People often think that all realtors make too much money.
It’s a common misconception because not everyone earns six figures a year.
Realtors get their living through commissions.
The B.C. Real Estate Council explains online that commission rates in the province are not fixed by law or by any real estate board.
Commissions are negotiable. Also, the seller’s agent traditionally shares the commission with the buyer’s agent.
The BC Condos and Homes team of prominent realtors Les Twarog and Sonja Pedersen has launched a survey asking people what they think is a reasonable fee for agents.
In particular, the poll notes a typical commission of seven percent on the first $100,000 value of a property, and two to three percent on the balance.
So for a $1 million home, this commission rate translates to around $29,000.
The agents for the seller and buyer share the commission.
On a $2 million property, the survey notes that the commission comes to about $54,000.
Twarog and Pedersen charge a slightly higher commission.
On their website, the realtors say that the rate is seven percent on the first $100,000 and 3.5 percent on the balance.
Rates also depend on realtors.
For example, Vancouver realtors Mike Stewart charges seven percent on the first $100,000, and 2.5 percent on the balance.
Stewart gives the buyer’s agent 3.125 percent on the first $100,000 and 1.1625 percent on the balance.
The realtor has a built-in calculator on his website to illustrate how this works.
For example, a $1 million home would give a seller’s agent a commission of $15,913, and the buyer’s agent, $13,588.
Add a GST of $1,475 to the total $29,501 commission on the sale, and the seller gets $969,025 from the $1 million deal.
Going back to the BC Condos and Homes survey, the questionnaire also asks whether sellers want to pay either a fixed rate or commission based on the selling price.
The poll also asks respondents if they would be “comfortable to purchase a house…without a realtors [sic] help”.