How Do Real Estate Commissions Work in Canada?

Buying or selling a home is probably the biggest financial transaction of your life. And somewhere in that process, tens of thousands of dollars quietly change hands in the form of real estate commissions—money many buyers and sellers don't fully understand.

Here's everything you need to know about how real estate commissions work in Canada.

10 Key Facts About Real Estate Commissions

• Commission is a real estate fee that pays for the services of a listing agent and/or buyer's agent.
• Total commission for both agents varies by province, but is often in the 4–5% range.
• Commissions are subject to GST or HST, depending on the province.
• The total commission is split between both agents and their respective brokerages.
• The commission for both agents is usually paid for by the seller.
• There is a reason for this: paying an agent out of pocket is a significant financial barrier for many buyers, especially first-time buyers. Removing this barrier expands buyer pools.
• Commissions are always negotiable.
• You have options to pay less commission: negotiate, engage a discount brokerage, pay a flat fee to list on the MLS, or sell without an agent.
• Agents are only paid commission after a property sells successfully.
• There are ongoing lawsuits about the real estate commission structure in Canada. It's important to stay informed as the cases unfold.

If you're here to learn more about legal challenges to the commission structure, here's a shortcut to that section.

What Is a Real Estate Commission?

A commission is the fee paid to real estate agents when a home is sold.

It's calculated as a percentage of the final sale price. On a $700,000 home with a 5% total commission, that's $35,000 in agent fees. On a $1 million home, you're looking at $50,000.

That's a lot of money. So it's worth knowing exactly where it goes.

Who Pays the Commission?

In most transactions, the seller pays the entire commission.

Even though two agents are involved—one representing the seller, one representing the buyer—the seller's proceeds cover both. The buyer doesn't write a separate check to their agent on closing day.

This surprises a lot of people. Your agent is "your" agent, but the seller is the one paying them. Here's why that setup exists:

Why Sellers Pay the Buyer's Agent—And Why That's Not Crazy

This is where most explanations stop short. Here's the full picture.

The obvious question is: if the buyer's agent works for the buyer, why does the seller pay them? (This is a hot topic right now, and there are ongoing lawsuits about it that we'll cover later.)

Part of it is convention. Part of it is the way mortgages work.

Buyers can't borrow money specifically to pay their agent. Banks won't include commission in a mortgage—they can't foreclose on and resell a service fee if the buyer defaults. What a bank will do is lend a buyer money to buy a more expensive home, as long as that price is considered market value.

So here's what actually happens in practice: the seller builds the commission into the asking price. The buyer pays that price, finances it through their mortgage, and the commission comes out of the sale proceeds at closing. The buyer effectively finances the commission over 25 years without ever writing a separate check for it.

If the seller doesn't do this, the buyer has to come up with several thousand extra dollars in cash. And many can't do that, not when they're already paying a down payment and closing costs out of pocket.

For sellers, this matters. When you offer a buyer's agent commission, you're removing a financial barrier. You're making it possible for more buyers to afford to close the deal. That means more offers, more competition, and potentially a higher sale price.

Cutting the buyer-side commission isn't automatically a savings, even though commission is the biggest closing cost for sellers. A reduced buyer pool can mean your home sits longer on the market and ultimately sells at a worse price.

How Does the Money Get Split?

Real estate commission fees get divided between both agents. The exact mix depends on the specific real estate brokerages and regional customs.

Here's a typical Ontario example:

• Total commission: 5% of sale price
• Listing agent gets: 2.5%
• Buyer's agent gets: 2.5%
• For a $1 million house (approximate average price in the GTA), this works out to $25,000 per agent

In Alberta, it might look more like this:

• Total commission: 7% of the first $100,000, 3% on the remaining balance
• Total is split 50-50 between the buyer's and seller's agents
• For a $600,000 house (approximate average price in Calgary), this works out to $11,000 per agent (3.6% total or 1.8% each)

That said, neither agent pockets the full amount. Each agent works under a brokerage—think of it as their employer or umbrella company. The brokerage takes a cut, which varies by agreement. Some agents keep 50% and give 50% to the brokerage. Others have different arrangements.

Let's look at the Calgary agent again:

• Total commission: 1.8% ($11,000)
• Brokerage cut: 50% ($5,500)
• Agent pay: 50% ($5,500)

This $5,500 includes expenses that the agent pays out of pocket, such as marketing materials for listings and professional photography.

By the time the math is done, the individual agent's net proceeds are considerably less than the headline commission number suggests.

Does Commission Include Tax?

Commission is subject to GST or HST, depending on your province.

