What it costs a REALTOR® to sell your home!

There are lots of articles out there that talk about why you should choose a REALTOR®.  If you have not seen any of these, you probably haven’t been reading my blog, nor had a chance to visit the HowRealtorsHelp.ca website.

I wanted to take this opportunity to focus on something different in this article, and explain what it costs a REALTOR® to work with a buyer or seller.  Hopefully this will allow people to appreciate what a REALTOR® truly has to do to sell that listing or to help the buyer find the right home.

To do this let me first explain what a REALTOR® is. They are a Real Estate Professional that belongs to organized Real Estate.  What this means, is they have completed the requirement to be registered in their province as a Real Estate Salesperson or Broker. After they have completed this process (which involves a series of educational requirements as well as joining a Brokerage) they have the option to become a member of organized Real Estate by joining a local Real Estate Board and in-turn also joining their Provincial Association (in my case the Ontario Real Estate Association also known as OREA) as well as the Canadian Real Estate Association (also known as CREA). Only when a Registrant joins these three tiers are they a REALTOR® and by extension have access to the MLS® (Multiple Listing Service). There are Real Estate Professionals out there that are not REALTORS® so it is important to understand this distinction; especially when you choose someone to work with.

Now that I have briefly explained what a REALTOR® is (and I do mean briefly as there is much more to it than the simple overview above), let me also explain that every Real Estate Professional must work with a Brokerage in order to trade in Real Estate.  The Brokerage provides the Real Estate Professional with the tools and resources to conduct their business under the guidance of a Broker of Record.

Now getting back to a REALTOR®. These professionals have the ability to set their own fee structure independently based on their value proposition or more simply; what they have to offer. The industry is very competitive, and the fee structure, as well as what is associated with that structure varies vastly from agent to agent (even within the same Brokerage). There are no “standard fees” or “standard service offerings”, the fee structure of the REALTOR® represents the services that individual provides to help buy or sell that home. And as a Buyer or Seller, you are free to negotiate both the fees as well as the service offering that the REALTOR® offers you.

To illustrate this better, let me paint the following picture. There are REALTORS® that when contracted to sell a home, they provide everything from painting services, relocation services, home staging services, cleaning services, and multifaceted marketing services just to name a few.  On the other end of the spectrum, we have REALTORS® who are contracted to provide simple posting service on the MLS®.  It is obvious that the more customized service an agent provides to their buyer or seller; naturally, the higher the associated fees that accompany that service.

The reality is that the market dictates what these fees are, based on competition, and more importantly based on the client’s needs. But in both cases, you are getting a Real Estate Professional; it’s up to you to decide what level of service you require to meet your needs. Some sellers may be happy to just list their property on MLS® and take care of their own home showings, their own offer negotiations, as well as their own marketing; while other sellers need more customized service based on their time, skills, and knowledge of the home selling process.

So what I am saying is it is not as simple as just calling a REALTOR® with the lowest commission offering. It is important for you to fully understand what that offering is and what you are expected to do as part of the contract.  And yes, I said the word contract.  Regardless of what level of service you want from your REALTOR®, you are entering into a contract where you agree to provide your Real Estate Professional with compensation based on the service level you require.

More often than not, the compensation model is based on a commission percentage of the selling price, meaning that the REALTOR®, despite having to pay for the service model they are contracted to provide; do not receive compensation until, and only if, the home is sold. There are however several other Real Estate Sales models out there where it follows more of an a-la-carte offering; meaning you pay upfront for what you want. The main difference in these two models is that in the more traditional commission based model you only pay the REALTOR® if your home sells, putting all the risk in the selling process on them; where the al-a-carte offering you pay upfront for those services regardless of whether the home sells or not.

Now let’s get the gist of what it costs for a REALTOR® to work with a buyer or seller.

