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Real Estate Commission in Ontario: How It Works

Ontario real estate commission is set by negotiation, not regulation. The conventional structure is 5% of sale price split equally between the listing and buyer-side brokerages, plus 13% HST, paid by the seller from sale proceeds at closing. Every part of that — the rate, the split, the structure, even who pays — is negotiable under TRESA, and discount, flat-fee, and tiered models are all legal.

The conventional structure

The default Ontario residential commission is 5%, split 2.5% to each side:

Listing-side commission: 2.5% — paid to the seller\'s brokerage
Buyer-side (co-op) commission: 2.5% — paid by the listing brokerage to the buyer\'s brokerage
HST: 13% on the total commission, paid by the seller

On a $700,000 sale at 5% commission, the math:

Total commission: $700,000 × 5% = $35,000
HST at 13%: $35,000 × 13% = $4,550
Total cost to seller: $39,550
Listing brokerage receives: $17,500 + $2,275 HST
Buyer-side brokerage receives: $17,500 + $2,275 HST

The brokerages then split with their respective agents per individual commission split agreements (typically 70/30 to 95/5).

Try the calculator

Enter any sale price and see commission, HST, and brokerage split in real time:

Open the commission calculator

Commission by sale price (worked examples)

Sale price	5% commission	+ 13% HST	Per side
$500,000	$25,000	$28,250	$14,125
$700,000	$35,000	$39,550	$19,775
$1,000,000	$50,000	$56,500	$28,250
$1,500,000	$75,000	$84,750	$42,375
$2,500,000	$125,000	$141,250	$70,625

Negotiating commission

TRESA explicitly requires brokerages to disclose that commission is negotiable, and most listing agents will discuss the rate. What\'s actually negotiable:

Listing-side rate. Often the easiest to negotiate. A 2.5% listing-side commission is conventional, but 2% or even 1.5% is common in seller\'s markets, on premium listings, and with brokerages that have lower service costs.
Buyer-side rate offered. Some sellers reduce buyer-side commission to 2% or 2.25% to lower total cost, but listing agents typically push back because lower buyer-side commission reduces showing volume.
Tiered or sliding scale. "X% on the first $Y, Z% on the rest" structures are common on luxury listings.
Performance bonuses. Some sellers add a bonus for selling above asking or under a target days-on-market.
Cancellation terms. If the listing doesn\'t sell within the listing period, can you cancel without penalty? Some brokerages charge a marketing-cost recovery fee on cancellation.

What\'s usually NOT worth negotiating: a sub-1% listing rate (most full-service brokerages won\'t accept it and you\'ll get reduced service), zero buyer-side commission (will significantly hurt showing volume), or cash kickbacks to the seller (problematic under RECO\'s rules — disclosed rebates are fine, undisclosed payments are not).

Discount and flat-fee brokerages

Discount models in Ontario typically fall into three patterns:

Reduced percentage: 1-1.5% listing-side, full 2.5% buyer-side. Saves the seller about 1% (~$7,000 on a $700K sale) while still attracting buyer agents.
Flat fee: $4,000-$8,000 for listing services regardless of sale price. Makes sense on higher-priced homes; you save more on a $1.5M property.
Mere posting: $500-$1,500 to get on MLS with no agent representation. The seller handles showings, negotiations, and paperwork. High savings, high effort.

Mere posting requires more seller time and carries more legal risk; most sellers underestimate the time commitment. Reduced-percentage and flat-fee models offer the best risk-adjusted savings for most Ontario sellers.

TRESA Phase 2 changes (December 2023)

The Trust in Real Estate Services Act (TRESA) Phase 2 made three commission-relevant changes:

Mandatory written buyer representation agreements before showing properties or making offers. The agreement must specify how the buyer\'s agent is compensated — including what happens if the listing-side offer is lower than the agreed rate.
Designated representation replacing customer service in some cases. A designated representative owes fiduciary duty to one party in a multiple-representation scenario, which has implications for who can negotiate commission.
Information guide — RECO\'s standardized consumer information guide must be reviewed before signing any representation agreement, including the disclosure that commission is negotiable.

For most transactions the practical effect is paperwork: more disclosure forms, but the underlying commission structure (seller pays both sides at 5% combined) remains common. The bigger change is for buyers, who now have a written contract with their agent that includes explicit compensation terms.

