The standard structure — seller pays both sides
In a standard Canadian residential real estate transaction, the seller pays the total commission. This commission covers both the listing agent (seller's agent) and the buyer's agent. The commission is agreed upon when the seller signs the listing agreement with their brokerage, and it's paid from the sale proceeds at closing.
The total commission is then split between the listing brokerage and the buyer's brokerage, according to what's offered in the listing. Historically, a 50/50 split was common, with each side receiving roughly 2.5% of the sale price in markets like Ontario. Each brokerage then pays their individual agent according to the agent's commission split arrangement with that brokerage.
From a buyer's perspective, this structure has meant that engaging a buyer's agent doesn't directly add to what you pay. The commission was already baked into the seller's costs. Whether or not you have a buyer's agent, the listing agent's brokerage retains the buyer's agent portion when there's no buyer's agent.
What's changing — industry pressure on commission structures
In March 2024, a landmark U.S. class action settlement involving the National Association of Realtors changed how buyer's agent commissions are structured and disclosed in the United States. Sellers are no longer required to offer buyer's agent commissions through MLS, and agents must have written agreements specifying their compensation before showing properties. These changes created significant industry disruption in the U.S. and attracted attention from Canadian regulators, brokerages, and consumer advocates.
In Canada, CREA (Canadian Real Estate Association) and provincial regulators have been examining their own commission disclosure rules. Some changes to how buyer's agent compensation is disclosed in MLS listings are in progress or expected. The direction of travel is toward greater transparency and more flexibility for buyers and sellers to negotiate compensation directly. typically $400,000–$900,000 for condos and townhomes; detached from $800,000
What this means practically for buyers right now: the commission structure is more negotiable than it was five years ago, and agents are more likely to be willing to discuss it openly. Asking your buyer's agent to put their compensation in writing is now standard practice rather than an unusual request.
What the law requires agents to disclose
In Ontario, RECO's regulations require agents to disclose any conflict of interest arising from the commission structure and to be transparent about how they're compensated. If the commission structure could affect the advice an agent gives — for example, if recommending one property over another would result in a higher commission — the agent must disclose this. The BRA (buyer representation agreement) sets out the commission terms in writing, and this is the primary document establishing what the agent will be paid.
In BC, the Real Estate Services Act has similar requirements. In Quebec, OACIQ regulations require written disclosure of remuneration. Across all provinces, an agent who receives any referral fee, kickback, or other undisclosed compensation for recommending a service provider (inspector, lawyer, mortgage broker) is in breach of professional rules. If you discover this happening, it should be reported to the provincial regulator. [verify current figures with a licensed agent or at realtor.ca]
Example: what commission looks like on a $700,000 condo (approximate)
Total commission: approximately $35,000 (5% total, approximate — rates vary and are negotiable)
Listing brokerage portion: approximately $17,500 (split with listing agent per their internal arrangement)
Buyer's brokerage portion: approximately $17,500 (split with buyer's agent per their internal arrangement)
HST: applies to real estate commission in Ontario — add 13%
Note: all figures approximate. Commission rates are not fixed by law and vary by market, brokerage, and negotiation. [verify current figures with a licensed agent or at realtor.ca]
Buyer's agent commission when unrepresented
A common misconception: if a buyer doesn't hire a buyer's agent and contacts the listing agent directly, they save on commission. In most cases, this is not how it works. The listing agent's brokerage typically retains the buyer's agent portion when there's no buyer's agent, rather than it flowing back to the buyer. The seller doesn't pay less; the listing brokerage simply collects more.
This is changing somewhat as the market evolves, but it remains the norm in most Canadian markets. Before assuming you'll save money by going unrepresented, confirm with the specific listing what happens to the buyer's agent commission in an unrepresented transaction. [verify current figures with a licensed agent or at realtor.ca]
New construction and builder commissions
Builders typically pay buyer's agent commissions directly from their own budget when a registered agent brings a buyer to a new development. The commission structure for new builds varies by builder and project, and it can differ significantly from resale commission rates. Some builders offer higher commissions on slow-selling units; some reduce commissions as a project sells through.
For a buyer, the critical thing is that you register with your buyer's agent before your first visit to the builder's sales office. Once you've visited without an agent registered, you may not be able to have an agent represent you for that project, and any commission the builder offers goes to the builder's own sales team rather than to an advocate for you. typically $400,000–$900,000 for condos and townhomes; detached from $800,000