a Realtor®who’s working for a discount brokerage. How is that going to affect your home selling experience? Realtors® collecting a discounted commission need to take on many listings in order to sustain themselves.  Or maybe they’re just moonlighting in real estate part-time for some extra cash. And where does that leave you and your listing?

What you save in Realtor® commission upfront might end up costing you in the long run with extra days on market, a poorly negotiated sales price, or a deal that falls through due to agent inexperience or inability to juggle competing priorities.

Bottom line: When you do your research and find a high-quality real estate agent who can deliver an excellent home selling experience from start to finish, the commission will be money well spent. In addition to those tangible services a Realtor® offers – which might include things like signage, cleaning, staging, photos, online and print marketing materials and feature sheets – an experienced, reputable agent will have insight, expertise, connections, and access to other industry-related resources – all of which are immeasurably beneficial when trying to sell your home in a challenging market.

A quality real estate professional is your best bet for a risk-free, stress-free home sale.

While I may not have convinced you that commission rates are totally fair, I absolutely stand by my word that a seasoned real estate agent is your best bet for a stress-free home selling experience. In fact, I’m willing to stack the odds in your favour! My long time experience means you get a phenomenal home selling experience and peace of mind knowing that your home will be sold as fast as possible. Learn more about the benefits of selling with an Experienced Realtor® contact me for a no-obligation consultation. 

Questions or comments about this post? Leave your details below and I will personally get back to you!