Where commission appears on the Humber exam

Commission calculation comes up on Course 2 (Residential Transactions) for residential math and Course 4 (Commercial Real Estate Transactions) for commercial-flavoured commission structures. The MCQ patterns include:

Calculate net to the agent given a brokerage split and HST
Identify which TRESA Phase 2 disclosure must accompany a commission discussion
Solve for sale price given total commission paid (back-solve scenarios)
Distinguish commission rebate scenarios that comply with vs. violate TRESA
Calculate listing brokerage net after paying buyer-side

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FAQs

What is the average real estate commission in Ontario?

The most commonly cited rate is 5% of the sale price, typically split 2.5% to the listing brokerage and 2.5% to the cooperating (buyer-side) brokerage. Commission is negotiable in Ontario — no rate is fixed by law. Discount and flat-fee brokerages routinely charge less; full-service rates range from 3.5% to 5% in most markets, occasionally up to 6% for complex listings or rural properties.

Who pays the realtor commission in Ontario?

In a traditional residential transaction, the seller pays the entire commission out of sale proceeds at closing. The seller's brokerage then pays the buyer-side brokerage from the listing-side commission per the listing agreement. Buyers do not directly pay their agent in most cases. TRESA Phase 2 introduced new buyer representation agreement requirements that allow buyers to negotiate their own compensation arrangement, including top-ups if the listing-side offer is below their agreed rate.

Is HST charged on Ontario real estate commission?

Yes. Ontario charges 13% HST on the full real estate commission. On a $700,000 sale at 5% commission ($35,000), HST is $4,550, for a total commission cost of $39,550. The HST is collected by the brokerages and remitted to the CRA. HST is calculated on the gross commission (before any rebates the brokerage offers the buyer or seller).

Are real estate commissions negotiable in Ontario?

Yes — explicitly. Section 9 of the TRESA Code of Ethics requires brokerages to disclose to consumers that commission is negotiable, and the listing agreement must specify the agreed rate. Many sellers negotiate down from the conventional 5% based on market conditions, expected days-on-market, and the brokerage's service level. Buyers under TRESA Phase 2 can also negotiate their buyer representation compensation, including arrangements where the buyer pays their agent directly.

What is the lowest commission a realtor will take in Ontario?

Discount and flat-fee brokerages exist with listing-side commissions as low as 1% or flat fees of $4,000-$8,000. Most full-service Ontario brokerages won't go below 1.5% on the listing side. The buyer-side commission (offered by the listing brokerage to attract co-op brokerages) typically stays at 2-2.5% even on aggressively-priced listings, because lowering it reduces buyer-agent willingness to show the property.

Does the seller still pay buyer-agent commission under the new TRESA rules?

In most Ontario transactions, yes — the seller continues to pay buyer-side commission via the listing agreement, and the buyer's representation agreement aligns with that compensation. TRESA Phase 2 (effective December 2023) requires written buyer representation agreements before showing properties or making offers, and these agreements specify what happens if the listing brokerage offers less than the agreed buyer-side commission. The most common arrangement is still seller-paid, with buyer top-up only when the listing-side offer is materially lower.

How much commission do you get on a $300,000 house?

On a $300,000 Ontario sale at the conventional 5% commission rate: total commission is $15,000, split typically 2.5% ($7,500) to the listing brokerage and 2.5% ($7,500) to the buyer-side brokerage. Add 13% HST: $1,950 total HST, so the seller pays $16,950 in commission costs. Each agent then splits their brokerage commission with their own brokerage per their personal split agreement (commonly 70/30 to 90/10). At a 70/30 split, the agent personally keeps $5,250 from a $7,500 brokerage commission before HST, brokerage fees, and self-employment taxes.

Is 3% a good brokerage fee?

3% total commission (typically split 1.5%/1.5% between listing and buyer side) is well below the Ontario conventional 5% rate. Whether it's good depends on which side. For a seller, 3% saves about $14,000 vs 5% on a $700,000 sale — meaningful savings. For a brokerage, 3% means significantly reduced service or a discount/flat-fee model. The risk of 3% is reduced buyer-side commission (1.5%) — many buyer agents won't show properties offering less than 2-2.5%, so showing volume drops. Discount models work best when the listing speaks for itself; less effective in slow markets.

Do I have to pay realtor fees if I pull out of a sale?

It depends on your listing agreement. Most Ontario listing agreements specify that commission is owed only when the transaction closes — if you cancel before signing or before closing, no commission is paid. However, some agreements include marketing-cost recovery clauses: if you cancel mid-listing, you may owe the brokerage a fixed amount (typically $500-$2,000) for staging, photography, and MLS fees they've already incurred. Read the cancellation clause before signing. If a buyer pulls out after offer acceptance, the issue shifts to the deposit and the buyer's representation agreement, not the seller's listing agreement.

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