First and foremost, we pay fees to be a part of Organized Real Estate and in-turn have access to the MLS®, which is a fundamental tool to our profession. These fees on an annualized basis can add up to thousands of dollars. Let me also explain the MLS® that the REALTORS® work with, is not the MLS.ca or REALTOR.ca website that the public can see.  The site a REALTOR® works with is a comprehensive database that includes extensive, detailed information about tens of thousands of properties. We have access to many other tools such as the Land Registry System, the Municipal Property Assessment System, and historical data of properties that have; sold, are for sale, as well as the properties that didn’t sell. The public sites (MLS.ca or the rebranded version REALTOR.ca) are owned and operated by the Canadian Real Estate Association and receive only baseline data on a periodic basis from the Local Boards MLS® systems. The system is a collaborative marketing tool that a REALTOR® uses as part of their marketing strategy.

Although every REALTOR® is an independent sales person, I mentioned earlier the fact that we must be a part of a Brokerage and trade under the guidance of a Broker of Record. The REALTOR® pays fees to the Brokerage for the opportunity for them to trade in Real Estate.  Could you imagine going to your place of work tomorrow and paying your employer to work there; well, that’s what a REALTOR® does.  These fees typically add up to thousands of dollars annually depending on the productivity level of the REALTOR® (typically the more you sell, the more you pay).

The attributes that a REALTOR® brings to a client is the fact that they are effective marketers, negotiators, are knowledgeable of the community within which they work, and are very knowledgeable of the home buying/selling process. When a buyer or seller approaches a REALTOR®, they are approaching a professional who has invested a lot of money and time to become the professional they are. So beyond the costs just to be a Real Estate Professional, let’s look at what it costs for a REALTOR® to work with a buyer or seller.

Let’s start by analyzing what it truly costs to sell a home.  First and foremost, the REALTOR® needs to establish the opportunity to meet with you as a seller.  They do this thru several different and innovative marketing means. We spend thousands of dollars in marketing campaigns just to give us the opportunity to sit in front of you as a seller and explain our value proposition.

Once you sign a Listing Agreement, the REALTOR® now takes the appropriate measurements, prepares the listing, and kicks things into motion. Depending on the service level you chose, it will determine what happens next.  In most cases it starts with a putting a sign on the lawn; depending on the size and complexity of the sign, this may involve a third party who is contracted to install it. Next an agent needs to take pictures; as the old saying goes, a picture is worth a thousand words. So the quality of the pictures is very important.

Now, depending on the service level you have contracted, this is where a REALTORS® actions become very different. For example, I use a professional photographer and virtual tour company to create the right look for my marketing.  Depending on the home, I will also involve a staging company to help make the home look its best. As a pilot; I also take aerial photos of rural properties to help get a better perspective of what the property has to offer.  Of course, I pay for these services as part of my marketing plan for my clients.

While this is happening, your listing is loaded on to the MLS® system. I now also start preparing your feature sheets which are a takeaway for every prospective home buyer. We would have already discussed dates for both an agent open house as well as a public open house. Yes, I said agent open house; I specifically market to other REALTORS® because they represent qualified buyers, and most Real Estate Professionals are working with multiple buyers at anyone time.  These agents will also receive your listing electronically thru a “handshake” agreement we have.

Marketing is not as simple as just putting the property on the MLS®; we need to get your property in front of the right buyer’s eyes.  Every REALTOR® will have a different way to do this, but it usually includes a mix of internet advertising and print advertising, and may also include TV or Radio advertising depending on the contracted services.

This is where the marketing machine goes into full swing.  This typically includes advertising through the agent’s website, their company site, and any other electronic means they utilize.  For example, I syndicate my listings to hundreds of agents and hundreds of websites to maximize the exposure of your property. Your listing is quite literally out there, everywhere, on the internet.  I do this because the reality is the majority of all buyers surf the net first when looking for a home.  Even after they contract a REALTOR® to help them find the right home, they still surf the net continuously, searching and searching.

Depending on your contracted agreement with the REALTOR®, will depend on how this is paid for. For example; in my marketing plan, I pay for all marketing services for my clients. I assume the risk of selling your property for you.

