Realtor Commission When Selling a Home in British Columbia

Commission is often the largest single cost of selling a home, and many sellers sign a listing contract without fully understanding it. Questions come up quickly: how much is normal, can it be negotiated, who pays the buyer's agent, and when is it actually owed?

In British Columbia, most of the answers are found in the listing agreement itself, backed by rules that say what that agreement must contain. This article explains how those rules work so you can read your own contract with confidence.

This article covers the law of British Columbia.

The listing agreement comes first

A brokerage that provides trading services to a property owner offering real estate for sale must have a written service agreement, usually called a listing agreement, unless the prospective client waives it. It must be entered into before the brokerage represents you in offering the property.

The agreement must be signed by you and an authorized signatory of the brokerage. It must state the property address, the effective date, the expiry date, a description of the services, and the remuneration along with the circumstances in which it is payable.

Because the remuneration and the circumstances for payment must be written into the agreement, that document is where you find out what you will owe and when. If something is unclear, ask for it to be explained before you sign.

How much commission, and is it negotiable?

The listing agreement must state the remuneration and the circumstances in which it is payable. What amount is reasonable for your sale depends on your situation, so it is worth confirming with a lawyer. Because it is a term of a contract, it is something you can ask about and discuss before signing. Rates and structures vary from one brokerage to another, so it is worth comparing more than one.

One structure is not allowed: remuneration based on the difference between the listed price and the actual sale price is barred. If a proposed arrangement rewards the brokerage for the gap between what you listed at and what the home sold for, ask about it.

Whether any tax applies to the commission depends on your situation, so it is worth confirming with a lawyer or accountant. Ask for the total you will owe to be explained clearly, and keep that explanation in writing, so there are no surprises when the sale completes.

Who pays the buyer's agent?

If the listing brokerage shares its remuneration with a cooperating brokerage, which is the buyer's side, the listing agreement must specify the breakdown. So the split should not be a mystery to you at the time you list.

When your licensee presents an offer, they must give you a disclosure, in the form approved by the superintendent. It sets out your payment to the listing brokerage, any payment to a cooperating brokerage, the amount the listing brokerage keeps, and any other remuneration. Money amounts must be stated in dollars.

Read that disclosure alongside your listing agreement. If any figure surprises you, ask the licensee to explain it before you respond to the offer.

When is commission owed, and can the contract change?

The agreement must state the circumstances in which remuneration is payable. Those circumstances differ between contracts, so the wording matters. Look closely at what happens if a sale does not complete, if you take the home off the market, or if a buyer introduced during the listing buys after the expiry date.

Any amendment to your service agreement must be in writing and signed by you and an authorized signatory of the brokerage. A copy of any written agreement must be delivered to you immediately on execution. If you did not receive your copy, ask for it.

What to do next

• Ask for the proposed listing agreement before the day you must sign, and read the remuneration and payment sections.
• If the listing brokerage will share its remuneration with the buyer's brokerage, check that the agreement specifies the breakdown.
• Ask a lawyer or accountant whether any tax applies to the commission in your situation.
• Check the effective date and expiry date.
• Ask when commission becomes payable and in what circumstances.
• Keep your signed copy and any signed amendments.
• Have a lawyer review the agreement if any term is unclear or if a dispute is developing.

Frequently asked questions