08 / 27 / 2019
What are realtor fees in Vancouver?
We’ve all heard someone complain about their realtor’s commission. This often results from not working with the realtor that best matches their goals. It’s common to go with the realtor that’s the easy choice without delving deeper into their level of service (and requiring more of them). I’m guilty of this before I was a realtor but had I spent a little more effort, I would have been better served throughout the process. The icing on the cake was the impersonal kitchen basket I received as a housewarming gift despite not cooking at all.
If you first think “He’s so funny” or “He’s so good looking” when someone asks about your realtor, you chose the wrong realtor.
I’m doubtful you’d hire a lawyer with that criteria and you should also aim higher when hiring a realtor for one of the most important decisions you’ll make in your lifetime. I want my clients to list my sense of humour and devilish good looks 3rd or 4th down their list.
Below, I’ve outlined realtor commissions, partly in favour of transparency and partly to help illustrate that you deserve excellent service from your realtor. To help you select the right realtor and put you on the right footing for your process, here are 10+1 questions to ask to select the right Vancouver realtor (although I was happy to learn that a friend just used them to select his realtor in Toronto).
What are REALTORS® in Vancouver paid?
Firstly, although the seller pays for both her and the buyer’s realtor, it’s all one pot of money. You can negotiate the commission to your realtor when selling and also when buying a property.
There is no standard fee in Vancouver, however, often the total commission paid by the seller will be calculated as 7% on first $100,000 and 2.5% on the balance of the sale price. This is shared between the seller’s realtor and the buyer’s realtor as shown in the below figure. Again, there is no official split but I consider a full buyer’s realtor commission to be 3.255% on the first $100,000 and 1.1625% on the balance.
Figure: Approximate example REALTOR® fees in Vancouver
There are realtors who charge more but, given housing costs, I’d be interested to know what they’re doing for that extra money. To me, the “I have 25 years experience” mantra doesn’t hold water if they’re going to hand you off to a team and/or not providing any additional services. On the other end of the spectrum are discount brokerages who are able to charge less as more work is done by the seller.
Realtors in other areas have other rates. For instance, sellers in Toronto will often be charged a flat 5%, equating to $50,000 on a $1,000,000 sale. That’s approximately $20,000 more than in Vancouver. I’ve considered moving to Toronto but the idea of their winter cold and summer heat quickly kills the idea.
Being a REALTOR® has costs
While we are well paid, we may not be as well paid as you think as, although it may seem like you’re hiring a person, you’re actually hiring a company. You wouldn’t be alone as the plethora of business expenses are a leading reason there’s a high failure rate among realtors.
Here’re example expenses my cautious accountant accepts for my business:
- property marketing materials (hiring professionals for photos, floorplans, brochures, and videos; professionally printed brochures)
- property advertising (creative design, online advertisements, brochures, MLS access fees)
- ordering strata documents for listings (some realtors charge their clients this expense but I feel that’s nickel and diming)
- real estate board licensing fees
- business insurance
- brokerage fees (as contractors, realtors pay their brokerages, not the other way around)
- office supplies including professional design and printing
- technology – cell phones, internet service, computer, service subscriptions
- website – designing the new theme of my website plus the building reviews cost a small fortune
- architectural consultant – I employ the leading architectural consultant to contribute to my listing and building reviews
- Condo Buyers Guide – similar to my website, the creative design, picture licencing and printing quickly adds up
- client events (speakers, AV rentals, gifts, meals, drinks) such as at Equinox Gallery
- vehicle (purchase cost, insurance, fuel, repairs, car washes, parking)
- training courses
This is by no means an exhaustive list and it doesn’t account for the time realtors spend running their business and working with clients.
I hope this is clear and encourages you to delve deeper when hiring a realtor. If you have any questions about Vancouver realtor commissions, please reach out via email (Jason@JasonHutchison.ca) or phone or text (604-314-7138).