What are Realtor fees in BC and How to calculate it?

akambi@grossyield.com -

“Realtor Fee”, also called “Commission” can leave home buyers and sellers confused. Trying to calculate realtor fees when buying or selling a home can be tricky due to complex commission rate structures.

We’ll try to answer all your questions in this blog.

Let’s start.

Realtor Fees in BC

You’ll hear agents in BC use a number of terms that all refer to the same thing – “Realtor Fee”, “Real Estate Commission”, or “Realtor Commission”.

The term can be defined as the amount of money paid to the realtor. The fee is always a percentage of the sales price.

There is no “Standard Realtor Commission” or “Standard Realtor Fee” in BC. The Competition Act of Canada does not cover this topic in detail. Hence, different brokers charge different fees.

The typical commission is  6 percent but some realtors may charge more or less. It’s also common for brokerage houses to have a unique commission structure where the fee decreases as the value of the property increases.

For example, you might have to pay 6 percent for $500,000 and 3 percent for any amount above it.

Who Pays the Realtor Fee?

Buyers are typically off the hook. The seller generally picks up this payment and pays it at the settlement table – the amount is subtracted from the proceeds of the sale. Hence, we can say it is included in the sale price.

How is it Calculated?

Let’s assume the value or sale price of a property is $2,000,000 and the realtor charges 5 percent commission.

We multiply the amount by the figure: 2,000,000 x 0.05

The resultant figure ($100,000) is your commission.

You can use online calculators to make the process easier. Feed the details and the calculator will do the rest for you.

Is it Negotiable?

Some brokers are willing to negotiate the rate so do give it a try. Since the amount is applied on the selling price of the house, a reduction of even 1 percent can make a lot of difference.

Is there GST on realtor fees (new home)

Yes, you will have to pay GST on the amount. The law considers real estate brokerage services like any other services.

The GST is 5 percent and is applied on the purchase value of the property. New home owners may have the option to apply for a rebate – up to 36 percent of the tax – if the purchase price of the property is $350,000 or less.