Can commissions be an agreed upon amount?


UPDATE: Previously, real estate brokerages could charge consumers a flat fee or a percentage of the sale price, but not a combination of the two. The restriction has been removed, so brokerages now have the option to make fee arrangements that could include a blend of a flat fee and a percentage of the sale price.

These changes, brought in by the Stronger Protection for Ontario Consumers Act, 2013, are effective as of
December 12, 2013.

Click here to see PUBLIC ADVISORY notice of December 13, 2013


 

Commission, or other remuneration, must be either:

  • An agreed amount or,

  • A percentage of the sale price

Commission or other remuneration cannot be a combination of an agreed amount and percentage.

The most common arrangement is a percentage of the sale price. Commissions based on a percentage of the sale price can decrease as the sale price increases. For example, a brokerage could set a commission rate of 3% for a sale price up to $250,000 and 2.5% for a sale price over $250,000. A commission based on percentage of sale price, however, cannot increase as the price increases – it can only decrease.

In addition, commissions can’t be based on a difference between the listing and sale price. For example, the commission cannot be 10% of the difference between a listing at $250,000 and the actual sale price.

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