In Alberta, that means 5% GST on top of the commission amount. On a $30,000 commission, you'd owe $1,500 in GST, bringing the total to $31,500. This money goes to the government, not the agent.

Factor this into your selling cost calculations from the start.

Is There a Standard Commission Rate?

No. There is no standard real estate commission rate in Canada.

No law, no regulation, and no government body sets commission rates. CREA (the Canadian Real Estate Association) explicitly states that rates are "solely the choice of those providing the services."

What exists is market convention. In Ontario, 5% became the de facto norm over decades. In BC, it's often 7% on the first $100,000 plus 2.5–3% on the rest. In Alberta, it's typically 7% on the first $100,000 and 3% after that.

These are habits, not rules. And habits can be negotiated. This is especially true if you're selling high-value real estate, where every percentage point represents more money.

What Are the Commission Rates Across Canada?

Here's a province-by-province breakdown of typical (not mandatory) structures:

Ontario: 5% total, usually split evenly. In expensive, competitive markets like Toronto, rates are seeing some compression toward 4–5% overall. Flat-fee and discount models are increasingly visible.

British Columbia: Tiered system: Up to 7% on the first $100,000, then 2.5–3% on the remaining balance. Split between buyer's and seller's agents. Flexible models are growing in Vancouver and other expensive urban markets.

Alberta: 7% on the first $100,000, 3% on the rest. Higher total commissions on mid-to-high value homes. Flat-fee models are available in Calgary and Edmonton.

Quebec: 4–5% total, split roughly evenly. Quebec has a high rate of alternative and hybrid commission models. Private sale platforms are also common here.

Manitoba: Around 5% total, similar to Ontario. Slightly more flexibility on higher-value properties.

Nova Scotia: Around 5%, split between agents. More flexibility in rural areas.

Saskatchewan: Often a declining scale: 6% on the first $100,000, 4% on the next $100,000, then 2% after that.

Can You Negotiate Commission?

Yes. Commissions are a contract term between you and your agent. When you're choosing an agent, you can ask for a lower rate. Some agents will agree, especially on higher-priced properties or if you're buying and selling with the same agent.

Other agents won't agree, and they don't have to. You can then decide if their services justify their rate or if you'd rather take your business elsewhere.

Some questions worth asking every agent you interview:

• What's your commission rate, and is it flexible?
• What's included—professional photography, staging, open houses, paid ads?
• Who pays for marketing costs—you or me?
• What happens if the home doesn't sell?

If they're not willing to discuss the rate at all, that's useful information too.

What Are Your Options for Paying Less?

You have more choices than most people realize.

Negotiate a lower percentage. Ask. Some agents will come down, especially on higher-priced properties.

Use a discount brokerage. Some brokerages charge 1–2% on the listing side instead of 2.5%. You still typically offer the buyer agent the standard rate to keep your buyer pool broad. Just be aware of which services are included and which aren't.

Flat-fee listing services. Pay a set amount (often $500–$2,000) to get your home on MLS. You handle everything else: showings, negotiations, paperwork. This can work well for experienced FSBO sellers. Requires significant time and know-how.

For Sale By Owner (FSBO). Skip agents entirely. You save the listing-side commission. Many FSBO sellers still offer a buyer-agent commission to attract represented buyers.

Sell to a cash buyer company. If you get a cash offer, you can skip not only commission, but listing prep and showings.

No matter which option you pick, you'll still need a real estate lawyer (or, in some provinces, a notary).

What If the Home Doesn't Sell?

If your home doesn't sell before the listing agreement expires, neither agent gets paid.

Listing agents carry the cost of marketing your home upfront—photos, advertising, time invested—and get nothing if there's no sale. That's part of the risk they take.

There is one important exception: the holdover clause (sometimes called a brokerage protection clause). Most listing agreements include one. It says that if your home sells within a set period after the listing expires—to a buyer who was introduced to the property during the listing—the selling agent can still claim their commission. Read your agreement carefully. This clause is standard, and it matters.

If a buyer doesn't buy before their agreement with their agent expires, same thing—the agent doesn't get paid.

The Bigger Picture of Real Estate Commission

Real estate commission is one of the highest costs in any home sale, and most people accept it without asking a single question.

You don't have to. Ask what's included. Ask if the rate is flexible. Interview at least three agents before signing anything. And understand that the structure—seller paying both agents—exists for practical financial reasons, not just because the industry set it up that way.

The more you know going in, the better-equipped you are to make good decisions.

Have questions about commission structures in your area? Talk to a local Calgary agent and ask them to walk you through a real example with your actual numbers. That conversation is free, and it's worth having before you list or buy.