How does the buyer's agent commission work — do I as the seller pay it?

In the traditional Ontario commission structure, the seller pays a total commission to the listing brokerage, and the listing agreement specifies what portion of that total will be offered to a cooperating buyer's brokerage through the MLS co-operation structure. So yes, the commission that compensates the buyer's agent typically flows from the seller's proceeds at closing.

The total commission and the co-operation amount offered to buyer's brokerages are both negotiable when you sign your listing agreement. You can offer a fixed dollar amount or a percentage to the buyer's brokerage. Offering a competitive co-operation amount is generally considered good practice because buyer's agents review listed compensation when deciding which properties to show their clients.

It is worth noting that the real estate industry has been evolving on commission structures. Some buyers and their agents now negotiate buyer's agent fees directly through buyer representation agreements, with buyers potentially covering that cost themselves. If you are unsure how co-operation commissions affect your net proceeds, have your listing agent walk you through the full math before you list.