About Calgary Real Estate Commissions

About Calgary Real Estate Commissions

Who pays and how much? I decided to write this article because the friendly lady at the post office yesterday thinks all real estate agents are rich and make $14,000 on every deal.

In Calgary, all real estate fees are negotiable. There is no set limit either high or low. Some Realtors will work for nothing and some have a lot higher standards.

Let's say a person lists a home for sale with a listing agent and agrees to pay 7% on the first $100,000 of the selling price and 3% on the balance. And let’s say the home sells for $350,000. The fees deducted from the sales proceeds of $350,000 would be $7,000.00 plus $7,500 plus 5% GST for a total of $15,225.00 leaving the seller with $334,775.00 So the nice lady at the post office wasn’t too far off the mark with her estimate of $14,000.

The truth is that most deals involve a buyer's Realtor and a Sellers Realtor. And the two Realtors as a rule of thumb would split the commission 50/50. So each Realtor would end up with $7,612.50 minus the 5% GST they collected on behalf of the Government Of Canada, each agent is down to $7,250.00 30% of that should probably be set aside for Income Taxes, so now those Calgary Realtors each have about $5,075.00.

Out of that comes fees to the Realtors Brokerage, Calgary Real Estate Board, Real Estate Council of Alberta, Alberta Real Estate Association, and office expenses, advertising and promotions, professional development costs, vehicle expenses, insurance, and the always popular unforeseen expenses.

Little by little that huge commission everyone thinks Realtors make on every deal gets whittled away to; not much left.

The 80/20 Rule applies to Realtors. 80% of the Realtors split up 20% of the business. Most Realtors don’t make much money if any and most don’t last in the business very long because it is a tough way to make a living. The 20% of the Realtors doing 80% of the business usually have massive expenses and large teams that all get a piece of the commission pie. The Realtors that really do the best, are the agents that own rental properties. There are no company pensions in the Real Estate Business, Realtors have to create their own and the smart ones do it with Rental Properties.

Back to the commissions. I know you really don’t care about our expenses you only care about the gross amount you have deducted from the sales proceeds. There are lots of options to avoid paying what some call typical commissions in Calgary and all have their pros and cons.

Some people become so focused on not paying commissions that they end up losing a lot more money in other ways. At the end of the day if you are buying a home, get a Realtor you know will be looking out for you 100% of the time. And the same thing if you are selling. Buyer Agents work for buyers and Sellers Agents work for sellers.