While the marketing machine is churning, we continue to evaluate and re-evaluate the home, the market conditions, as well as price index to determine if the home is properly represented in the local market place. We do this while showing the home and/or arranging for the home to be shown by other agents. Typically, a REALTOR® also does follow-up with the agents who did show the property.  This is to gauge feedback and to offer input to the seller on how to adjust the selling strategy.

So, this is a lengthy list and only covers the main highlights of what it takes to sell a home. We didn’t even touch on the time and energy dedicated to negotiating offers and sign backs, helping you understand the offer and the associated clauses, and working with the buyer’s agent to fulfill the conditional clauses in the offer. Nor did we touch on the intangible costs such as the REALTORS® fuel costs.

To be an effective REALTOR®, we must also have a network or a team of professionals that work with us. We need everything from home inspectors and lawyers, to trades people.  This network is important for the REALTOR® to provide you with options when and if they are needed as part of your sale or purchase.

The cost to sell your home easily adds up to thousands of dollars, and depending on the services you contract your REALTOR® to provide, it could easily be in the tens of thousands of dollars. So it is important to understand what services you ask your REALTOR® to provide you, and more importantly, what services do you need to help sell your home faster and for the highest possible price.

There are several costs associated with working with a buyer too.  A buyer will contract a REALTOR® to find them the right home and in turn agree to compensate them for their time, knowledge, and skills in finding the right home, negotiating the right offer, and seeing the deal thru to the close date and beyond.


In most cases, the seller of the home will compensate the buyer’s agent for bringing an accepted offer.  But that’s not always the case. Just as there are several models out there for how you sell your house, there are also several models for how the Co-operating Brokerage and in-turn the REALTOR® representing the buyer, receives compensation. When you sign a Buyers Representation Agreement, pay particular attention to the compensation you agree to pay the REALTOR® for their services.  If the Co-operating Commission is deficient of the amount on the Buyers Representation Agreement, you as the buyer will have to compensate the difference to your REALTOR®.

The compensation the Buyer’s Agent receives (which typically represents 50% of the listing commission) goes to pay for the time spent working with you to find the right property, as well as the intangibles such as fuel and vehicle costs. But finding the right property is only the beginning of the REALTORS® work.

We now need to negotiate the right offer. An offer that represents the Buyers interests and properly protects them in the transaction. Of course, this is not as simple as it sounds. The REALTOR® representing the buyer would love to pack the offer full of conditions in favour of just the Buyer; but the seller has to agree to the offer and will insist the offer be in favour of them. This is where the negotiating power of the REALTOR® comes into play.

Once the offer is accepted, the work of the REALTOR® doesn’t stop there.  They now have to work with you as the Buyer, to meet those conditions in the offer that are there to protect you! These include working with you and your mortgage broker to ensure you can obtain favourable financing; working with your inspector, to ensure that you are fully aware of the condition of the property; working with your lawyer to ensure the property can close, and much, much more. In many cases; the REALTOR® will need to make follow up visits with you or on their own to help fulfil the conditions of the offer.

As you can see there is a definite cost that a REALTOR® incurs to work with a buyer or a seller in any Real Estate Transaction. We do this while maintaining and enhancing our knowledge and skills to ensure we work in our clients best interests.

If you are interested in discussing buying or selling your next home, please give me a call.  I would be more than happy to work with you to understand your Real Estate needs!


About cluxemburger

Service you can Trust! As a dedicated real estate Broker Manager, my goal is to provide the highest possible level of service while ensuring that technology and proven business processes are used to maximize the Real Estate Experience. The Sutton Group - Central Realty team utilizes their skills, knowledge and technical resources to sell your home quickly and efficently; while working with buyers to enhance their buying experience. I look forward to building relationships with all of you! And if you a REALTOR® looking to step your career to the next level; give me a call. Sincerely, Chris
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