Understanding Realtor Fees in British Columbia: What You Need to Know
When someone begins to think of buying or selling real estate in British Columbia, they often have questions about what the associated costs are (i.e. “closing costs”) . While such costs will typically cover services such as lawyer / notary services, home inspections, mortgage insurance, etc., as well as property transfer tax (if applicable), they may also include realtor fees.
Here’s a detailed look at what to expect in regards to realtor fees in BC.
Standard Realtor Fee Structure in BC
In British Columbia, realtor fees follow a tiered structure: 7% on the first $100,000 of the sale price and 3% on the balance. This fee arrangement is established at the beginning when a realtor is engaged by a seller to sell their property. However, this contract is not made between a realtor and a seller, rather, it is between the realtor’s brokerage and the seller, with the contract not only stipulating the fee, but also designating the agent from the brokerage who is selected to navigate and advertise the sale.
Check out our BC Realtor fee calculator at the bottom of the page to determine what fees you might have to pay your realtor.
But as an example, if a home sells for $800,000, the realtor’s fee would be calculated as follows:
7% on the first $100,000 = $7,000
3% on the remaining $700,000 = $21,000
Total fee = $28,000
These fees are typically due at the closing of the sale when all transactions are finalized.
Sharing of Fees Between Brokerages
It's important to note that these fees are often shared between the seller’s and buyer’s brokerages when a buyer uses an agent to assist them in the transaction. This sharing of fees is critical information for sellers because it emphasizes that the seller’s brokerage handles the distribution of fees, and that the buyer does not directly pay their realtor; instead, the buyer’s realtor receives a share of the total commission from the seller’s brokerage.
However, if no other “cooperating” brokerage is involved — that is, if the buyer navigates their sale directly without the use of a buyer’s realtor — the full fee, as outlined in the contract, is retained by the selling brokerage.
Further, sometimes sellers choose not to compensate a buyer’s agent, or choose to list with a discount brokerage. In such cases, it is common for a buyer and a buyer’s agent to have a separate agreement with where the buyer agrees to compensate their realtor up to the standard buyer’s agent’s fee for their services during the specific transaction.
What Services Are Included?
The services provided by realtors in BC can vary significantly as there is no set standard. As a seller, it is vital to thoroughly discuss, and understand, the services that your realtor will provide before signing a contract. These services might include, but are not limited to, listing the property, marketing it through various channels, conducting open houses, negotiating with potential buyers, and facilitating the closing process.
As a buyer working with an agent, you would benefit from the realtor’s knowledge about the market trends, pricing strategies, awareness of listings on the market, knowledge of specific types of properties, familiarity with documents, process, costs, valued partnerships, etc. We cannot understate the importance of buyers working with realtors on the purchase of their next property.
Why Understanding This Fee Structure Matters
Understanding the realtor fee structure in BC is essential for several reasons:
Financial Planning: Knowing these fees in advance helps sellers calculate the net amount they can expect from the sale of their property.
Comparing Services: Since there is no standard set of services, sellers can use this knowledge to compare what different realtors offer for their fees.
Negotiation Leverage: Understanding the usual fee structures and services can provide sellers with leverage during negotiations and help them secure the best possible deal.
Conclusion
Selling a home in British Columbia involves various details that can influence the financial outcomes of the transaction. By understanding the typical realtor fees and what services are included, sellers (and buyers) can make more informed decisions, align their expectations, and navigate the sale process more effectively. Always ensure that all terms and services are clearly outlined in your contract with the realtor to avoid any surprises at closing.